Fashion retailer Next looked in good shape today: it announced a like-for-like sales increase of 2.2% for the 13 weeks to 1 May, thanks largely to its catalogue and online division, where sales were up a whopping 7.2%. It’s the second consecutive quarter of growth for Next (after four grim years of dwindling sales), but CEO Simon Wolfson isn’t ready to rest on his laurels just yet. The Next boss is apparently ‘very cautious’ about the year ahead – he reckons customers will rein in their spending again once the Government starts to tackle the UK’s growing budget deficit. So 2010 could still be a case of one step forward, two steps back…
Given how tough the last year has been for the high street, Next is looking healthier than most (particularly compared to this time last year). Total sales were up 4.1% – and although like-for-like store sales saw a disappointing 0.8% fall, this was offset by the stellar showing of Directory, its catalogues division. In fact, Next was so pleased with Directory’s performance that it has revised its sales targets upwards for the first half. This will help Next get closer to its goal of a full year sales increase of somewhere between 0.5% and 3.5% – which would mean shareholders get some sort of dividend payment.
So it’s another feather in the cap for Wolfson, who was brought in to nurse the ailing company back to health. By the looks of it (and judging by the share price, which has now risen from about £16 to more than £22) he’s just done that – to the extent that he’s now regularly linked with a move to a bigger job. But he insists he’s there for the long haul: he said today he was ‘absolutely committed’ to Next and had no plans to leave the company. And since it emerged recently that he’s been given a juicy £1m bonus as a reward for turning around the retailer’s fortunes (on top of his generous £682,000 salary), perhaps that’s not surprising.
Yet despite Next’s recovery, Wolfson sounded cautious about the year ahead, suggesting that whatever action the new Government takes to tackle the budget deficit is likely to ‘restrain growth in consumer spending’. Wolfson’s a big Tory donor, who’s given vocal support to their NI campaign. So we can guess who he wants to win tomorrow – although even if he has the ear of George Osborne, he’s unlikely to be able to prevent Next feeling the squeeze if the Tories do get in and start taking action on the public finances.
In today's bulletin:
Prudential left red-faced as FSA pulls the plug on rights issue
Catalogue sales give Next a boost - for now
Editor's blog: Vote for whoever you want
Avatar and adverts send NewsCorp profits soaring
MT meets the CBI's Richard Lambert