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Next boss Lord Wolfson was, dare I say it, somewhat optimistic as he unveiled its full-year-results this week.<\/span><\/p>\n The usually cautious Wolfson, a master of under-promising and over-delivering, said it was \u201ca long time since we started a year in a more positive frame of mind\u201d.<\/span><\/p>\n Yes, this is partly down to the fashion and home retailer notching up record sales and profits for the year, however, Wolfson was also enthused about the future and the \u201cnew era\u201d that he believes the business is entering.<\/span><\/p>\n Next\u2019s success so far, according to Wolfson, has been down to three big things: increasing retail space, growing its directory or online customers, and expanding its product.<\/span><\/p>\n However, he admits as of 2017 that magic formula stopped working \u2013 as he points out all business formulas eventually do.<\/span><\/p>\n Although the following years have been far from disappointing \u2013 profits have jumped a respectable, but \u201cunexciting\u201d in Wolfson\u2019s own words, 16% from 2017 to date – the horizon looks somewhat brighter.<\/span><\/p>\n This time the three key ingredients are growing the Next brand overseas, developing new brands and licenses, and growing sales from its infrastracture business Total Platform and its associated equity investments, such as Reiss, FatFace and Made.<\/span><\/p>\n The Next boss points out that this new growth formula mirrors the strategy that was so successful between 1997 to 2017 in that \u201cthey give our product skills and our infrastructure the opportunity to play to a wider audience\u201d.<\/span><\/p>\n The success of Next ultimately hinges on the success of its product, and last year this was firing on all cylinders.<\/span><\/p>\n \u201cIn terms of performance, I can\u2019t remember a year we\u2019ve had as consistent performance from all our product ranges,” says Wolfson.<\/span><\/p>\n Despite this, he believes it can take the Next brand to \u201canother level\u201d by \u201cbacking newness with conviction, giving our customers genuine breadth of choice, and delivering better, more aspirational levels of quality\u201d.<\/span><\/p>\n Upping quality – and therefore price – is a ripe opportunity for Next, which has seen shoppers opting to buy slightly \u201cfewer, slightly more expensive items\u201d over the past year.<\/span><\/p>\n Wolfson explains that although its average selling price is down 2%, the price per unit is up 3 or 4%.<\/span><\/p>\n He terms this a \u201cmeaningful shift\u201d that his team are keen to tap into in order to \u201cstretch the boundaries\u201d of the brand, by using better fabrics, prints, embellishments, and trims, and even opening up new sources of supply previously deemed too expensive.<\/span><\/p>\n Wolfson is at odds to point out that this is \u201cnot Next going upmarket\u201d but a \u201csubtle shift in emphasis\u201d and insists that<\/span> its entry price points are still incredibly important.<\/span><\/p>\n This can mean developing new brands in-house like its Lipsy team have with womenswear labels \u2018Love & Roses\u2019 and \u2018Friends Like These\u2019.<\/span><\/p>\n Sales in Love & Roses, launched in 2021, soared 181% to \u00a344m over the past year, as Friends Like These, which made its debut in 2022, jumped 90% to \u00a333m.<\/span><\/p>\n However, it is also looking to grow its brand offering through acquiring the IP of third-party brands like Cath Kidston and Made.com, which it operates as independent licensing businesses.<\/span><\/p>\n Elsewhere, it is also eyeing licensing agreements with other third-party brands, like it has with Laura Ashley, Reebok, and Bath & Body Works.<\/span><\/p>\n These tie-ups pair Next\u2019s specialist sourcing and technical skills with the brand’s heritage to \u201cdeliver something neither of us could deliver alone\u201d.<\/span><\/p>\n Licensing accounted for \u00a366.4m to sales over the last year, and it has recently inked new deals with Superdry and AllSaints in kidswear, and French Connection and Clarke & Clarke in home.<\/span><\/p>\n Another big avenue for growth is overseas expansion. Wolfson says given that the business is \u201cquite big\u201d, substantial growth in the UK is hard to come by. However, that’s not the case overseas.<\/span><\/p>\n Last year, sales at its online overseas arm jumped 17% and net margin jumped from 8.6% to 13% as it was boosted by strong growth through third-party aggregators.<\/span><\/p>\n However, when it comes to global performance, Next notes it performs much stronger closer to home in Europe and the Middle East, where there is stronger brand awareness and it is able to distribute goods on shorter lead times and reasonable prices.<\/span><\/p>\n Further afield in the Far East, the Americas and Australasia, sales have struggled. To counteract this, Next is looking to franchise and wholesale relationships in these territories.<\/span><\/p>\n Following a \u201cvery encouraging trial\u201d it is working with US department store Nordstrom. It has agreed terms with another \u201cmajor\u201d US retailer and is in talks with others.\u00a0<\/span><\/p>\n Elsewhere, it is close to finalising a franchising and licensing agreement in India and is in talks for similar agreements in other Asian countries.<\/span><\/p>\n \u00a0Sign up here\u00a0to g<\/span>et the latest news straight into your inbox each morning<\/span>\u00a0<\/span><\/strong><\/p>\n Next’s third growth avenue, Total Platform, will see it grow through outsourcing its impressive infrastructure to other businesses. <\/span><\/p>\n However, unlike Ocado, Amazon or other businesses that offer similar services, Next has sought to invest in the companies that use its infrastructure so it can benefit from the growth it will bring them.<\/span><\/p>\n Total Platform has been an area that Next has talked about for a while but it now having a notable impact on its bottom line.<\/span><\/p>\n It made \u00a343m last year and is forecast to contribute \u00a377m – or 8% of group profit – in its current year. Wolfson points out this figure would have been zero just three years ago.<\/span><\/p>\n The growth of this side of the business will inevitably see Next snap up more businesses to plug into the platform. In recent years it has bought Fat Face, Joules, and taken sizeable stakes in Reiss and JoJo Maman Bebe.<\/span><\/p>\n Although Wolfson acknowledges there is “a lot to”, he is confident this plan can unlock growth at the retailer, which has consistently been one of the top performers in the sector. <\/span><\/p>\n He says it has “the potential to create a huge amount of value for our existing customers, new customers and third-party clients”.<\/span><\/p>\n And no doubt it’s shareholders, with its shares trading at an all-time high after yesterday’s update.<\/p>\n No wonder Wolfson is feeling so chipper.<\/p>\n![\"Next](\"https:\/\/www.retailgazette.co.uk\/wp-content\/uploads\/2023\/09\/key-personnel-large1-v3-1-scaled-e1695336635899-297x300.jpg\")
That\u2019s because Wolfson has new formula for success. <\/span><\/p>\nDeveloping new brands<\/span><\/h3>\n
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Despite the opportunity to \u201cstretch the boundary\u201d of its own brand, Next acknowledges that there are \u201cnatural limits\u201d to this, which is where it will look to develop new brands. <\/span><\/p>\nGoing global<\/span><\/h3>\n
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\nTotal Platform<\/span><\/h3>\n
![\"FatFace](\"https:\/\/www.retailgazette.co.uk\/wp-content\/uploads\/2022\/09\/shutterstock_1857058651.jpg\")
Wolfson refused to comment on whether it was in talks with Ted Baker and Matches, two fashion brands that recently fell into administration, however he did say it had \u201clots nad lots of ongoing conversations with lots of potential equity partners”.<\/span><\/p>\n