Business And Financial Performance Of Next Plc

Reasons For Selecting Topic

The main reason why I selected EVALUATION OF THE FINANCIAL PERFORMANCE (topic 8) as my topic for this thesis is because I was quite interested in translating the meaning of the numerical entities such as ratios, calculations, and other complex numbers in evaluating a company’s performance into useful and understandable data. Selection of the topic was not the biggest challenge, neither is dealing with ratios and financial performance. The real challenge is to invoke some meaning out of these numbers to report how well a company is doing and that is exactly the aim for my research in this project.

Reasons For Selecting Next Plc

After selecting topic for RAP, the next step was to select an organization to conduct the research on. Keeping the chosen topic in mind, the main focus was to choose an organization with a lot of competitors and a strong position in the present rapidly declining economic situation. After careful consideration of all the requirements and thorough market research, the most fitting organization to my requirements was NEXT Plc. The company had everything I required such as a strong position in its respective market, a competitive nature, and the tendency to evolve and withstand change in a market with ever changing trends.

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Next Plc. is situated in Upper-Middle class of brands, because its products are more expensive than the lower class of brands such as Primark and Peacock, and are cheaper than top rated brands as LEVIS etc. Next plc is the reflection of a man's choice thinking hard before spending his money. In our current society where fashion trends change regularly and innovative products are introduced every other day in the market, the main purpose of this research is to focus on the strategy of Next Plc. which is how it transitions with these changes and how it competes with its rivals, how it reacts to the environmental and social impacts, and finally how it keeps its business steady and ahead of its competitors.

Next plc is registered on London Stock exchange (FTSE 100 Index). Its Headquarter lies in Leicestershire, in United Kingdom. Next plc has over 510 stores all over UK & Ireland, and is a recognized brand in more than 30 countries worldwide including America, France & India etc. All non UK and Ireland stores, with the exception of Copenhagen, Denmark are franchises of the company.

Chairman of Next plc in his statement in January 2014 stated that

"The year passed was a great year for the company. Earnings per share and ordinary dividend have grown by over 15% for the fifth consecutive year. Their retail and directory business is well supporting each other in an effective and efficient way. Their share prices have performed very well. Strength of the organization is relied on hard work and productivity of the management team. Their strategies will remain focused towards their products, profitability and returns to the shareholders. "

Every year NEXT publishes its product directory for the customers to be aware of all the products and particularly to promote the new launches. The same method is utilized on the website where new arrivals are announced and a user-friendly platform is built to help the customers browse through all the products available in stores from the comfort of their homes.

NEXT product portfolio houses a wide range of clothes and products ranging in categories from sports to casual to party wear (NEXT PLC, Annual report, 2012). All the NEXT stores are decorated and provided with the state of the art equipment and the staff present are energetic, motivated, and confident while helping customers and also boosting the sales of the company.

Aims And Objectives

The main aim of this report is to analyze Next plc, from the points of view of both existing and potential shareholders. Therefore, objectives for this RAP are:

  • To give shareholders of Next plc. an overview of financial and business performance to help them understand why they have or will want to invest in the company.
  • To compare NEXT plc with its close competitor Debenhams plc to evaluate the performance, both financially and strategically.
  • To provide detailed analysis to convince prospective investors whether or not they should invest in NEXT plc and why.

To achieve these objectives, RATIO analysis was applied to find out the financial performance o NEXT. Furthermore the financial performance of Debenhams was obtained for comparison to highlight the strengths and weaknesses of NEXT plc. For further overall business analysis three analytical models were applied namely SWOT, PESTEL and PORTER’S FIVE FORCES.

Information Gathering And Accounting/Business Techniques

NEXT plc is a listed company on the London stock exchange so gathering financial and publicly available data was not a very big issue. However it was hard to access primary sources of data and my thesis could be justified with secondary research, so most of the data used in this report comes from secondary resources such as internet articles, journals, and most importantly the financial reports that are publicly available on the company’s website.

Sources Of Information

Financial Statements

Audited Financial statements are a great source of information in terms of analysis of the financial performance of a company. In order to calculate Financial Ratios, the Income statement, Statement of Financial Position and Statement of Cash flows were used from the corporate websites of both NEXT and Debenhams. The directors’ statements were also used in order to compare business strategies with results obtained through the analysis.

Newspapers & Magazines

Newspapers were one of the key sources for gathering information in this report. Some of the famous daily editions of Financial Times, The Times, and The Guardian were used. Magazines like ‘The economist’, ‘The spectator’ and ‘new Yorker’ etc. also proved quite informative in my research. The use of these resources made my report more authentic and informative and helped me deliver a better understanding of the performance of NEXT plc over the period of 3 years.


The electronic media was also used along with other resources to make my research more thorough. Obtaining the older issues of some of the magazines and newspapers was tough so the electronic media specifically the internet was consulted in such instances which proved very helpful for my research.


Books were perhaps the most important source of information while conducting this research. Business related books, articles, and journals helped understand some of the complex terms of business and simplify some of the methods of converting numerical data to useful and easily understandable information. BPP study texts and KAPLAN texts were also used in preparation of this report especially the F7 (Financial Reporting), F9 (Financial Management), P2 (Corporate Reporting), and P3 (Business analysis) and P5 (Performance Management). Other reference books were also obtained at different libraries and used in context of this research.

Method Used To Collect Information


Databases such as FAME 2, ONESOURCE and RDS have been used in The British library.


The books used to obtain information and guidance in the coursework of research were obtained at various libraries such as the college library, the residential library and most importantly The British library.

Miscellaneous Research

Most of the research was conducted online which although seems pretty easy but was actually the trickiest since most of the sources of information available online were not reliable and authentic. However I did carefully consider and use information that in my opinion was reliable and trustworthy enough to quote in my research. The main purpose was to be as relevant and straight forward in expressing my views. Since the research was specific to one company in particular (NEXT plc) and another company was used for comparison the company’s corporate websites were the most important sources of gathering information.

Limitation Of Secondary Data

Secondary data although readily available from most resources as compared to primary data, still has a few limitations which are discussed as follows:

  • Reliability of secondary data is not very high, because it is an open source for all users and editing options are available to most users as well.
  • Obtaining reliable and authentic data is a very time consuming process, and makes it very difficult for students to obtain knowledge under time-constraints (Stawarski and Phillips, 2008).
  • Secondary data increases the risks of Plagiarism.
  • Secondary data is usually on past accounting techniques.
  • Secondary data can be hard to reference because often it is difficult to find out where the information really originates from as similar information can be available at multiple locations online.

Accounting And Business Techniques Used

Ratio analysis is the basic technique used to carry out financial analysis of the companies under research (Ahrendsen and Katchova, 2012). Business analyses have been performed with the help of following analytical tools:

  1. Swot Analysis
  2. Porters Five Forces
  3. Pestel Model

Accounting Techniques Limitations

Ratio Analysis was used to provide External comparison between next plc and Debenhams plc. However Argouslidis, 2008, states that there are a number of limitations to this method, some of which are discussed below:

  • Ratios are calculated using historical data, hence ignoring current situation to Business such as Inflation and Current rates of Taxation.
  • Ratios are free from size and type of business of an organization, so it is difficult to compare organizations of different sizes and nature of their business (Arnold, 2005).
  • Difference of when the financial year ends for different organizations may also be a problem for comparison during ration analysis.
  • Creative accounting of businesses to show high performance to users is another point that lacks in ratio analysis technique (Law, J. and Owen, G. 2010).

Business Techniques- Limitations

SWOT analysis takes into account a company’s strength and weakness which are analyzed and the opportunities and threats the current market climate presents to their business. It is important for every organization to build on its strengths, remedy its weaknesses, exploit opportunities and try to avoid threats (Atrill and McLaney, 2008). However there are some limitations to this model as well which include:

  1. No guidance for management as how to identify all four elements of the model.
  2. Economic environment is unpredictable and may vary frequently.

PESTEL stands for political, economic, sociological, technological, environmental and legal factors that affect the external environment of a business. It is a macro business environment analysis tool (BPP, 2008). Some of the limitations that it poses are:

  • Although identifying these factors is very important for any business, they have very little control over the factors discussed in this model.
  • All these factors are geographically bound so a PESTLE analysis for one franchise of a company may yield different results as compared to a franchise of the same company in a different area which makes it very difficult to analyze a company operating on a global level as a whole (Broadbent and Cullen, 2012).

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Porter 5 Forces Model

This model clarifies the internal environment of the entity. In general the more of the forces that are favorable within an industry the more profits will be earned (LSBF, 2011).

Five forces are:

  • Threat of new competitors.
  • Threat of existing competitors.
  • Power of customers.
  • Power of suppliers.
  • Threat of Substitutes.

This model also has some limitations as discussed below:

  • Linking the results of the analysis using this model to the strategies of a business is a very important but very complex process.
  • This model mainly aims to figure out everything that a company lacks but does very little to eradicate these deficiencies in a company (Bragg, 2010).

Ethical Issues

While conducting a research there are several ethical issues that may arise and need to be dealt with. Some of which are discussed below:

  • The first and foremost ethical issue in any research is the authenticity of it. This calls for a list of all the materials used while conducting the research to be included in the bibliography and all the information obtained from outside resources to be referenced appropriately and honestly (Huber, 2000). None of the work should be plagiarized which in other words means that none of the work belonging to any other individual should be passed on as one’s own in a research paper.
  • To eradicate this problem, every single source that has been used in this research has been added in the bibliography and referenced appropriately throughout this paper using the “Harvard Referencing System”, which is specifically designed for students to use while writing research papers.
  • Another ethical issue may be the reliability of the data presented in this research. This is to say that all the data is not collected from a single source (in this case NEXT plc’s website) and therefore can be confirmed by similar information obtained from other sources.
  • For this a vast variety of resources have been used as explained in the previous sections to ensure that the data obtained is true and reliable and can be confirmed from the various sources listed in the bibliography (Scarisbrick, 2007). All the results and conclusions have been reached using reliable data and therefore the reliability and authenticity of this paper is genuine.

Analysis, Result And Conclusion

The various analyses carried out to measure the performance of NEXT and Debenhams will help the shareholders to assess the profitability, growth and other performance indicators affecting both the companies particularly NEXT plc. This report focuses on the financial and business analysis of Next plc from the period of 2011 to 2013, containing Ratio analysis and Business analysis models.

Net Profit Margin

The figures in the table above reveal that Next’s net profit margin is leaning towards a growing trend. Net profit margin grew by 0.48% in 2013 (NEXT PLC, Annual report, 2013) over the three year period from 2011. Amount of net profit has grown significantly and this a good opportunity for the investors as the profit will be used to distribute dividends.

Next has successfully managed to control its cost drivers. This is evident from the financial statements of Next plc for the year ending 2013. Next’s administration and distribution costs were £201 and 269.5 £ million respectively which are low when compared on a like for like basis (LFL). One of the key reasons for this immense control over its costs is the perfect number of employees working in outlets, booking and administration department. Another reason is the growing revenue generated by Next directory. Next directory has shown a lot of promise with net operating profit margins of over 20% for the three years 2011, 2012 and 2013, respectively. However, Next sourcing profits have recovered from the previous years because organization has put focus more on its strategies towards the sourcing (NEXT PLC, Annual report, 2014).

In comparison Debenhams’ net profit margin was lower, and its growth was also at a slower pace. In year 2011 net profit margin of DeFurthermore Next plc directory business grew in revenue over three years indicating the strength in performance and stable growth in new marketing ventures (Company summary, Next plc). The graph below shows the division of segmental revenue for the financial year ending 2014. It can be seen that retail sales of Next plc has shown extra ordinary financial results. Other segments are having low share as compared to the directory. The two business retail and directory are integrating and supporting each other in efficient manner. Operating margin in both the business have grown significantly.

On the other hand its competitor Debenhams’s sales figures are low as compared to the Next. In terms of growth and development the company may be doing very well on its own as evident from the percentage of their growth however the sales figures still lack far behind those of Next plc (Debenhams PLC, Annual report, 2013).

benhams’ grew from 5.30 % to 5.62 % and then fell back to 5.60 % (Debenhams PLC, Annual report, 2013). Though consistency can be seen in the margin but there is a need to make wide enhancements. High administration and distribution costs were the main reasons behind the fall of profits as Debenhams is still trying to establish its network.

Asset Turnover

Currently Next PLC is holding more than 500 retail stores in UK. The international retail is having 200 franchised stores all around the world. All these stores are major source of revenue for the company acting as asset for the business. The asset turnover ratio of the company is showing an steady trend. It means they are well utilizing their assets in producing revenue but there is a scope of improvement (NEXT PLC SWOT Analysis, 2014). They have to work harder to concentrate more on their assets.

This might be a source of worry for the investors of Next as they might question the fall in the ratio of assets and be worried that their investments would be affected if the ratio will not show the upward trend.

On the other hand Debenhams is also struggling perhaps a bit more than Next to show a enhancement in the ratio (Debenhams PLC, Annual report, 2012). The ratio has only gone as high as 1.09 in the 3 years as compared to Next’s 1.90 and this is not very good progress for a company which is trying to establish its business. This also indicates that Debenhams is showing poor utilization of store area and other assets of the company available to them.

Efficiency Ratios

Generally the inventory turnover ratio refers to ratio which shows how the inventory is managed through comparing the cost of goods sold with average inventory in efficient manner (Jonathan Law, 2010). At present Next plc is holding a good rate of inventory turnover ratio, although they notices a decline in the year 2012 but they again jump back with having a ratio of 6.93. This ratio is very significant for the company because total turnover depends upon the two components of the performance that is stock purchasing and second is sales. Here the ratio is indicating that organization is well controlling its merchandise. It seems that they are not overspending by purchasing too much inventory and wastes resources. They are making good amount of sales (NEXT PLC, Annual report, 2014).

On the other hand Debenhams have shown a declining trend. It suggests that there having issues with their inventory. This implies that wastage of resources is been done in wide manner. This can create problems for the company as they are not been able to convert the inventory into cash (Debenhams PLC, Annual report, 2011).

Swot Analysis

Below is the summary of Next plc’s SWOT analysis which shows both the current and future position in its Business environment.


  • Next’s biggest strength is the brand name that is recognized not only in the UK but in the quality fashion markets abroad as well.
  • Next enjoys the loyal customer base, particularly with Next directory customer database, with an increase of 12.4 % recorded last year (Sutton, 2010).
  • Related diversified investment is key source of strength for Next plc, so that if one product fails, another can make up for it.
  • Next plans quarterly sales targets instead of annual ones which enables them to respond to latest trends and fashion requirements from its customers in a much more efficient manner (LSBF, 2011).
  • Being a listed company with a high volume of sales works well for Next as it is able to score discounts on raw-material that it purchases in bulk, hence cutting down on costs and increasing profit margins.
  • For the last ten years they had a clear financial objective that is to offer long term and sustainable growth in the earning per share. It is based on the principle that growth in the EPS will be followed by growth in the share price (Broadbent and Cullen, 2012). The graph below reflects how the EPS has been traced by the share prices of the company for the last 15 years.


  • Next plc’s is not focused on expanding internationally as much as it should be because the number of stores abroad is still low for a well settled and established business. This enables its competitors to outrun Next in international markets so Next should quickly remedy the situation (NEXT PLC, Annual report, 2014).
  • E-commerce division of Next plc is weak as compared to some of its competitors. Next has not invested much in technological advancement of its stores more importantly its website which is really setting it back in terms of sales.
  • Next is losing out on a lot of opportunities as it is not able to exploit the massive amount of sales available online since it is a rapidly growing trend in the retail market these days.


  • Next uses social events like sports etc. to promote its brand name on a global level by sponsoring certain teams or events and emblazoning the Next logo on the shirts of players (Value based management, Methods SWOT Analysis, 2004).
  • Next is a brand name that commands a lot of brand loyalty amongst its customers therefore the opportunity is great for Next to advance into newer product markets other than clothing and add more products to its product portfolio.
  • Online shopping is the latest trend in the retail market. People do not have a lot of time to go out and browse for products in shops. Rather they prefer browsing the products online and having them delivered to their doorstep or even just collecting their order on their way home from the shop. This is a great opportunity for Next to develop its online market to boost the online sales by investing heavily on this frontier.


  • Political situation in South Asia, where Next procures most of its products from, is not very good currently and that can affect the supply time or even increase costs (Drury, 2005). Although Next plc is maintaining 10% extra inventory in order to tackle this issue but its high time that the organization looks for a permanent solution to this problem.
  • The ever changing prices of cotton in the global market, although not in control of Next, can affect increase the production costs and decrease profit margins all the while changing the customer’s perception who may now be willing to compromise quality over cost (NEXT PLC SWOT Analysis, 2014).
  • The need for providing in fashion products is very high but even more important is the need to anticipate any future fashion trends before they are out so that Next can launch the new fashion products more than any of its competitors.
  • Next plc’s strategic business unit has very aggressive competitors, who in order to decrease production costs are outsourcing their manufacturing and production to suppliers from South Asia and China etc. Next plc has also entered in these markets, but lack of information and expensive manufacturing from low cost suppliers can affect profitability of Next (NEXT PLC, Annual report, 2013).

Pestel Analysis

PESTEL MODEL will be used to deeply analyze the external environment of Next plc. The external environment analysis discusses all the factors that affect the company externally and their occurrence is out of their control. These factors are discussed below:


At present the political situations in South Asia, where Next procures most of its products from, is not very good and that can affect the supply time or even increase costs (Drury, 2005). Although Next plc is maintaining 10% extra inventory in order to tackle this issue but its high time that Next looks for a permanent solution to this problem (Environment, 2014).

United Kingdom is going through an economic crisis with low growth of economy and a rapid decrease in current disposable income of the average consumer and also rapid rates of unemployment (Company summary, Next plc) because of political instability in the country. Consumers are not reluctant on spending money on products that they don’t essentially need and are content on using less luxurious items since the value of money has increased so much in the past few years. Moreover, the Government of United Kingdom is imposing strict laws for immigrants, making it hard for companies to approach cheap labor, thus increasing the production costs since the companies are forced to pay a higher wage to its employees (Unhaenf, 2000).

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Economic environment in UK is complex because there is a strong comparison between the sterling and Euro (Tim, 2004). There is a high pound sterling exchange rate against the Euro making it tough for UK to become competitive beyond its boundaries. Presently NEXT owns about 90% share in the UK market so it is not much of a concern as of now but it will be when the company will decide to take their business global.

Next plc’s major income is generated from inside the United Kingdom so the economic condition of United Kingdom affects Next plc as well (Thomas, 2009). Government of United Kingdom is taking appropriate steps to revive the economy from the current recession, but certain factors such as unemployment and consistent immigration policies contradicting the labor from abroad are causing problems.


Fashion changes quite regularly and social trends pay a big part in its transition. For example the fashion in summer is different from that of winter. It is important for Next to be able to invoke transition into these changes quickly and also maintain the quality of their goods consistently no matter what the fashion trend is (Sutton, 2004).

“Next plc is committed to the principles of responsible businesses, by addressing key business related social, ethical and environmental matters in a way that aim to bring value to all its stakeholders.” (NEXT PLC, Annual report, 2014)

Next are known to support local charities financially. Each Next outlet donates to one charity in its neighborhood and considers it a way to give something back to the society. Social media is the upcoming source of marketing for the business world (Drury, 2005). It is essential for the organization to make perfect use of this type of marketing for their products and services and create more brand loyalty (Broadbent and Cullen, 2012).


Technology is perhaps the biggest impact on the business environment in the present era. Especially in UK, the use of advanced technology is perhaps essential for any industry to cope with this technological advancement to make life easier for themselves and their customers. The use of Mobile phones, Tablets and social networking websites are examples of consumers favoring the latest technology (Goodway and Nick, 2011). E-commerce is a very important business outlet for Next plc in order to cope with consumer needs and to increase its revenue. Since retail sales are going down in next directory they must be compensated by investing in online platform to continue generating more sales. These facts and figures anticipate that technological advancement will help next plc to achieve its corporate goals quickly and more efficiently in future (Fairchild, 2002). Next plc is operating in 38 countries other than UK, and revenue increased about 3.1% in the financial year 2013, however they still need to invest actively in developing their online market since it is becoming commercially viable now (Law and Owen, 2010).


The world we are living in is facing issues that affect the environment like global warming, pollution and sustainability issues etc. As an active part of the society, companies have made it a part of their corporate social responsibility to make their process and operations as environmental friendly as they can possibly be. Certain laws have also been put in place by local authorities and laws differ based on the territory in which company runs it business (Environment, 2014). Next plc in order to adhere to these laws and as part of their corporate social responsibility feel the need to preserve their environment by measuring the ‘Carbon footprint’ from its operations and try to minimize it as much as they can, and also take appropriate steps towards a ‘GREENER ENVIRONMENT’.


There are number of rules and regulations enacted by the government for the companies in the clothing industry. Laws are enacted by government to ensure healthy competition among companies, such as competition commission monitor mergers and acquisitions of companies to ensure everything is happening legally (Drury, C., 2005). Multinational companies like Next plc are also required to follow export and import laws and Exchange regulations as well. Furthermore, Employment laws, which include Minimum wage and health and safety laws are also applicable to companies to comply with.

Threats Of New Entrants

Next plc face threats of new entrants in the market. Due to high initial investment, small entrants may not pose much of a threat, but large multinational companies like Ralph Lauren and Marks and Spencer etc (NEXT PLC, Annual report, 2012). may threaten the position of Next especially now that it’s looking to invest in newer ventures and its competitors are already ahead of it.

The Bargaining Power Of Customers

Next plc customers have the power to bargain since they know what they want and where they can get it from. Since there are a number of competitors in the market to offer the quality product to customers, the customer gets in a stronger position to negotiate and bargain because of the looming threat of going to some other company that would adhere to their demands (Company summary, Next plc). The product which is mostly sold by the Next is clothing and it is not very item specific. A pair of jeans will remain a pair of jeans whether the customer buys it from Next or any other company. So with that in mind, Next has to adhere to the needs of its customers rather than offer what they have in their arsenal.

The Bargaining Power Of Supplier

Next plc is a prominent member of the clothing industry since 1982, and has heaps of knowledge of various market trends from the experience of decades. Since, market is going through recession, supplier conditions have changed due to factors like inflation, credit costs, cotton price variations, and labor costs in the international market (Management Study Guide, 2008). Next plc relies on its suppliers to cooperate and needs to maintain good relations with them. It is not very easy to switch to new suppliers even though they are cheaper than the existing suppliers however both the company and the supplier want to keep the good relationship going therefore the bargaining power hangs in the balance.

Threats Of Existing Competitors

At the current economic condition, customers become more price sensitive due to factors discussed in PESTEL model, and existing brands are focusing to give best price to win the customer (O'Hare, 2013). Since the switching cost is negligible so it can be seen that competition to win the customer is high and next plc must plan its prices to retain its customers keeping profit margin under control.

Threats Of Subtitute

Substitute’s threat is low in the case of next plc, because next plc offers a wide range of products, and has developed a good portfolio of brand names for its products helping its sales to grow and ensuring customer retention as well (NEXT PLC, Annual report, 2012). Along with brand loyalty, Next employs innovative staff, who produce designs according to the needs and desire of the potential customers making Next plc key player in fashion industry.


In the current condition of credit crunch and unemployment issues along with less disposable income, Next plc shows an increase in its sales revenue, but the breakup shows next directory is performing well and retail sales are showing bad results, despite Next investing in more retail outlets (NEXT PLC, Annual report, 2014). Sales revenue has witnessed the growth of 3.1%. It reflects that the strategic planning of Next is working as evident from its growth over the years. Now that the economic conditions improving and retail market is recovering slowly but steadily the company has the opportunity to increase its profits from the economic recovery by investing in newer market segments as the risks associated with said expansion are lower (BBC, 2011). It can be said that, Next plc has achieved its primary target of increasing shareholders wealth, since the Earnings per share (EPS) have increased over the years.

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The organization is a living example of a boat that struggles with the ups and downs of the waves of water. The company has managed to gain stability in the market in the last six years while most of the other companies are still trying to increase their market share and build a suitable business environment (Barlow and Brown. 2008). Because of the high and steadily increasing sales volume, the company has been able to maintain healthy relations with the shareholders and the investors. In the present context the organizations is well positioned in the UK market and is responding very well towards the need of the consumers (Sutton, 2004).


Next plc’s profits are influenced by the cotton supply and price of cotton in international market. Cotton prices skyrocketed recently due to the low supply but now the prices have started to come down as sufficient supply has been reinstated. Next plc must try to keep its production costs to a bare minimum so its profit margins don’t suffer because one way or the other Next must reevaluate its price plans for most of its products because of the economic crisis worldwide. Also Next Plc cannot afford to run most of its production units in the UK because of the high production costs so they must outsource their operations to countries like India, China, or Taiwan where labor is cheap and raw materials are readily available at low costs. The brand name of the organization is recognized everywhere. They can use their own brand to fulfill the demands of the customers. Through this they can have a complete control over the quality management process (Company summary, Next plc). The payment schedules of Next Plc are suffering and the delay in paying their suppliers can cause a rift between the company and its suppliers. It is evident that company always looks for diversification in the foreign markets which is a great move, given the current circumstances so the company must stick to this strategy because this could balance any possible risks of decreasing domestic sales. Furthermore this international expansion will make the company less reliant on the UK for most of its sales and profits and Next can generate more revenues than they ever have by having more than one strong zones. This approach can also make the position of the business stronger in case the GBP (Great British Pound) becomes weaker or if the government opts to join the Monetary Union (Next plc, 2011). The primary product sold by the company is clothing which is not very items specific. Clothing is sold by many other retailers in UK. Hence it is absolutely essential that Next Plc comes up with many additional values, such as label, price, style, quality etc.

You may also like to read: 


  • Kaplan.(2011) ACCA Paper F7 Financial Reporting. London: Kaplan Publishing
  • Kaplan.(2011) ACCA Paper F5 Performance measurement. London: Kaplan Publishing.
  • Kaplan.(2011) ACCA Paper P3 Business Analysis. London: Kaplan Publishing.
  • Kaplan.(2011) ACCA Paper P5 Advance Performance management. London: Kaplan Publishing.
  • BPP.(2011) ACCA Paper F5 Performance measurement. London: BPP Publishing.
  • BPP.(2011) ACCA Paper F7 Financial reporting. London: BPP Publishing.
  • BPP.(2011) ACCA Paper P3 Business analysis. London: BPP Publishing.
  • Sutton, Tim. (2004) Corporate Financial Accounting and Reporting. Edition 2. London: Person Education Ltd.
  • LSBF (2011) ACCA Paper P3 business analysis. London: London school of business finance publishing
  • Colin Drury (2005), Management Accounting for Business Decisions, 6th Edition, International London: Thomson Business Press
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