Next weathers 'perfect storm'

 

Retail chain Next said it rode out the "perfect economic storm" today after £1 billion of online and catalogue sales boosted profits by 5%.

The fashion and homewares chain, which has 536 stores, said the haul of £570.3 million for the year to January 31 was slightly ahead of its previous guidance.

Its Directory arm saw sales rise 16% to £1.1 billion, and now accounts for nearly a third of its business, offsetting a 1.4% decline in its retail division.

Chief executive Simon Wolfson said he hoped softer inflation will mean consumers no longer feel they are becoming poorer, which should give a boost to the UK's retail sector.

However the group predicted more retail sales declines this year and warned that the outlook for the year ahead remained "very uncertain".

It will open 15 more stores than it closes in the coming year, as well as 19 new concept sites in coming years, which have separate fashion and home stores next to one another and sell a range of DIY goods.

Next said: "2011 presented the retail sector with the perfect economic storm. Consumer demand was anaemic, held back by a combination of high inflation, low growth in wages and limited growth in consumer credit."

Lord Wolfson believes Next's high street business still has a bright future as it goes hand-in-hand with the flourishing Directories business. Stores were increasingly being used to handle online orders, with 59% of parcels returned through stores.

He said: "We remain convinced that there is a continued place for fashion retail stores and that increasingly customers will see stores and online as part of a single service."

The group closed 14 underperforming stores in the year but said 90% of its store estate makes a return of over 15% and less than 1% makes a return of less than 5%.

Next raised prices by an average of 7% last year as it was forced to pass on rising cotton and commodity prices.

But it expects prices to be flat this year as last year's VAT hike falls out of the equation and inflation eases, which will help consumer spending and confidence.

Lord Wolfson said: "The squeeze in real earnings has been enormous this year - there was a big difference between 5% inflation and 1.5% earnings growth.

"We are already seeing inflation coming back in line with earnings growth. Consumers will feel much better and won't feel like they are getting poorer, which was the case last year."

The group forecasts that retail sales will at best be flat and at worst decline 3% in the current year although the strong growth of Directory will continue, with sales up by as much as 12%.

It forecasts profits for the current financial year will be between £560 million and £610 million.

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent