Following today’s release of Next’s figures for Q1 FY2022/23; Emily Salter, senior apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Next has had a good start to its FY2022/23, with total full-price sales rising 21.3% on the year, and 19.5% on a three-year basis, as its LABEL branded proposition drives the retailer’s sales. In March it stated that sales at the start of its FY2022/23 were exceeding its expectations, but this must have abated somewhat as the retailer’s guidance for the year remains unchanged. As the rising costs of living started to bite in April, the midmarket stands to be squeezed this year as consumers trade down and reduce their non-essential spending. However, Next is poised to prosper as its wide range of brands, including some value players such as F&F, and products, including more essential items like childrenswear, will protect it from the worst of the impacts of inflation.
“Though total online sales were down 11% year-on-year, this was driven by Next branded products (-24%) due to the switch to online experienced last year and the retailer’s already high online penetration, with total online sales an impressive 47% higher than Q1 FY2019/20. Conversely, retail revenue growth is massively inflated as it came up against a period of store closures last year, with sales via this channel down 8% on a three-year basis. However, this trend is to be expected, as even innovating and introducing new features in its stores cannot take away from the front-of-mind appeal that Next has built for its online proposition, especially its wide range of brands that makes it extremely convenient to purchase from.
“In some of its stores, Next increasingly resembles a department store, with a growing number of branded areas, including Reiss and recently GAP, as well as an increased focus on homewares and beauty. Though in some locations this will allow Next to further gain from the closure of Debenhams and John Lewis & Partners stores, there was a reason for these closures and the demise of the midmarket department store—they are simply not needed as much because of the rise of online marketplaces, like Next itself.”