Future of Work

Next’s annual sales and profits at its High Street stores have continued their fall of recent years, while its online business continues to grow. Sales in Next’s stores fell nearly 8% last year to £1.95bn, while online sales rose by 14.7% to £1.92bn.

It said online was a “long-term threat” to its High Street business, but a “larger opportunity” for the group. The retailer also said it could see “no evidence” that Brexit uncertainty was affecting consumer behaviour.

Overall, Next’s group pre-tax profits for the year to January were in line with expectations at £722.9m, a fall of 0.4%.

Annual profits at its High Street stores fell by just over 20%, while online profits jumped by nearly 14%.Total group sales, including the finance division, rose by 2.5% to £4.22bn.

Next said 53% of its sales were now online. It said the growth of online sales “represents a long-term threat to our retail business but potentially, a much larger opportunity for the group as a whole”.

Richard Hunter, head of markets at Interactive Investor, said the difference between the fortunes of the stores and online was becoming “increasingly marked”.

“The online business, which has long been the jewel in the crown, continues its growth apace with full-price sales increasing nearly 15% over the period.

“The fact that there is a slow transition to this channel… is of comfort, even though the additional costs of transferring in the form of warehouse picking and delivery, need to be carefully managed.”

Chairman Lord Wolfson, a prominent supporter of Brexit, said the retailer could see “no evidence” that Brexit uncertainty was “affecting consumer behaviour in our sector”.

“Our feeling is that there is a level of fatigue around the subject that leaves consumers numb to the daily swings in the political debate.”

If the UK government’s provisional tariff rates were introduced in the event of a no-deal Brexit, Lord Wolfson said Next had estimated there would be a net reduction in the tariffs it pays of about £12m-£15m, as tariffs on goods imported from outside the EU fell.

In the “medium term”, Next’s intention would be to pass on price cuts to customers. “In the context of £1.7bn of stock purchases, the savings would be relatively modest,” he added.

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