Next today said it would focus on UK delivery and overseas expansion as it invests in its online business over the coming year.
The update came as Next reported total sales of £4bn in the year to January 2015, some 7.2% up on the same time last year. Retail sales of £2.3bn were 4.8% ahead, while directory sales, which mostly take place online, grew by 12.1% to reach £1.5bn. Overall, Next brand sales of £3.9bn were 7.6% ahead, with a slight fall in ‘other’ sales to £139.0, taking the company over the £4bn turnover milestone for the first time.
Pre-tax profits of £782.2m were 12.5% ahead of the same time last year, with a £35m boost from growth in online sales.
Over the last year, Next extended last ordering times to midnight for next-day delivery to stores, and extended last orders for home delivery to 11pm. By August, the company said today, it aims to extend to midnight. “Currently,” said the company, “we take around 9% of our orders between 10pm and midnight.”
The company has also trained call centre customer service staff to deliver retail standards of service, a move that it says has resulted in falling levels of enquiries and complaints. “However,” said Next in its financial statement today, “we still feel we have a long way to go to get to the levels of service we would like. In particular, we need to ensure that more enquiries are dealt with first time. Of course, much of the effort is about preventing mistakes in the first place. To that extent, our warehouses and distribution network can contribute more to preventing repeat enquiries than our call centres.”
Over the coming year, Next will also focus on website functionality improvements, including payment processing, account management screens, and on search and selection methods more appropriate for its home product web pages. Additionally, it will relaunch its iPad and iPhone apps while also redesigning its mobile site.
The company’s focus on the customer is part of a plan to improve the service it offers them following disappointing surveys in June 2013. Next said that as a result of a new customer-focused strategy, “we redefined what we meant by great service, focusing on serving our customers in the way they wanted to be served, not on traditional retail salesmanship designed to maximise short-term sales.” As a result, it said, the proportion of customers rating the retailer as very good or outstanding had risen to 57% in November 2014 from 46% in June 2013.
A further focus will be on the company’s Label catalogue business, which sells third party brands both through a dedicated part of the Next website, through Labelonline.co.uk and through four catalogues a year. Some 30 premium brands are expected to join existing brands in the range over the coming year.
The Lipsy business, which sells online through Lipsy.co.uk and standalone stores, made a profit of £5.1m in 2015, on turnover 16% up at £73m.
Looking ahead, Next said it expected full-price sales to grow by between 1.5% and 5.5%, and for group pre-tax profits to come in at between £785m and £835m.
• Ted Baker reported ecommerce sales of £36.7m in the 53 weeks to January 31, 58.2% ahead of the same time last year. The digital sales hike came as group revenues rose by 20.4% to £387.6m, and pre-tax profits rose by 25.3% to £48.8m.
The fashion brand, which sells online and through stores and concessions in the UK, Europe, North America and Asia, said strong ecommerce growth had come following the relaunch of its UK platform in 2013, and the migration of the US site to the same platform in July 2014.
Chief executive and founder Ray Kelvin said: “We continue to invest in the brand as we develop in new markets where we see long term growth. All the while, we remain totally focused on the quality, design and attention to detail which underpins every area of the group.
“Our customers’ reaction to our Spring/Summer collections across markets has been very encouraging and we are excited by our new store openings in the coming months, which include a first store devoted to showcasing our extended licence product range in Spitalfields, London.
• Meanwhile, luxury footwear company Jimmy Choo , which sells online, through stores and wholesale, reported pre-tax losses of £8.3m on revenue of £299.6m, including £192.9m from its retail division, which includes ecommerce. It said that during the 2014 financial year, to December 31, it had made “good progress on the replacement of our systems infrastructure including SAP, product life cycle management and our online platform.”
