Retailer Next expects to renew 76 leases this year, with an average lease term of 4.2 years, reducing its annualised occupancy cash costs by £3.6m, or 16%.
“The expected cost reduction of -16% is lower than the reductions we have achieved in recent years,” the company added in its interim financial report. “This is because 48 of the leases being renewed this year have already been renegotiated during the last five years; these stores’ rent had already fallen to post-pandemic levels, so their rent reductions are small, and only down -5%.”
Twenty-eight older leases, which were last negotiated pre-2018, saw larger rent reductions of 29%, or £3.1m, Next said.
The company also expects to receive £5.4m from capital contributions and rent-free periods, which it said it will spend upgrading and maintaining stores.
Next expects new store openings to offset closures this year, opening five new mainline stores, four of which will open in the second half.
Image © Dinendra Haria/Shutterstock
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