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| | 26/03/2018 | Drapers, Pui-Guan Man - Next boss Lord Wolfson on drive to reduce store rents | | | Next outlines plans for reduced rent | | | Drapers reports that Next chief executive Lord Simon Wolfson has outlined aims to push for lower rent bills this year, as the retailer seeks to regain momentum after reporting its 'most challenging' year in 25 years.
Wolfson said leases on 240 of Next’s 528 stores will be due for renewal over the next three years, presenting a 'big opportunity' for rent reductions and shorter lease lengths.
Next renewed 19 leases during the year to January 2018, trimming its average rent bill for these stores by 25%. Lord Wolfson is aiming for a 22% reduction - a £2m saving - from renegotiations on a further 29 leases this year.
Lord Simon Wolfson said the UK high street would improve if the central planning system relaxed its rules on allocating properties by use and 'let the market do its work', adding that he was not sure the current structure is 'fit for purpose in a dynamic, changing world'.
Separately, Next plans to up its concession income by £5m to £13m in 2018/19. It is mulling whether to stock third-party clothing brands at its bricks-and-mortar shops, although Wolfson was quick to downplay the scale of a potential pilot as the 'economics of it don’t look very exciting'.
Next is negotiating with suppliers on opening a bridalwear concession and spa at its Arndale store, where it will also offer a car showroom on top of services including a florist and hairdresser.
Wolfson blamed 'a difficult clothing market' and 'self-inflicted product ranging errors and omissions' as some of the main factors driving Next’s sales declines in 2017, which were announced last week.
Total group sales dipped by 0.5% to £4.1bn in the year to January 2018 compared with the previous year. Retail full-price sales declined by 7%, contrasting with an 11.2% leap in online full-price sales.
Under inflationary pressure on the market, fuelled by the Brexit referendum, Next raised its clothing prices by 4% last year but expects to see a 'more benign' pricing environment in the year ahead.
Wolfson predicts inflation in the clothing industry will 'very quickly go back to zero' and the squeeze on consumer spending will reduce. |
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