Web Growth Saves Next from a Bleak Christmas ; Underlying Sales Slump ++ [Pound]40m Revamp Planned ++ Online Shopping Boosts Directory Arm
Mesure, Susie, The Independent (London, England)
Next has vowed to tackle its disappointing sales performance after a Christmas that was salvaged by its strict promotional policy and strong growth from its website.
Simon Wolfson, the chief executive, admitted for the first time that Next faced problems unless it could sta-bilise its like-for- like sales, which have been in freefall for the past two years.
Its retail division, by far the bulk of its business, saw underlying sales in the 308 stores that were unaffected by new openings slump by 6.9 per cent from 31 July to 24 December. And that excluded those stores in towns where it has recently opened large new ones. Even total group sales only grew 2.8 per cent.
Despite missing internal sales targets, the group said its pre- tax profits would be "slightly ahead" of the consensus forecast because its margins improved due to tight stock and cost controls, better buying and its refusal to discount before Christmas. It put 13 per cent less stock into its sale, which started on 27 December.
Its Directory arm - which includes mail order and internet sales - profited from more people shopping online: over the festive period, it took more orders over the internet than over the telephone for the first time. Its internet sales rose by 30 per cent, ahead of the 9.3 per cent overall increase in sales at the Directory arm.
Mr Wolfson said the group opted to "defend our bottom line rather than go for the glory of the top line", adding: "Ultimately we are in business in order to deliver increasing profit and that is what we've achieved."
But he was blunt about the challenges facing Next, saying he would be "worried" if its sales tailspin continued. This was a volte- face for Mr Wolfson, who normally bemoans the City's obsession with like-for-like sales.
"Do I think we can carry on having negative like-for-likes and always be successful? …