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Next’s online sales surge 52% as it revises forecast up, supply chain and labour issues remain a concern

Image courtesy of Next

Next’s online sales for the half year to July are 52% up on the same period in 2019, with overall sales up 8.8%. Pre-tax profit is also up 6% to £347m, ahead of expectations.

The retailer has seen profits from online sales rocket by 74% across the same period, leading the retailer to upgrade its forecast for the year – the fourth time the retailer has increased its predictions for sales in 2021 – and leading to the company predicting its full year profits to be £800m, the highest since 2016.

The retailer stated that online demand was way ahead of expectations, especially for home and childrenswear. The boom in digital sales has also helped plug the gap created by store closures across the pandemic, which still blight the ledger for the year.

The reopening of stores in April produced a far stronger bounce-back than had been expected, it says. This hasn’t led to a fall back in online sales, which again is helping the retail look to finishing the year on a high.

However, there was a note of caution: supply chain issues and inflation could yet stymie this growth. While demand has continued through August and into the second half, there are still “significant stock shortages” the company says. This has been caused by interruptions internationally to the supply chain due to Covid-19.

Stock levels, it warned, are far from optimal and are down 12% at the same point in 2019. Next says that the situation is currently improving and more normal inventory levels are expected by December.

Online to lead the charge

Despite this, Next is optimistic about long term growth. In a statement it says: “There are two reasons for this optimism: firstly, the financial drag of our Retail business has diminished. Secondly, within the last two years the scale and breadth of our online opportunities have materially increased. The combined effect of the development of our own Next product ranges, the accelerated increase in our customer base, the growing success of LABEL and  the launch of our Total Platform business, hold out the prospect of a return to long term growth for the Group”.

The Next product ranges have been expanded to include performance sports wear and garden furniture, while the LABEL brand has expanded the sale of third-party clothing, home and beauty goods on the retailer’s site.

The Total Platform is essentially Next setting itself up as a third-party marketplace, offering client brands not only access to sales through the Next website, but also access to Next’s technology, warehousing, logistics and other infrastructure, for the benefit of their own online operation.

Next now has six clients signed up to Total Platform: Childsplay Clothing, Laura Ashley, Victoria’s Secret, Aubin, Reiss and GAP. Four of these clients are successfully trading on the Platform with the others launching over the next twelve months.

The company says: “The delivery of the Reiss Platform, in Spring 2022, will be our most ambitious and comprehensive to date. It will materially increase Total Platform’s capabilities, providing services such as delivery to wholesale customers, concession partners and overseas retail stores, along with a suite of tax and import functionality, including the provision of bonded UK warehousing.”

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