Following today’s release of Next’s figures for the six months ending 29th July 2023; Emily Salter, lead retail analyst at GlobalData, a leading data and analytics company, offers her view:
“Retail bellwether Next has had a good H1 FY2023/24, with its total sales rising by 5.4% to £2.6bn as it constantly outperformed its own expectations, although the retailer admitted that these were overly cautious. Initially, Next expected its full-price sales to decline by 3.0%, whereas they grew by 3.2%, boosted by the warm weather in May and June when sales rose by 7.5% and 10.0% respectively. The retailer has revised its full year guidance of full-price sales up from 1.8% to 2.6%, and although this may again be cautious, the unpredictable weather over the past few months will have disrupted its sales. This growth is behind that of the total clothing & footwear market, which GlobalData forecasts will grow 2.7% in 2023, but Next’s sales are likely being pulled down by its home range, a market that is struggling in 2023. The retailer also raised its full year profit before tax guidance, increasing it by £30m to £875m.
“Next’s online platform continued to show resilience, with sales growing by 5.0% in a stalling market, as less than 35% of its sales were made in its shops during the period. The retailer has continued to make improvements to its already strong online proposition to keep up with ever-growing consumer expectations of convenience and ease of use. This includes its new warehouse, Elmsall 3, which it got earlier access to, leading to efficiencies such as fewer items being fulfilled from store stock, and fewer items being delivered later than promised (6% versus 11% last year), boosting consumer satisfaction. Additionally, the warehouse’s automated picking and packing technology should deliver more service improvements and efficiencies next year.
“An area Next has identified as a growth opportunity is its Total Platform, a diversification from its core business as a retailer to provide a service for other retailers, piggybacking off their growth. This is linked to the retailer snapping up various brands to strengthen its offer – and not just struggling ones. At the start of September, it increased its stake from 51% to 72% in Total Platform client Reiss, which seems to have flourished with its website operating through this platform. Reiss’ new, more simplified ownership structure will be beneficial for both parties, with Reiss more able to draw on Next’s retail prowess, and Next reaping greater benefits from Reiss’ strongly growing position within the market.”
