The chief executive of Next has lamented the decline of retail sales in a trend he expects to continue in the long term.
Lord Simon Wolfson said retail is at an “irreversible disadvantage” to online.
His comments came as Next reported a 48% annual drop in retail revenue to £954.5m, with online revenue climbing by 10% to £2.37bn.
The retailer suffered an overall 17% drop in group sales to £3.6bn for the year ended January 2021, with in-store sales contributing just 29% of the revenue. It currently has 491 stores spanning some 8.4m sq ft of retail space.
Wolfson said: “In many ways, the past 10 years have been about adapting to the simple truth that we did not want to believe: retail stores were, and will remain, at a fundamental disadvantage to online competition.
“This is not being driven by price or even home delivery, but by the scale of the choice websites can offer relative to any physical store.
“The annual decline in retail like-for-like sales has become the new normal, and looks set to remain that way for many years.”
The company anticipates like-for-like store sales will decline by a further 20% over the next year. Combined with an expected additional 10 weeks of closures, this would see a 32% drop in retail revenue against two years ago. It is projecting retail sales of £1.25bn, down by £600m in two years, and an overall loss of £20m for 2022.
During the year, Next added 44,000 sq ft of net retail space, but closed seven stores. The main additions were the four Next beauty halls. In the period, some 80 leases expired. The retailer closed 18 branches and renegotiated 62 stores, achieving a 58% reduction in rent.
Next said retail space will remain flat over the next year, with four stores to open and six to close. It expects to renew 56 store leases this year, with anticipated rent reductions of 47%.
The retailer has not proposed a dividend for 2020/21 due to uncertainty on store openings and will review this later in the year.
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