THE 20th of December 1990 was one of the worst days in David Jones's life. Rumours that Next, where he is chief executive, was in crisis talks with its bankers sent its shares tumbling to 6.5p. Two years earlier, they had been riding high at more than 300p.
'I remember it so well; it was a Thursday. And the worst feature was getting the news round to the staff that the company was not suddenly going to go bust tomorrow.'
Now, its shares stand at 208p, daily share price rises of 6.5p are common, and Mr Jones says that his time with Next has been the best of his life. His enjoyment is not surprising. Along with his chairman, Lord Wolfson, who formerly headed Great Universal Stores, he has been the driving force behind a management team that has not only nursed Next back to health but has also left it fitter than at any time since it was set up 11 years ago.
That makes it a classic corporate turnaround. Four years ago, it was a perfect example of all that can go wrong in an entrepreneurial business. Created by George Davies and his wife Liz in 1982, its aim was to produce well-made, well-designed fashions for the high street.
It was a spectacular success. In six years, the number of stores mushroomed from five to 440, bringing the Next look to customers from Aberdeen to Plymouth. Sales soared to pounds 862m and profits peaked at pounds 92.4m.
As sales and outlets expanded, so too did the reach of the Next brand. Menswear and children's wear and jewellery were given the Next treatment. Next Directory, a home shopping catalogue, was launched for those who could not, or preferred not to, go into the shops.
A casual wear chain for women, Next Too, was added to the more formal Next Collection: even a discount chain, Next to Nothing, was launched to clear out its stock disasters.
Those who wanted to create the full Next look could buy lamps, duvet covers and china in a chain of home furnishing shops.
'It was precious, almost egotistical,' Julie Ramshaw, retail analyst with Morgan Stanley, said. 'They thought that if you put the brand name on to anything from knickers to coffee cups, it would sell, so the product lost its quality and aspirational flair.'
Next went on a spending spree. It bought Grattan - bringing Mr Jones into the group - in 1986 to further its home shopping plans. Combined English Stores was acquired for its collection of high- street outlets and a 270-shop newsagent chain was added - 'because someone thought that was a good business to be in', Mr Jones said.
'They were extremely heady times, there was tremendous euphoria,' he said. There was also tremendous pressure. Next may have been a brilliant concept, but its rapid growth was testing the management's skills and the customers' enthusiasm.
In December 1988, a profits warning from the group confirmed what the share price was already signalling: Next had stalled. A few weeks later, the Davieses were ousted in a boardroom coup and Mr Jones and Lord Wolfson were installed.
The problems were all too apparent: too many shops, too many staff and too many businesses. Next had become a 'space bandit', opening more and more stores. Some were losing money, others were too big, and the profusion of brands was diluting the image.
Mr Jones's biggest fear was that the Next brand had 'blown its bolt' in the 1980s and was incapable of being taken into the 1990s. 'That was why we spent a lot of time finding out exactly what people wanted.'
The result is one range, at least 70 per cent of which is in every branch. And, from the autumn, the Directory will offer the same merchandise, which strengthens the brand and makes stock purchasing more efficient. 'When we talked to the Directory customers, they said they couldn't understand why if they saw it in the Directory they couldn't buy it in the shops.' It also cuts costs and makes buying easier.
Staff numbers were cut and a third of the stores were closed. At just over 300, Mr Jones believes the number is now about right.
He was lucky. Next hit its problems ahead of most other retailers, which meant he was able to unload most of his excess stock.
The results are evident. Quality of merchandise has improved, encouraging more of those who visit the stores to buy. Sales per square foot have risen from pounds 250,000 to pounds 350,000 in two years and stock is marked down only in the traditional sale season.
Mr Jones also ensured that management had time to focus on the core areas by selling off some of the peripheral elements, such as the newsagent chain. Together with the property deals, that raised a bit of cash, but it had little impact on what turned out to be Next's big problem: a pounds 190m Eurobond issue that had to be repaid in 1992.
Next would have had little chance of persuading banks to refinance the bond. The only choice was Grattan, which it sold to the German group Otto Versand in 1991.
The decision was a hard one for Mr Jones, who started his career in mail order and had joined Next through the Grattan deal. But now he says: 'Life began again on 16 April 1991, when we completed the sale. It was the only way to save the group.'
The City also realised the significance of the deal, and since the sale Next's shares have outperformed the market more than sevenfold. Investors were rewarded with a threefold increase in pre-tax profits in the year to January. Ms Ramshaw is forecasting pounds 57m this year and pounds 64.5m next, a far higher growth rate than at many rival retailers.
Mr Jones says there is still much to do - improving production, customer service, store quality, and so on. Profits, earnings and dividends are still below their 1980s peak, although the core Next chain is making more money than ever.
Perhaps the main challenge now lies in deciding how, or indeed whether, to expand when the Next business does fully mature and cash generation, already strong, increases. Mr Jones is already thinking about possibilities such as moving into Europe or buying another retail brand.
Lord Wolfson, chairman of Next, used to run the mail-order division of Great Universal Stores, not the entire group as stated in our article on 19 August.
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