Newswatch: Next stage of rationalisation

The finance department at high-street retailer Next has managed one of the fastest rationalisations ever seen in the retail sector, according to analysts.

Although the consensus is for pre-tax profits of around #160m, down from #184m last year, analysts predict that the restructuring measures put in place last year will not be reflected in the 1998 figures.

The high-street chain’s shares fell to under #4 and stayed at that level until as recently as December 1998, reflecting the strain of previous under-performance overseas and a season’s unsuccessful range which failed to sell.

Under finance director David Keens, however, much of that has been turned around and analysts confidently predict next year’s profits will bounce back to nearer #185m.

A Big Five retail sector commentator said: ‘Although sales will be up, profits will be down because the better, second half of the year could not make up for the difficult, first half. However, they managed to sort out their problems faster than many.’

A retail analyst at a major European investment bank said the brand had yet to record similar growth in the Next Directory, which disclosed sales over Christmas 2.5% down on the previous year.

‘The recovery in the Directory was always going to lag behind because of the lead time for the different collections to be sold through the catalogue but there is also a lot of competition in mail order and they used to enjoy a relatively uncluttered market,’ he said.