The CEO of Next Plc said the retailer made a “critical mistake” when it purchased Joules less than a year ago.
“Do not underestimate the extent to which the online sales of a distressed company can be boosted through discounts and promotions, particularly in the run up to liquidation,” said Next Plc CEO Lord Simon Wolfson. “This was the critical mistake we made with Joules.”
The comments suggest that the retail boss regrets getting in bed with the bankrupt chain through a 34 million pound ($27.7 million) deal along with Joules founder Tom Joules.
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Despite alluding to problems with the homewares and fashion retailer, Next reported full-price sales rising 3.2 percent for six months ended July 29. Revenue in the period climbed 5.4 percent to 2.64 billion pounds ($3.24 billion) from 2.50 billion pounds ($3.07 billion) a year ago. After-tax profits fell 2 percent to 322 million pounds ($395.7 million) from 329 million pounds ($404.3 million) a year ago.
Next revised full year guidance for the third time this year. It now expects total full price sales to grow 2.6 percent to 4.72 billion pounds ($5.80 billion), with an estimated 2 percent gain in full price sales for the second half. Next revised its outlook for profit before tax to 875 million pounds ($1.08 billion). Prior guidance in August estimated full price sales at 4.68 billion pounds ($5.75 billion) and profit before tax at 845 million pounds ($1.04 billion). The company sees inflationary pressures on selling prices and operating costs easing in the next two years.
Wolfson also commented on how fashion seems to be getting even faster.
“Fashion has always been about newness, but it appears to us that trends are moving faster; customers are willing to adopt new looks more rapidly than they have been for some time (even in areas that have moved more slowly in the past, like Homeware),” he said.
Most of this year’s bestsellers are completely new, he said. Product leaders must “keep the newness coming; be brave in backing emerging trends; and remember that, in fashion, no amount of data can beat the human intuition of a brilliant product professional,” Wolfson continued. “Because if you test and wait-and-see, you will be too late.”
Next design teams have added new looks, colors, prints, fits, fabrics, textures and washes. They’re working with new and existing global suppliers, according to Wolfson.
