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Next admits toughest trading period 'for 25 years' | |
(35 minutes later) | |
Annual profits at Next have fallen 8% after what the retailer described as its most challenging year for 25 years. | |
The company said pre-tax profits dropped to £726.1m in the 12 months to January, marking the third year in a row that profit has declined. | |
Next said that sales of full-priced products at its stores tumbled in contrast to online demand. | Next said that sales of full-priced products at its stores tumbled in contrast to online demand. |
It blamed "a weak clothing market" as well as "self-inflicted product ranging errors and omissions". | It blamed "a weak clothing market" as well as "self-inflicted product ranging errors and omissions". |
Full priced sales at its shops fell by 7% but rose by 11.2% online. Total revenue for the year fell by 0.5% to £4.1bn. | |
Next's chief executive, Lord Wolfson, said that "in many ways 2017 was the most challenging year we have faced for 25 years". | |
He said that while it had been uncomfortable, "it has also prompted us to take a fresh look at almost everything we do" including the structure of its shop portfolio and the "in-store experience". | He said that while it had been uncomfortable, "it has also prompted us to take a fresh look at almost everything we do" including the structure of its shop portfolio and the "in-store experience". |
'Quite lazy' | 'Quite lazy' |
Experts on the retail sector say mid-priced retailers like Next are in a tough spot. | Experts on the retail sector say mid-priced retailers like Next are in a tough spot. |
"The middle market is suffering and there isn't a way back home," Kate Hardcastle, from consultancy Insight with Passion, told the BBC. | |
"I think retail generally in this market place has been quite lazy. As soon as consumers had an alternative option that are perhaps are a better price, better product or faster moving product, I think they've taken it. | |
"So you've seen the rise of Primark on the discount side, Asos and Zara on the more fashion-orientated side and a consumer very much influenced by Instagram and social media. | |
"It's just too much of a turnaround, too much of a challenge for these quite heavyweight retailers who have expected to trade they always have.," Ms Hardcastle said. | "It's just too much of a turnaround, too much of a challenge for these quite heavyweight retailers who have expected to trade they always have.," Ms Hardcastle said. |
The latest retail data from the Office for National Statistics showed a rise in sales at supermarkets in February, but falling trade at non-food stores as consumers choose to spend their money on essential items. | |
A number of retailers and casual dining outlets have failed or face having to radically restructure their businesses. | |
Both Toys R Us and Maplin have fallen into administration. Fashion chain New Look this week secured an agreement with its creditors to close 60 UK stores and cut 1,000 jobs. | |
In the restaurant sector, Jamie's Italian, burger chain Byron and Prezzo are closing outlets and laying off staff. | |
Next said that it planned to roll out more concessions across its store after trying out a number of new services at its shop in Manchester's Arndale Centre. | |
These include; a florist, a prosecco bar, a restaurant, a children's activity centre, a café, a card and stationery shop, a barber and "shortly a car showroom". | |
It said that it was talks to add a spa operator and bridalwear concession to the store and said it expected these steps would add £800,000 worth of income to the shop. | |
Next also said it was in discussions to add other services to its stores including travel, branded footwear and cosmetics. | |
"In the year ahead we currently plan to open 98 concessions across our store portfolio and expect to generate annualised income of around £5m from these concessions." |