Next seeks rent cuts after ‘challenging year’

NEXT plans to squeeze its landlords for rent reductions and shorter-term leases in a push to keep its stores in the black after posting its second drop in annual profits in a row.

Around half of the high street fashion chain’s store leases come up for renewal in the next three years, which Simon Wolfson, its chief executive, said would be a “big opportunity” to push for lower rents.

Next renewed 19 leases in the year to January, slashing its average rent bill for those stores by 25pc, and hopes to squeeze a 22pc cut from 29 renegotiations this year.

Lord Wolfson said: “If the landlord wants a reasonable rent we’ll stay, if they don’t we won’t.” The push will pile the pressure on retail landlords, which are losing retail tenants that are suffering as shoppers desert the high street.

After Maplin and Toys R Us both went into administration earlier this month, New Look confirmed plans to shutter dozens of stores through a company voluntary arrangement this week, and Carpetright indicated it could be poised to do the same.

House of Fraser’s lenders, meanwhile, appointed advisers to doublecheck its investments in an effort to ward off another high street collapse, in news first reported by Sky News.

Lord Wolfson said the high street would benefit from an overhaul of the planning system to relax restrictions on how property can be used, saying: “There are central planners who decide where people eat, where they shop, where they sleep, where they work and I’m not sure that system is fit for purpose in a dynamic changing world. Let individual hardworking intelligent people work out how best to use that property and then you will end with a much more vibrant market.”

Lord Wolfson’s comments came after Next revealed an 8.1pc drop in annual profits to £726m following what he described as its “most challenging year” in 25 years. A 9.2pc online sales surge wasn’t enough to offset a 7.9pc drop in store sales, leaving total revenues 0.5pc lower at £4.1bn.

It blamed problems with its range, which it said had become too focused on “more fashionable lines” to the exclusion of its core “heartland products”. The retailer’s shares closed up 7.7pc at £49.84 yesterday.