All eyes will be on the performance of Next’s new autumn/winter collection when the retailer updates the City at its interims on Tuesday.
While no one expects a swing into positive like-for-like territory during the six months to the end of June, the mood in the City towards Next has shifted as analysts look for signs that the seeds of chief executive Simon Wolfson’s recovery plans are bearing fruit.
The full effect of store refurbishments outlined as part of Wolfson’s turnaround strategy earlier in the year are not expected to be felt this year, but the new ranges offer something more tangible and immediate – and the response so far has been positive. Next’s attempts to overhaul its product to become more fashionable, exciting and increasingly upmarket are being given a cautious thumbs up.
Bernstein analyst Luca Solca finds the menswear and childrenswear collections “fully convincing”, but stops short of praise for casual womenswear.
Even Seymour Pierce analyst Richard Ratner, who remains bearish about trading at Next, says the autumn/winter range will be “the turning point in Next’s fortunes”. But no one is breaking open the bubbly just yet.
Expectations were high after encouraging like-for-likes at the beginning of the year and in the wake of the announcement of the recovery programme. Some suggested its revival could mirror that of a resurgent Marks & Spencer, against which it is continually unfavourably compared. But the reality didn’t live up to the optimistic forecasts.
This is not all its own fault. While Next can address issues such as merchandising, branding and fashionability, some things are beyond the turnaround strategy of any retailer. The poor summer weather and the warm patch over the bank holiday will have dented sales. Challenging trading conditions continue to threaten all clothing retailers as interest rate rises bite. So Next cannot afford to take its eye off the ball. But with the momentum stalling in Stuart Rose’s much-lauded M&S recovery, this may be the window of opportunity for Next to make up some ground.