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How the UK heatwave made Next an extra £10 Million

How the UK heatwave made Next an extra £10 Million

  Business   0 Comments   September 27, 2018   David Eden

This sounds insane doesn't it how could Next make so much from a heatwave, but Next actually raised their profit forecast for the year by £10 Million after getting much stronger than expected sales within the first 6 months of the year.

template image.This is after the company has said the UK retail market remains volatile and they are cautious in their outlook, does this sound like a company that would raise their profit forecast by so much over something they wasn't certain of.

These worries come from Brexit and the lack of certainty regarding its outcome, which is likely to lead to higher tariffs on goods imported into the UK. The lack of a deal shown from the UK has had many businesses rightly concerned and preparing for the worst.

So then why would Next after all these worries increase their profit forecast £10 million?

Well, an increase in share price doesn't lie, as many high street retailers are struggling in an uncertain economy shows Next in a good contrast resulting in their shares increasing by 8%. Considering the large jump to online sales shown by Retail sales falling by 6.9% and online sales jumping by 16.8% it's no surprise high street retailers are suffering.

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But where does Next fit into these figures? During the first six months of the year, their sales actually increased by 4.5% from their expectations. This comes from their August trading statement where they believed that the risk was high of July's extra sales being offset by August losses. When actually there was no loss of sales in August or even early September. Sales in Next stores account for just under half of their turnover and with the shift to online shopping getting sales in store continues to be challenging.

So what does this mean for you and your business and how can the rest of us learn from this to turn a large profit when we are expecting losses?

The simple answer is using the weather effectively, getting a few extra weeks of warm weather to be able to sell your summer line for longer can make the difference between a large profit or having to put products on clearance or even throw away stock.

template image.You may be thinking that since you can't control the weather this cannot possibly help you and your business but you couldn't be more wrong, what this demonstrates is that if you use seasons effectively they can help massively grow your business. You will get a summer and you will get a winter and using them properly can mean the difference between a profit and a loss.

If you aren't selling different products for each of the seasons you are missing out on a large amount of revenue, for example, retail stores can stock up on suncream, t-shirts, buckets, spades, crab nets, Sunglasses, and hats. Cafes can swap to more warm food such as soup in the winter while serving ice cream and cool drinks in the summer.

template image.While this may seem like an obvious thing you would be surprised how many retailers miss out, it clearly shows here as Next stands out with their increased sales while other high street retailers are struggling in the market. These are massive multi-million-pound companies and even they are getting it wrong, so assuming it's an obvious thing couldn't be further from the truth, it's likely you and your competitors aren't utilising the seasons properly as well.

Do you want to be like Next or do you want to be like the other high street retailers and struggle to make a profit?

They key here is preparation and forecasting, when the heatwave came Next had the summer stock to account for it and they were rewarded for it, by converting what was predicted to be a loss into a gain.

So if you take just one thing away from this then let it be this, prepare for the seasons and use them effectively. Maybe then your business can be in the news for showing an unexpected growth when all your competitors are struggling, just imagine the power and impact that could have on your business. But if you don't want that then just ignore everything I have said and allow your competitors to use these tricks against you.


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