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Business Model 2022
Business Model 2022
Business Model 2022
The Chief Executive’s Review PART 2: The Big Picture (on pages 8 to 21), summarises the way in which NEXT is adapting its business model in
response to the deep rooted and lasting changes we perceive are at work in the retail sector. The key elements of our business model are set out
here, together with the guiding principles that have shaped the direction in which we have taken the business.
Strategic Report
OUR OBJECTIVES
Our purpose is to offer beautifully designed, excellent quality 1. Add value • Increase the number of profitable Online customers and their 4. Good returns on capital invested
clothing, homeware and beauty products which are responsibly • Use our product skills, distribution networks, systems, services and spend, both in the UK and internationally. Our UK Online business • Support the Group’s access to low cost finance by maintaining
sourced and accessibly priced, and in doing so build shareholder sourcing to create goods and provide services that consumers is complemented by our LABEL offering of branded products and a strong balance sheet and secure financing structure.
value through long term, sustainable growth in Earnings Per Share. cannot easily find elsewhere. the credit facility (nextpay). Our objective is to be our • Make a return on capital commensurate with risk, and using robust
• Focus on customers’ satisfaction levels by improving the customer customers’ first choice online retailer for clothing, footwear and investment appraisal models targeting financial hurdles, including
We are, at heart, a fashion, homeware and beauty business with
experience in our stores and continuing to develop and enhance home products. cash payback and return on capital invested.
excellent operations and strong financial disciplines. We have spent
Governance
years honing those skills and the supporting infrastructure building our Online website. 3. Make a margin • Maximise the profitability of retail selling space.
the trust and confidence of our customers, suppliers and partners • Achieve healthy gross and net margins through efficient product
2. Play to our strengths 5. Generate and return surplus cash to shareholders
along the way. It is these qualities that we aim to leverage and sourcing, stock management and cost control.
• Improve and develop our product ranges by using our design • This is done by way of share buybacks and/or special dividends.
develop, supported by our core principles of doing • Healthy margins help create stability that allows the business to
skills to create quality products at affordable prices.
business responsibly: withstand the vagaries of any consumer facing business.
Financial Statements
OUR INFRASTRUCTURE • Well-Connected Store Network to sell products on credit has proven to be WHAT WE DO • NEXT and Lipsy Branded Products • Total Platform
Around 500 stores in UK & Eire and an attractive service to customers which Our in-house team develop NEXT branded We leverage our infrastructure by offering
We draw on all of our assets – warehouses, The business has evolved at pace in recent
199 mainly franchised stores in 35 countries. benefits Online sales and Group profitability. products offering great design, quality and a complete suite of online services to
delivery networks, systems, websites, years and continues to do so. The growth in
Our stores play an important role in The customer receivables are a valuable value for money. Lipsy is our wholly-owned third-party brands. We provide services
stores, marketing, credit facilities – to our LABEL business and, more recently, the
supporting our Online customers; nearly asset, adding to the Group’s subsidiary which designs and sells its own such as websites, marketing, warehousing,
support a business selling hundreds of third- launch of the Total Platform business have
half of our UK Online orders are collected in- financial strength. branded and other branded products. distribution networks and contact centres.
party brands alongside our own expanded the channels through which we
store and the majority of returns are
Shareholder Information
NEXT products. • Call Centres generate sales. These can be summarised
through our stores. • Third-Party Brands • Third-Party Brand Licences
NEXT operates call centres in the UK and across four key streams:
• Warehousing & Distribution Our LABEL business sells third-party Our licensing business creates value by
• Digital Marketing Systems overseas to support its worldwide customer clothing, home and beauty brands online. combining NEXT’s sourcing and quality
8 UK warehouses, 7 UK depots and 2
The development of an online marketing service operations for Retail, Online and The majority, by revenue, are sold on a expertise with the design inspiration of
International hubs which are fully integrated
system to target products and brands to the NEXT Finance. We also employ multi- commission basis with the remainder sold partner brands.
with our cost efficient distribution facilities.
customers most likely to want those items. language services to meet the needs of our on a wholesale basis.
Our distribution network serves our Retail
Our systems have the ability to manage international customers.
stores and Online customer deliveries for
both NEXT and third-party branded significant amounts of data and incorporate
• Supply Chain
products. We also facilitate the induction of sophisticated search facilities and web
NEXT has a well established supply chain
products held in third-party warehouses based marketing tools that link with our
that is supported by our overseas sourcing
into NEXT’s distribution network for onward email and social marketing systems.
operation, NEXT Sourcing (NSL).
delivery to customers. NSL provides buying, sourcing and design
• Consumer Credit
• NEXT Online NEXT Finance has built a high quality skills which support the product teams in
receivables book with customer credit the UK. NEXT owns a similar, smaller
Over 6 million UK Online customers and
balances amounting to £1.4bn. The ability operation based in Portugal overseeing
1.9 million overseas customers.
sourcing in Europe and North Africa.