Comment: Multichannel success for fashion and homeware retailer Next

Next’s full-year figures showed that the fashion powerhouse remains a pastmaster in multichannel retailing.

And, encouragingly for other retailers, at a time when extensive store portfolios are seen by some investors as a weakness or potential liability as emerging routes to the consumer such as mobile grow, Next’s strong performance demonstrates the power of the well-managed shop in the multichannel world.

Last year, Next noted, the difference in growth between its Directory arm and its store network narrowed. As well as contributing to profit in their own right - almost 90% of sales came from shops generating an earnings contribution of 15% or more - the chain plays an increasingly integral role at a multichannel level.

A fifth of Directory orders are delivered through stores and more than half of returns are made through them. The existence of the store network has allowed next-day collection times for customers to be brought forward, and the reduction of the associated charge from £2.99 to just 50p only makes Next’s multichannel positioning more appealing to consumers.

It’s not surprising that Next aims to open more space - a net 250,000 sq ft in the new financial year. New space, along with online growth, is a key plank of the retailer’s profit growth strategy, and the two factors outweigh the impact on earnings of falling sales at established shops.

On the reverse side, others could also take a leaf from Next’s book on how store portfolios should be run. As the retailer puts it: “Underperforming stores are actively managed with a view to possible closure before they become uneconomic.”

For four years in a row, as some retailers crumbed under the pressures of punishing trading conditions, Next has increased earnings per share by more than 15%.

The performance is testament to its particular management strength, but surely also a reason for wider confidence that the best retailers can continue to adapt and reward investors - and that the store ain’t dead yet.