Jim Armitage: In-store excitement, not share buybacks, best Next step

Jim Armitage: Retailer Next’s numbers suggest the cold snap before Christmas pushed us to buy more winter woollies online: Next

What Next lacks in razzmatazz, it makes up for in honesty.

So it is that the no-nonsense chain admits candidly that its sales since November were better than it had hoped due, not just to its own brilliance, but also to the cold weather.

While the industry data showed the snow kept us off the High Streets, Next’s numbers suggest the cold snap before Christmas pushed us to buy more winter woollies online.

No surprise, then, that shares in the whole fashion sector jumped. Being a creature of habit, Next chief Lord Wolfson’s instinct is to pledge a £300 million return to shareholders through buybacks — handing back a huge 4.7% of the company’s share capital.

By my reckoning, that would mean he has reduced Next’s shares in issue by nearly a third in the past decade. The near-£2 billion return of cash over that period keeps his shareholders happy (and prop up the share price) but surely for its longer-term health the business should be investing more in digital and making its store chain more exciting.

In fairness, it has done some work on this, and sales at Next shops were better than expected, but they’re still down more than 6% on a year ago. And it’s telling that annual sales at Next’s shops have remained broadly similar over the past decade despite it increasing its store space by 45%.

Overall, even if Next hits its newly upgraded profit forecast of £725 million, that will still be its poorest performance since 2014.

Shareholders receiving their big buyback cheques from Next should consider spending them on retailers better-poised for growth: SuperGroup, B&M and Boohoo come to mind.

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