The current Next trade report disappointed shareholders with profit drop by 2.5% in the past three months and share downed as many as 5%. Its prediction over the annual profit was also cut on the top to ￡680 to ￡740 from ￡680 to ￡780. Next news statement indicated that Next clothes on racks wouldn’t pay too much attention to the new trend but will keep their bestsellers and heart land products in their ranges available.
Next hit a record by its first drop in profit for the past eight years. The consumption environment is rigid in UK and Next cannot resist it as it was announced to face a tough year ahead.
Explanation of the retail sector facing tough year ahead by reading the statement made by Next
Next have being straightforward about its trade depression. But not just Next who suffer such challenge, retail company on High Street can also tell you something that matters. Some of their costly goods on display racks or display showcase are up for sale as the pound had a fall and the shopping habit of consumers on High Street is changing.
Without confusion and misleading Next tells you frankly a bad situation they are facing.
Though Next wouldn’t give a punch over the depression still we need to list problems as follow:
1. Outward factor would be that the sterling is falling since Brexit vote and forces the Next import grew more expensive, which rose up its production cost on the other hand.
2. Next Directory sales had kept rises in past 10 years until it met online shopping. And now it dropped by nearly 3% to 2.3bn pounds. It really helplessly gets a heavy punch from the online shopping. Moreover, Next agreed with that question about whether possessing a portfolio shop an asset or a liability. Fickleness features the current retail market.
3. Inflation is rising and almost catches up with the general wages growth.
4. Inner factor would be the lack of stock of Next’s bestseller and heartland products that would be sold out in large volume and great price in several colours.
Though tough situation Next reckoned it is facing, it is planning to open new shop, which means that the market is big enough to worth its store running for shopping business.
Its tactic strategy by conceding the fall in the retail shopping market first so that after Next got the mass attention it is able to spread out a positive attitude by comparing with the crises occurred in 2008 to prove the current situation is an unavoidable event that business would have come across and as well as Next’s willing to face the difficulty and grow more powerful. That shows to the public Next’s persistence resolution to grow and actually push the share up at last.
This is a textbook example of how a company should get its message across for better business operation.
Post time: Jun-15-2017