Following today’s release of Next’s figures for the six months ending 29th July 2024; Emily Salter, lead retail analyst at GlobalData, a leading data and analytics company, offers her view: “Next has reported another exceptional performance, with its total group sales rising by 8.0% in its H1 FY2024/25, while total Next sales (excluding revenue from investments) rose by a still impressive 4.2%. This growth was driven by international sales, with overseas full-price sales growing by 22.8% as it has seen success with the Next brand via its own website and other third-party marketplaces. The retailer has identified international sales as a growth opportunity as online sales continue to rise and fashion trends across the world converge, aided by the influence of social media. However, this presents the challenge of how to grow consumer awareness of the Next brand and make the range of brands it offers locally relevant – as overseas sales currently mainly come from Next’s own brand, but given the success of its branded proposition in the UK, this could be replicated in some countries.
“In contrast, the UK underperformed the group due to the poor weather in Q2, with total full-price sales up by 1.0%. This still represents a rise in Next’s share of the sector though, with the UK clothing & footwear market remaining negative throughout the first half of 2024. Instore sales dragged its UK sales down, falling by 2.1% as despite the range of investments it has made in its stores to boost footfall, such as opening concessions of brands like Bath & Bodyworks, it was unable to offset the impacts of the poor weather on its footfall. One potential concern is that UK Next brand sales declined by 0.9%. Although the retailer partially attributes this to the poor weather and strong comparatives last year, it is right to look beyond this excuse and assess the health and appeal of the brand. One factor that may come into play here is the intensifying competition from M&S, who has invested heavily in the fashionability and quality of its own brand, gaining it favour among young shoppers and influencers.
“After a strong first half, the outlook for Next looks rosy. Full-price sales for the first six weeks of its second half exceeded expectations, up 6.9%, so it has upgraded its second half guidance from an increase of 2.5% to 3.7%. Even more impressively, the retailer is once again able to increase its full year pre-tax profit guidance, by £15m to £995m. Next’s continued innovation and desire to constantly improve its offer will stand it in good stead. For instance, it will launch a separate website, SEASONS, offering premium and affordable luxury brands such as RIXO and Ganni that are not available on (and would not fit with) the Next site. This launch should be well-timed as consumers start to feel their discretionary incomes rise, but SEASONS will need to stand out, with many of these brands being available at other marketplaces and department stores.”
