Next pauses Myanmar production after year of strong online sales
Next has paused its production orders from Myanmar, it’s boss said today, as the military coup grows more deadly.
“We’re not placing any more orders at the moment, that is a big step,” CEO Simon Wolfson told Reuters.
“Most of the stock that we were sourcing from Myanmar…we have alternatives in place already for that stock in other countries.”
Less than five per cent of its stock was provided by Myanmar, the CEO added.
Online sales
The British retailer has managed to weather the pandemic storm after expanding its online presence with sales now accounting for nearly half of turnover.
Next said online sales had been stronger than expected in the first eight weeks of the year and are up 60 per cent on two years ago. As a result Next is raising its central profit guidance by £30m to £700m.
Richard Hunter, head of markets at Interactive Investor said: “Next is often an unsung hero among investors, but these results again show the resilience and the openness in the way the company operates.”
Next said it had widened its online customer base by 40 per cent to 8.4m last year with online sales accounting for nearly half of turnover.
“Looking ahead, there is more uncertainty than ever – the consumer economy, future lockdowns and more,” chief executive Simon Wolfson said. “But there is one thing about which we are sure: our business will emerge from the pandemic better placed to meet the challenges and opportunities of the online era than it was at this time last year.”
Shares in Next are up 3.4 per cent.
Brand full price sales in the year were down 15 per cent on the previous year and total sales fell 17 per cent. Profit before tax came in at £342m, in line with January’s trading update.
Next said it would not pay a final dividend for the year “given the continuing uncertainty” after suspending payouts last April.
“Rather than proposing a dividend at this time, the directors consider it sensible to wait and see how the business performs once the current lockdown comes to an end and COVID restrictions are lifted,” Wolfson said.
Even as stores remained shut for the majority of the year Next reduced its net debt by £502m to £610m. It said it expects to generate £175m of surplus cash which would further reduce net debt to £435m.
“As a destination people want to visit, Next is likely to be among the biggest beneficiaries as the economy re-opens; but its growing online business, integrated logistics offering, and add-ins like its Total Platform service for other brands give it a strong anchor in the online economy,” John Moore, senior investment manager at Brewin Dolphin said.