Online, not stores, is key to overseas growth, says Next boss Lord Wolfson

Next boss Lord Wolfson said it would not be opening any further company-owned stores internationally declaring: “they don’t make any money.”

He continued: “The internet does because you can reach a huge number of people, only a small percentage of who might want your product but at no fixed asset investment.

“If you open a shop and only a small amount of the population is interested in the product you still have to pay the same rent as retailers whose product is specifically geared up to that market pay and that is where the problem lies. You’re paying the rent of the most tailored range but your range isn’t tailored. On the internet it’s a level playing field.”

The retailer’s international online business makes “very healthy profits” according to Wolfson. Sales grew from £33m to £54m last year and is expected to hit £70m this year.

The retailer does have a profitable franchise business but Wolfson said that worked because they sell at a higher price point than Next.

Wolfson unveiled a 9% full year pre-tax underlying profit at the fashion and homewares retailer against a 3.1% sales jump.

He put the rise down to adding profitable new space and its online growth.

He said: “You would have heard us using the phrase walking backwards up the escalator to describe retail. The thing moving us back on the escalator are existing stores If nothing’s done to them, they are going to move backwards and that last year cost us £29m in profit. The reason that retail is standing still is because we’re taking on profitable new space.”

The Next boss blasted some local councils for standing in the way of new developments. He said: “Many local councils are enthusiastic and efficient, but a few remain an unhealthy mix of Luddite intransigence and incompetence.”

Wolfson said that it takes twice as long to get planning permission than to actually build shops. Next has 1.2 million sq ft of trading space in its pipeline but only expects to open 250,000 sq ft in the year ahead.

He said:  “There is a lot of pent-up demand in towns where the shops aren’t up to scratch, access to the town centre isn’t up to scratch or car parking isn’t up to scratch and there is an opportunity in many places to improve access and trade by growing shops. [Some local councils]understand that shutting shops destroys wealth, but they don’t understand that opening them creates wealth.”