Next hits refresh button after ‘uncomfortable’ 2017
Next reports that 2017 was the most challenging period it has faced for 25 years, with both sales and profit dipping.
A difficult clothing market coincided with self-inflicted product ranging errors and omissions, Next said. At the same time, the retailer had to manage the costs, systems requirements and opportunities of an accelerating structural shift in spending from stores to online. There was an 8.1% drop in profit before tax to £726.1 million from £790.2 million the year before. Total sales decreased by 0.5% to £4.1 billion. Online saw solid growth of 9.2% but this was offset by a 7.9% drop at Next Retail.
Catherine Shuttleworth, CEO at Savvy, said: “The numbers from Next make for grim reading. With sales in stores down by 24% it’s a giant kick in the teeth for High Street retailing. The costs of operating a High Street chain versus an online clothing retailer are now in stark view and it seems a number of retailers are going to have to radically change their operating models as this transformation in retail continues. It’s clear that middle market players are losing appeal with shoppers. On the flip side, the positive news from Ted Baker this week shows that shoppers are willing to spend on product sometimes a little more, but less often.”
The clothing market, along with the wider economy and High Street, look set to remain challenging. But Next Chief Executive, Simon Wolfson, attempted to put a positive spin on things. “Whilst it has been an uncomfortable year it has also prompted us to take a fresh look at almost everything we do: from the structure of our store portfolio, the in-store experience and the generation of alternative retail revenue streams, the management of our cost base, our sourcing and buying methods, stock management and, most importantly, our online systems, marketing and fulfilment platform. As a result of these endeavours, many challenges and opportunities have emerged,” he commented.