Next hits 25-year low as profits tumble 8%
NEXT suffered an 8 per cent drop in annual profit and is set for its third straight decline this year after its most “challenging” period for a quarter of a century.
The FTSE 100 fashion retailer, which trades from over 500 stores in the UK and Ireland, said the pressure from rising costs and squeezed household budgets had been compounded by “self-inflicted product errors and omissions”.
It said the switch to online represents “a permanent and profound change in the structure of our industry”, but stressed the value of a high street presence, for instance being able to make items available for customers who find their online order is sold out.
It will broaden its appeal by introducing cafes, restaurants and other concessions and is talking to a travel operator, branded footwear and cosmetics businesses.
Next plans to generate £5million from opening 98 concessions across its network over the next year.
Chief executive Lord Simon Wolfson admitted it was difficult to predict how long the shopper preference for leisure spending over retail would last, but he believes Next’s improved ranges put it in a better position.
He said: “In many ways 2017 was the most challenging year for 25 years. While uncomfortable, it has prompted us to take a fresh look at almost everything we do. The company goes into the coming year in good financial health.”
Pre-tax profit fell 8.1 per cent to £726.1million on 0.5 per cent lower group sales of £4.11billion. Retail sales were down 7.9 per cent and online up 9.2 per cent, while store profits fell by 24 per cent.
Next forecast profit this year would be 2.9 per cent lower at £705million, but shares rallied 355p to 4984p on hopes for an improved sales performance.
AJ Bell investment director Russ Mould said: “It is what is missing from the statement that matters more than what is in it – there is no profit warning, there is no dividend cut and no sense of panic.”
● PREZZO has backing from creditors on a rescue deal which will see it close 94 of its restaurants.
The private equity-owned chain, which employs 4,500 across its 302 units, did not say how many staff would lose their jobs but will make “every effort” to redeploy them.
Closures, which include all of its 33 Chimichange TexMex eateries, will take place over April and May.