WWith the end of the lockdown in sight, and new late-night opening plans announced for stores in England, it is hoped that brighter days will come for Britain’s high street. So investors will cling to every word said by Next CEO Simon Wolfson when he presents the company’s figures on Thursday.
It may be April Fool’s Day, but Lord Wolfson is considered a sage on all matters of retail and economics – a view only reinforced by his skillful handling of Next during a crisis that ended. to weaker companies such as Debenhams and Arcadia, owner of Topshop.
This time last year, with the coronavirus newly arriving on UK shores, the announcement of Next annual results came at a dramatic moment, with Wolfson warning retailers were “facing an unprecedented crisis in living memory “.
He feared his own company’s pre-tax profits could drop to less than £ 100million, a fraction of the nearly £ 600million it had banked the year before. In the end, his worst predictions didn’t come true. Advice given just after a better-than-expected Christmas told investors to expect profits of £ 342million.
Sales have held up better than Wolfson might have expected due to demand from the locked-in Britons for home furnishings, loungewear and children’s wear. Unlike its rival Primark, which does not sell online, Next was well prepared for a web tilt after years of investing in its home shopping arm, a hangover from its days as a based business. on the catalog.
It will be interesting to know how spending has held up during this winter’s lockdown slog – and whether he, like L’Oréal, believes the pandemic will give way to another ‘roaring twenties’.
Wolfson seems to have put his extra thinking time to good use and made some interesting moves. Next missed the Topshop brand auction, which went to online rival Asos in a £ 330million deal, but took a 25% stake in clothing brand Reiss for 33 million pounds sterling.
The deal will see Reiss move to Next’s burgeoning technology department, like Ocado, Total Platform, which handles web logistics for other brands. This is seen as a future growth channel for the company. The Reiss deal also brings Christos Angelides, a much-loved Next veteran who has led Reiss since 2017, back into the fold.
Independent retail analyst Richard Hyman says leadership is everything in such a tough retail market. “Something very unusual about Wolfson is that he is an entrepreneur with an entrepreneurial instinct. Is Next a better retailer than 10 years ago? No, but he identified his competitive advantages. “
Next’s resilience to the headwinds of Covid-19 helped propel the share price to an all-time high of 2015, at £ 80.15. The initial pandemic panic saw shares drop to a low of £ 36.62, but they closed last week at £ 78.90.
This year, Wolfson, the longest-serving CEO of the FTSE 100, took on his first non-executive position, at Deliveroo. As fund managers steer clear of the food delivery company’s upcoming introduction due to concerns about the treatment of workers, it will be interesting to see if he regrets the choice.
But what about the fine details of store management, when it’s allowed again? Wolfson is one of the few enthusiasts who are passionate about physical retail space at the right price – and with rents coming down these days, he is more and more so. In a recent interview, he suggested that an online sales tax was not the answer, but that trade rates should be reduced in stores and increased on online warehouses to help turn things around.
The heavy job losses seen in the retail sector over the past year – and John Lewis announcing more department store closures – means big questions are being asked about the future of an industry who is the largest private sector employer and how the economy will fare. the Covid monster collapses. Wolfson is seen as someone who might have at least some of the answers.