Simon Wolfson thinks long term as Next performance picks up

Chief executive Simon Wolfson said: “Home is performing better than other areas; it is a great time to expand a home chain as people are exiting the market.”

He was not worried about investing in a higher ticket sector ahead of possible VAT and tax rises because he is interested in the long term growth potential.

He said that improved product and picking up trends faster was helping fashion sales. “We are changing the Next way of buying,” he explained, giving the example of some jersey clothing items that were designed in December and installed in stores by March. He said the push to shorten lead times was ongoing and Next still has some way to go.

In the full year to January 30 Next’s pre-tax profits jumped 18% to £505m. Group revenues rose from £3.27bn to £3.4bn. Like-for-like sales were 0.5% ahead for the year.

Singer analyst Matthew McEachran described the results as “excellent”. He said: “Growth this year will be focused on home and Lipsy while the changes in core retail regarding fashionability and response times will continue to be another key point of focus.” He said the strength of Next’s Directory business, which delivered a 7% sales rise in the year, and ongoing efficiencies make it attractive to investors.

Wolfson adopted his typically cautious tone about the trading outlook and said consumer and economic trends were very difficult to read. The retailer said it expects like-for-like sales in its first half to be between -2.5% and +0.5%. Wolfson said that for the retail market as a whole, like-for-like growth would be “tough” to achieve in the next four to five years.

He said Next will continue to invest in stores alongside its internet offer. “The two go hand in hand; the customer does not see it as a separate business,” he maintained.

Next will expand internationally primarily using the internet rather than by opening new stores, but remains committed to its established overseas portfolio and will continue to open a “modest” quantity of new space overseas.

Wolfson believes that when the economy is healthier again Next will be in a strong position. “The top end of the mass market is the best place to be in growth times,” he said.