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NEXT SPLASHES OUT TO FIND 'OLD MAGIC'

NEW LOOK: Wolfson wants to get away from the chain's 'nice but a bit boring' image

Wednesday September 12,2007

By Peter Cunliffe, Deputy City Editor

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FASHION retailer Next is lining up its biggest marketing campaign in more than a decade as it digs in for a tough time on the high street.

As part of a drive to put the “magic” back into the brand, the company, which traditionally relies on word of mouth to win customers, is preparing to spend £20million on advertising and sprucing up window displays in the run-up to Christmas.

Chief executive Simon Wolfson unveiled the plans yesterday as he reported a sharp rise in half-year profits.

But he also warned: “All the indications are that customers are tightening their belts.

“Our main aim this year is to put the magic back into the Next brand. A year ago customers thought we were nice, reliable but a little bit boring.”

The group, backed by increased newspaper and billboard advertising and its first TV campaign in 12 years, is moving more upmarket. It is distancing itself from the likes of Primark and introducing more mid-price ranges and a new label, Signature.

The changes will see the average price of Next products rise 6 per cent over the autumn.

Group half-year pre-tax profits rose nearly 11 per cent to a better-than-expected £198.2million, mainly due to cost savings, on sales steady at £1.5billion.

Next shares rose 79p to 1940p. But with sales down 2.9 per cent over the past six weeks, the company’s outlook was more downbeat than predicted, particularly for the Next Directory internet and mail-order arm. Profits there jumped 23 per cent to £73.8million, outstripping shops where they nudged up 1.3 per cent to £112million.

Wolfson was “very cautious” about Directory’s prospects, citing increased competition from internet retailers and growing pressure on customers to cut spending on credit — Directory has itself imposed tighter credit controls.

Analysts are sticking to profit forecasts of about £490million for the full year.

* French Connection cut half-year losses from £3.6million to £2.5million but said its menswear and Toast womenswear ranges had suffered from weak sales.