00:00I want to start with Next, Andrea. What do these earnings tell us about that high street retailer?
00:04Well, Next, it's been doing pretty well. It's really defied the doom in UK retail. It benefited
00:13last year from Mark Spencer's having IT problems. It's just a very well-run retailer. It knows who
00:19it is. It knows who its customers are. It's got a strong online arm. It's got a growing
00:25international business. It's probably the best-run retailer in the UK.
00:31What are they doing? What's Next doing the H&M that Henny's isn't doing?
00:35Well, H&M, I always struggle to figure out why they're not performing. Somebody described
00:41them to me as they're not fast and they're not fashion anymore. I think the other thing
00:45is I think they're stuck in a bit of a Shein Zara sandwich. They're the filling in the middle.
00:51So, you've got Shein. Appetising. Exactly. You've got Shein, really low price. You've
00:56got Zara going increasingly upmarket, filling that white space that's been left by the luxury
01:02brands. H&M are somewhere in the middle. So, that could actually work in their favour
01:07because the danger for Zara is it goes to upmarket and alienates some of those more value-conscious
01:13customers. So, Zara is upmarket now?
01:15Zara has been really stretching. It's still got the opening price points, but it's been increasingly
01:19moving into a premium retail area because all the luxury brands have gone so far. They've
01:27taken the prices up so high. You've got all this white space that's been filled by brands
01:32like Coach, Ralph Lauren, Cezanne. So, Zara is sort of moving into that market, which is
01:39very smart. But the danger is that some of those shoppers that went there for really cheap-cheek
01:45go somewhere else. And H&M, if it can get its act together, could pick up some of that
01:50trade.
01:50So, a lot of these are idiosyncratic stories about how these businesses are run. Is there
01:54anything that we can extract about the strength of the UK consumer? Because we had numbers
01:59this morning saying household confidence is at its lowest under Prime Minister Kirstama.
02:04Well, I think the biggest issue is going to be what the war in Iran does to costs. I mean,
02:09Nex said they've got 15 million of costs coming through, things like freight, energy. They
02:13can offset that. The problem is if it goes on a long time and we start seeing that really
02:19feed into petrol prices, household energy costs, then consumers will have – they've got to
02:26spend more on the things they need. So, they've got less left over for the things they want.
02:31Nex said prices aren't going to go up sort of right now. But if this carries on, we're
02:37going to see it really hit in the autumn when the factories that make the clothes have to
02:42deal with their own energy prices as well as energy that goes into things like polyester,
02:48oil that goes into polyester. That will come through. And they were talking about maybe 5%
02:52increase in the autumn. But the thing is there's a little offsetting factor which also goes in
02:59Zara's favour. What they've noticed is their customers are buying fewer but more expensive
03:05products. So, if they can – you know, there's lots of sort of – there's lots of things you can
03:10do when you face higher prices. You can make things – you can put less wool in a cardigan
03:17and it's a bit more itchy. Or you can go the other way and you can sort of add piping
03:22to a
03:22collar, put a fancy lining in, add some trimmings, which helps you to charge more to customers
03:29because they think it's more better quality. So, if people are willing to spend more on clothes
03:35but buy fewer items, then that does help you with the cost coming down the line.
03:41Piping. Piping. Piping. And itchy cardigans. Lizzie's not going down that route. I always
03:47knew that dressmaking O-level had come in handy one day.
03:49Who What?
03:50You
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