Next has revealed its performance for the year ended January 2021, citing a decline in sales of -17% (-£736m, and full-price sales down -15% YoY), with the majority of the damage incurred in H1. Next says that in H2,  lost retail sales (-£368m) were almost entirely offset by online gains (+£364m).

Next recorded pre-tax profits of £342m, while debt was reduced by £502m to £610m.

"Despite most of our stores being closed for a significant portion of 2020/21, total group sales decreased by less than -17% to £3.6b," says Next's chairman, Michael Roney.

In the year to date, profit lost from a longer-than-expected retail lockdown has been offset by the benefit of the extension of business rates relief, but online sales have been stronger than expected.

Next says the business has "followed the money, developing new ideas bottom up, drawing on innovations generated throughout the group". "We expect the shift in consumer behaviour towards online sales to continue for some time, and one of our priorities during the year has been to continue the development of our online platform," says Michael. "We accelerated part of our planned capital expenditure in the online business, spending £121m on warehousing and systems."

During lockdown, product categories such as homewares helped mitigate declines in adult clothing, footwear and accessories. Next, which has expanded its branded home offer to include garden furniture, divan beds and mattresses, says that part of the business saw full-price sales increase by £20m (+55%), with significant growth achieved through its Platform Plus model, in which stock is offered on the Next website but held in partners' warehouses. In the year ahead, Next anticipates full-price sales in Branded Home to be around £75m, with a profit of some £13m.

When stores were open, LFL sales in retail parks, although negative, were between 15-20% better than Next's other stores. "That said, the steady reduction in retail occupancy costs, the continued relevance of our stores to online shopping through collections and returns and (perhaps) the closure of competing shops, mean that the battle to keep our stores relevant in an online world is far from over," the retailer states.