Next reports growing profits despite perfect storm for UK retailers

Next Directory recently announced the company experienced an 8.5 percent increase in profits for the first half of 2011, as its revenue rose to £22.8 million. The retailer considers the growth a significant achievement, as the value added tax, food and fuel inflation, government cuts and stagnant wages have forced many consumers to shop conservatively this year.

Next's prices were 7 percent higher in the first half of 2011 and will be 8 percent higher in the second half. The retailer does not anticipate raising prices in the first half of 2012, however, because cotton prices have fallen to 50 percent below the peak reached in March. While the company's 500 brick-and-mortar stores sales decreased 1.8 percent, online sales jumped 15 percent in the first six months of the year.

In an interview with the Press Association, David Keens, group finance director for Next, said the sales figures showed U.K. customers are transitioning to more online shopping. He credits the company's new 9 p.m. deadline for next-day delivery as enticing customers to purchase on the website.

In a statement, Next said it believes the company's e-commerce site and physical retail stores complement each other. However, the uncertain retail landscape has pushed the retailer to sign short-term leases with landlords and invest more time in their online presence.