Next “took its eye off the ball” and introduced too many trend-led pieces into its collections, which contributed to a drop in sales last year, chief executive Lord Wolfson admitted today.
Speaking after the high street chain announced its first fall in profits since 2009 earlier today, Wolfson said the business had been too focused on increasing its speed to market and creating more fashion-forward products. Its core range of mid-priced styles suffered as a result.
“When we were focusing on these new processes and chasing trends, we took our eye off the ball,” said Wolfson. “We were missing heartland, core products for us. We had gaps in our bestselling lines, those mid-priced products that are easy to wear. We just didn’t have enough of them.”
The business recognised the issue in January and is now rectifying the problem. Some of the missing product will start to appear in the summer collections but it will be autumn before it is rebalanced.
Wolfson added: “We are reacting more quickly to trends than we have in the past. We are not throwing away the progress we have made in terms of new trends. Instead we need to balance that with our core ranges to make sure we have enough of the product our shoppers come to us for.”
In 2017, Next will focus on product, marketing, services, stores and cost control. Wolfson said the market will continue to shift away from spending on clothing this year and inflation will hit fashion retailers in particular.
“There is a real squeeze on income and discretionary spend will be hit – that’s us. It’s bad news for the wider fashion sector.”
Prices on like-for-like product in the first half of the year are up less than 5%. Next expects this to stay level for the second half as it continues to mitigate the cost of the drop in the value of sterling by investing in new sourcing hubs in Vietnam and Cambodia, and stretching their capabilities from basics to mid-price product.
“The year ahead is going to be tougher than the one we’ve just been through,” Wolfson warned.
On Brexit, he said he hoped the government would take an “open” approach to exiting the European Union and recognise that a lot of migration into the UK is productive to the economy.
“I hope they do not make the mistake of cutting people off who make a huge contribution,” he added.
Most of the EU workers employed by Next work at its warehouse, and make up 30% of staff there.