Business Analysis: For Next's boss, stellar results are their own reward
(Observer (UK) Via Acquire Media NewsEdge) Justin King, chief executive of Sainsbury's, has been named the businessman's businessman not once but twice in the past few weeks. He snaffled the Management Today accolade of Britain's most admired leader in November, and last Friday was picked as most impressive business leader in the Ipsos MORI annual captains of industry survey.
While not taking anything away from King's stewardship of Sainsbury's, it is remarkable that Next boss Simon Wolfson is not held in equal, if not higher, esteem.
On Friday Wolfson unveiled a Christmas trading update which smashed expectations - year-on-year sales up 12% in a supposedly grim market for clothing, powered by high-street sales up more than 7% and online sales rising more than 20%.
The shares rocketed to pounds 60.85 - up 10% on the day and 57% on the year. When Wolfson took over 12 years ago they were around pounds 10.
Next is now valued at some pounds 2bn more than Marks & Spencer, even though its turnover is less than half that of M&S. This year, for the first time, Next is expected to make more profit than its rival: some pounds 684m-pounds 700m, compared with an expected pounds 650m at M&S. When Wolfson, then just 29 years old, was made a director of Next in 1997, the chain was making pounds 160m a year. In the same year M&S made more than pounds 1bn.
Of course, part of the reason Next has made such advances on M&S is that the grand old lady of retail has made so many errors over the past few years - poor products, failure to invest in stores and distribution, failure to get ahead of the curve online. Next has also made mistakes - it has just recovered from them better.
Both businesses are fishing in the same tough, mass-market, mid-priced, middle-England, own-brand pool. But while M&S has flailed around, Wolfson's quiet discipline, which includes strict rules on matters such as store openings and share buybacks, and excludes starry behaviour like posing with models, has paid dividends - literally so this year, in the form of a special 50p-a-share payout.
(c) 2014 Guardian Newspapers Limited.
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