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The Next Best Thing: how Simon Wolfson’s business became king of the high street

·3-min read
Fashion giant Next has hiked its full-year outlook once more after surging sales, but warned over rising prices and staff shortages in the run-up to Christmas. (PA Archive)
Fashion giant Next has hiked its full-year outlook once more after surging sales, but warned over rising prices and staff shortages in the run-up to Christmas. (PA Archive)

Is Next the best run retailer in Britain?

It makes a very strong case for that title. Today it upped profit forecasts for the fourth time this year, and the sixth in two years. Sales rose 5% to £2.1 billion. Profits are up 8.5% to £290 million.

It keeps doing better than it expects to in the face of seemingly hostile conditions.

CEO Simon Wolfson, always fond of an historical reference, put it like this:

“General William Slim observed that, in battle, nothing is ever as good or as bad as the first excited reports would have it. His observation would have been very helpful for those managing a business through the pandemic. As it turned out, our gloomiest projections, made at the nadir of the crisis, were a long way off the mark.”

Does it intentionally play down expectations so it can exceed them later?

It is very tempting to think that, Wolfson insists not. He is telling it like he sees it, then being pleasantly surprised afterwards.

Veteran retail analyst Nick Bubb said: “If you thought that recent trading at Next would have been affected by all the shortages etc, then you have been sadly mistaken, as, notwithstanding the excellence of its management, it is extraordinary how the business seems constantly able to rise to the challenge.”

Why is it so good?

Management. Wolfson is one of those CEOs that really does deliver value, who really is worth his millions. Moreover, he isn’t passing through. He joined as a sales consultant at the Kensington branch in 1991, becoming CEO at the age of just 33.

Wolfson’s father was chairman of Next, so the charge of nepotism is impossible to avoid. Sometimes nepotism works, you have to concede.

Freetrade’s Dan Lane said. “Next has a new lease of life. But it has been in the works for a while. A massive push online has more than made up for empty high streets but the mistake would be to think it’s been a mad rush at Next to get an online channel ready for lockdown shoppers. It might not be the most innovative name on the UK market but its site has quietly become the jewel in its crown over the past few years.”

So Wolfson is now upbeat on the future?

No, he doesn’t much care for optimism. His statement goes: “It would be wise to heed the other half of the General’s advice; it is almost certain that underlying conditions are not as good as they currently appear. The combined effect of pent-up demand for clothing, record savings ratios , and far fewer overseas holidays has materially boosted sales in recent months. The impact of these factors must inevitably diminish as time goes on.”

What is the growth plan?

For one, it is looking to take equity stakes in rivals and then boost their sales. So it owns a chunk of Victoria Secrets and Reiss, both previously struggling retailers. It describes them as “total platform clients”, which means Next takes care of their websites, their warehouses and other logistics. That leaves the companies free to focus on developing the brand.

Like that other mouthier high street king, Wolfson will continue to take stakes in rival retailers. He’s a polite Mike Ashley, right? “No comment,” he deadpans.

Is he a Conservative?

Very much so, but that doesn’t stop him from criticising the government. He said of the fuel issue?

“The HGV crisis was foreseen and widely predicted for many months. For the sake of the wider UK economy, we hope that the Government will take a more decisive approach to the looming skills crisis in warehouses, restaurants, hotels, care homes and many seasonal industries.

“A demand-led approach to ensuring the country has the skills it needs is now vital.”

Lord Wolfson added: “I hope that going forward the Government looks further into the future and doesn’t wait until the crisis is upon it.”

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