Seemingly nothing can derail the Next roadshow with the fashion retailer declaring this morning that it is closing in on annual profits of £1 billion for the first time in its history.

Just six weeks after its last upgrade, Next has issued yet another improved outlook following a 7.1% increase in pre-tax profits to £452 million for the six months to the end of July. Sales since then have been higher than previously anticipated, prompting the company to raise its full-year guidance.

The update, however, was very much a tale of two retailers with skyrocketing demand in its online channel juxtaposed against falling sales in stores.

Twenty years ago retail stores accounted for 72% of total sales at Next and 70% of the group's profit. Today retail accounts for 30% of sales and just 19% of profits, and the online channel is still seen as the main driver of growth going forward.

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In-store revenue, on the other hand, fell by 2.1% in the first half. That trend’s not expected to change going forward, with high-street shopping in structural decline.

Next has some insulation in the fact that its shops typically have shorter, more favourable leases than its peers, and are more focussed on out-of-town retail outlets that have fared better. But an update from the company on the potential ramifications of a landmark legal battle over equal pay underscores the delicate state of affairs on the high street.

Last month an employment tribunal ruled that Next should pay its store staff, who are predominantly women, the same hourly rates as its mostly male warehouse workers. Next said this will hamper its ability to make stores “individually profitable”, potentially leading to their closure.

Next is appealing against the decision, but if unsuccessful it could have to pay more than £30m to settle the claim which was first lodged in 2018 and includes more than 3,500 current and former shop workers.

“Materially increasing store operating costs will result in more shops being closed when their leases expire, and will materially impede our ability to open new stores going forward," Next said. It also warned of ripple effects across its warehouses, where it will be unable to raise wages without doing so in stores. 

“If, for many people, warehouse work is less attractive than work in stores (as the evidence before the Tribunal showed), how can a warehouse attract the number of employees it needs?" the company said.