Next is no longer going ahead with plans to open a beauty hall in the former Debenhams unit in Leicester’s Highcross.
The Leicestershire-based high street retailer, which has its headquarters in Enderby, had planned to take the main floor of the unit after Debenhams announced it would not be reopening post-lockdown.
The beauty hall was going to be part of a new concept for the fashion chain which is opening similar stores in the next few months – each about 15-20,000 sq ft – in Watford, Milton Keynes, Gateshead and Reading.
The plan for a Leicester branch was seen as a shot in the arm for the city centre after Debenhams confirmed in May it was closing the Highcross store, which only underwent a big revamp a couple of years ago, and laying off hundreds of staff at its national head office.
Debenhams has suffered a difficult few years, falling into administration for the second time in a year and suffering the huge economic consequences of the UK lockdown. In the spring, the company also announced it would not be re-opening stores in The Oracle, Reading, and Centrale Shopping Centre, Croydon.
It also pulled out of plans to build a major new store at Fosse Park.
Debenhams currently stands on the brink of liquidation.
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Next had been working on a deal with Highcross owner Hammerson to open three beauty concepts in the existing beauty halls of those now-closed Debenhams stores.
However, Next chief executive Lord Simon Wolfson said the plans had changed.
He told LeicestershireLive: “There are two other beauty halls that have got conditional contracts in place that are likely to open in January next year – but they are conditional contracts.
“We are not proceeding with the one in Leicester. The landlord has found an alternative use for that property.”
The beauty stores that do open will feature a mix of branded beauty products, women’s accessories, lingerie and nightwear and an offer of Next Home products. They are part of a big drive by the business to extend its beauty offering, which is growing by about 60 per cent year-on-year. It now includes more than 285 brands on its website, including 43 added in the past six months, such as Tom Ford, Versace and Liz Earle.
More key brands will be added this year including YSL, Bobbi Brown, Urban Decay, Giorgio Armani Beauty, Too Faced, Lancôme, Kiehl’s, Mugler and Viktor & Rolf.
Lord Wolfson said the beauty stores that were going ahead were all trials, with the risk and rewards being shared with the landlords. The business will know if they are going to be a success in about six months’ time.
Highcross has been asked to comment on what will happen with the old Debenhams unit.
Lord Wolfson added that plans were still moving ahead with a landmark Next Home store on the new Fosse Park extension currently being built.
He also said the business had not taken lightly the decision to stop selling Boohoo products on its website after allegations emerged in the summer of at least one Leicester factory making products destined for Boohoo exploiting its workers.
Boohoo, which sources 40 per cent of its clothing from UK factories, mostly in Leicester, has since undertaken an independent review of suppliers in the city, the results of which will be reported this month.
Lord Wolfson said Next’s Lipsy women’s clothes and accessories subsidiary was the only part of his business sourcing from Leicester.
He said it used two suppliers in the city making a “very small percentage” of their products, including one printing t-shirts.
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He said: “When questions were raised over Leicester, we fully inspected both of those factories and will continue to be extremely vigilant with them. We were entirely satisfied that they were compliant with all of our standards and rules.
“There is no question mark in our mind over those, but of course, given what’s happened in Leicester, we will continue to be more vigilant – both in Leicester and any other UK locations that we deal with.
“In terms of Boohoo, the Boohoo trade we did was through Lipsy. They were a client of Lipsy and it was, again, a tiny percentage of the group’s trade, significantly less than 0.2 per cent.”
Lord Wolfson spoke on the back of the latest Next trading figures, covering the six months to July which showed store takings down 61 per cent as a result of lockdown.
Online sales, meanwhile, rose 14 per cent as people shopped from home.
Combined, it meant overall sales were down a third.
The drop meant Next’s recorded pre-tax losses for the half year of £16.5 million, compared to six month profits of £327.4 million a year earlier.
Despite that, Next has upped its full-year sales forecast, saying the impact of lockdown was not as bad as first feared.
It now expects full-year underlying pre-tax profits of £300 million – up from the £195 million previously predicted – thanks to a rebound in sales in recent weeks.
Over the full year, Next said it now expects sales to be down 12 per cent, much better than the 30 per cent prediction given in April – at the time, its best-case scenario for the year.
The business has almost 500 stores and annual sales last year of £4.4 billion.
Signing off the half-year results to the end of July, Lord Wolfson said: “The company’s sales performance through the pandemic has been more resilient than we expected.
“The scale of our online business (in the UK and overseas), the breadth of our product offer, and the fact that much of our store portfolio is located out of town, have served to mitigate the worst effects of the pandemic on trade.
“Standing as we are, in the midst of the pandemic, with no sign yet of abatement or vaccine, it might seem odd that the essential tone of this report is optimistic.
“Particularly, some might say, coming from Next.
“But our confidence in the future is not because we see a comfortable route through to the end of the pandemic.
“The prospects for the next six months remain as uncertain as the outlook for the virus itself; never has our guidance been more tentative or as broad in its possible outcomes.
“But in all our guidance scenarios the group generates a profit, generates cash and reduces its debts.
“So we can look to the end of this extraordinary time – whenever that may be – in the belief that we can build on the strength of the Next brand, its people and its infrastructure along with all the new opportunities those assets might deliver.”