Just how committed is Next to remaining a physical retailer? While the company has appeared to rule out further closures in the current financial year it is clear it is prepared to be tough with landlords as it looks to get occupancy costs down.
As one of the few reliable rent payers in the sector, Next is in a very strong bargaining position. And by pushing for reductions, it looks like it will just about be able to stay profitable on its retail stores this year.
“Next should also benefit from the exit of weaker rivals from the market – there is little doubt that it is one of the few remaining unburnished stars in the UK retail space,” says AJ Bell’s Russ Mould.
“The shops potentially also have a role to play in showcasing Next products, alongside being a hub to collect stuff bought online – with recent examples of stores helping with some of the logistics attached to fulfilling online orders.
“The company’s ability to respond to the pandemic has been impressive and is reflected in its continuing profitability, with profit notably expected to return to roughly pre-Covid levels in the current financial year.
“This will increase anticipation that the company will resume dividends – a move it is resisting for now – sooner rather than later.
“Next is also aware of the need to retain newly won online customers in the under-20s and over-60s age groups. Supporting its ability to do so is a willingness to change in order to cater to customer tastes by, for example, carrying third-party brands on its site and apps.”
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