Gloom predicted in spite of store profits

High street favourite Next looks set to ring up a profits boost when it reveals its half-year results this week - but its outlook will make gloomy reading.

Next upped its profit forecasts in July for the second time in three months as sunny weather boosted trading and lifted high street sales by between two per cent and three per cent.

Analysts expect the group to announce pre-tax profits of £182.9 million in the first six months of the year, an increase of 5.4 per cent.

But Tim Attenborough, of BNP Paribas, forecast Wednesday's results will be accompanied by a "relatively downbeat prognosis for the UK consumer in 2010".

"In our view Next Retail is still trapped in a spiral of negative like-for-like sales and declining sales densities," he said.

"Next Retail's near saturation of the UK retail market leaves little room for space growth without further cannibalising existing stores."

Still on the retail front, department store Debenhams' drive to dominate its stores with in-house brands is expected to hit sales figures in a trading update tomorrow.

Converted

The high street retailer has converted more than 500,000 sq ft of concession space during the last three months as part of a reorganisation programme and analysts are expecting the move to temporarily hit sales.

Debenhams is predicted to have seen falls of up to three per cent or more in the fourth quarter.

The retailer bought the licence to trade the Principles brand earlier this year and hailed the performance of its Designer at Debenhams clothing range from the likes of Ted Baker, Betty Jackson and John Rocha.

Out-of-town furnishings firm Dunelm is expected to provide profits cheer when it reveals its full-year results tomorrow.

It is believed that its simple value for money offers with average transaction values of £25, will help it ride out tough trading conditions.

By Business Editor Jim Walsh