James Moore: Next can afford to reward its staff as well as its shareholders
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Your support makes all the difference.I’ve written before about what a success story Next is. The clothes retailer has delivered again with its final results.
What a shame, then, that it doesn’t do more to share that success with its employees.
Let me explain. Having nudged up its year-end profit forecasts to between £765m and £785m at the end of last year, the final tally came in near the top of the range, as had been expected by just about everyone.
The City was a bit spooked by the cautious tone adopted by the chief executive on the subject of future trading. But Lord Wolfson is a dab hand at expectation management and it looks like he’s playing that game again.
Now, Lord Wolfson is a rare breed in FTSE land in that he has, in the past, chosen to share his bonus among the staff who have contributed so much to his and Next’s success. Unfortunately his company doesn’t match his personal generosity. Sales assistants are expected to smile at customers for little more than the minimum wage when they’re getting started. And if you’re trying to get by on £6.50 an hour – less if you happen to be under 21, like many Next sales assistants are – there’s not all that much to smile about.
At the beginning of the week I revealed that, shamefully, there is not a single big retailer signed up to the voluntary national living wage, which guarantees a minimum basic income and has been adopted by a huge range of employers. Some of them aren’t exactly famed for their generosity.
In the preamble to its detailed numbers Next indulged in a little self-congratulation about having returned £572m to shareholders through a combination of dividends (£434m) and share buybacks (£138m). And there’s more to come.
I’m not about to criticise that; it’s Next’s job to produce a return for shareholders, and it is commendable that it rewards them for their investment rather than sitting on a vast cash pile, à la Apple. Dividends help to pay for and grow the pensions and savings of millions of small investors.
But here’s the thing. Living-wage adopters have noted that they get better work out of staff, who also stick around for longer and take fewer sick days. It’s economically sensible as well as socially just.
Lord Wolfson might not have needed to be so cautious, and Next’s dividends might be higher still, if he had better paid and motivated staff behind him.
It would only take each sales assistant selling an extra T-shirt or two to make all the difference.
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