Next chief executive Simon Wolfson talks to Drapers about the impact of weak sterling and managing costs in 2009.
Regarding the current currency issues, how much might this push prices up for autumn 09?
I anticipate it will push prices up between 5% and 10%. We’ll be doing lots of things to mitigate costs. We’ll be negotiating new terms, looking at new suppliers and new sourcing bases. We’re already negotiating for lower dollar prices. For supplier costs there’s been a fall in dollar terms, and they’re passing on a number of savings already.
But in retail, it’s not all bad news this year. It will be tough, but there are a number of positives on the horizon for the consumer; food, fuel and energy prices are set to fall and consumers will begin to benefit from reducing mortgage interest charges.
You’ve said Next is going to slow store refits down, how will this compare to last year?
We’ve done so many refits over the last two years, there is much less to do now. We’ll be spending about £20 million to £25m on refits this year, compared with £40m last year.
You’ve said you’re going to “closely manage costs and make further efficiencies in operations”, will you be making jobs cuts?
There is a natural wastage and staff turnover is high (between 30%-30% a year), but we are not looking at wide-scale redundancies. A vast majority of our cost cutting will be operational in store.
You expect Next Directory sales to be “marginally down” for the full year, is this a general market trend? What does it mean about the prospect for internet sales this year?
For the full year it is much too early to really tell, but there is still plenty of room left for growth in etail. The effect on the Directory is a general market issue. The internet is what is keeping the Directory growing.
How did the Brand Directory do? Are you still fully committed to it?
It is no great shakes. The main growth in sales comes from the Next Directory rather than the Brand Directory, but we are not looking at shutting it down.
What are you plans for marketing this year?
Marketing will be broadly in line with last year. We will be doing TV ads in the summer, but we haven’t made a decision about autumn yet.
Read the full details of Next’s Christmas trading statement, which showed like-for-like sales fell 7%, here.