Yahoo Finance Online Sales Lift Aids Retail Profit Growth
A string of retailers, including Next and John Lewis, have credited rising online sales for profit growth in the first half of the year.
Next, which is Britain's second biggest clothing retailer by sales value, reported a 19.3% increase in pre-tax profit to £324.2m in the six months to July.
It said its 700 stores and home shopping businesses all benefited from an improving economy.
Next is outperforming rivals, such as Marks & Spencer (Other OTC: MAKSF - news) , because of a strong online offer, a constant stream of new store openings and diversification into new product areas, such as homewares, as well as new overseas markets.
It reiterated the guidance it issued in July, when it raised its outlook for annual sales and profit for the second time in three months, forecasting 2014-15 sales growth of 7-10% and a pre-tax profit of up to £815m.
Next Directory sales rose 16.2%.
M&S, by comparison, has endured teething problems with its new website though clothing sales have started to recover following revamps to its offering though it has reported 12 consecutive quarters of decline .
The John Lewis Partnership - made up of its John Lewis department stores and Waitrose supermarkets - reported a 12.1% increase in profit to £129.8m for the six months to July 26.
Operating profits at John Lewis rose 62% to £56.3m - helped by strong growth in the higher margin home category and online sales which rose 26% to make up over 30% of total merchandise sales.
At Waitrose, profits dipped 9% to £145.2m as a result of higher investment in branches and the impact of challenging trading conditions - a similar explanation to the one used by Morrisons which reported a 51% dip in profits.
The supermarket, which has been matching Tesco (Xetra: 852647 - news) 's prices on branded products as well as Sainsbury's on own-label items, said it outperformed the market over the period with its share rising to 5%.
Partnership chairman Sir Charlie Mayfield said: "The outlook in the grocery sector remains challenging and we expect that to continue to be the case for some time.
"In contrast, trading conditions in the non-food sector are more positive than has been the case for several years."
Ocado, which operates purely as an online grocer, reported a 15.5% rise in gross retail sales in its third quarter but said average order sizes fell as competition increased in the business.
Chief executive Tim Steiner said: "We are pleased with the continued steady growth of our business despite the increasingly competitive nature of the market.
"The retail environment is challenging with an increased level of promotional activity and price reductions across the industry", he said, adding that he expeced Ocado to keep growing sales in line with, or slightly above, the online grocery market.
