Next boss Lord Wolfson has missed out on his annual bonus for the first time in 18 years amid tough times on the British high street.
Wolfson’s total pay package dived by 58% to £1.8m in the year to 28 January, according to the fashion and homewares retailer’s annual report published on Tuesday, after a key earnings per share target was missed. Last year, Wolfson earned a £503,000 annual bonus as part of his £4.3m total pay package.
Total remuneration for Next’s board almost halved as all directors missed out on their annual bonus after a failure to stock enough wardrobe staples contributed to the chain’s first drop in annual profits for eight years.
The company has also struggled in a tough market as shoppers spend less on clothes and more on eating out and holidays while competition online, where Next once offered far superior service, has increased as the likes of Marks & Spencer and Debenhams have modernised their operations.
However, all the directors were awarded a payout in recognition of Next’s long-term shares and earnings performance over the three years to January. Wolfson was awarded £606,000 in shares on top of his basic pay, down from £2.2m last year.
In the year ahead, Wolfson will get a 1% rise in basic salary to £773,000 and could earn up to £3.95m if he achieves the maximum possible bonus payouts.
New executive directors Michael Law and Jane Shields, who joined the board in 2013, will also get a 1% rise in basic salary to £416,000 each. But the annual report says the board handed Law, the operations director, and Shields, the sales and marketing director, a much lower pay rise than the 15% they had planned to implement this year in the light of poor profits.
Finance director Amanda James received a 16% pay rise to £416,200 in February but that was less than the 18% the board previously anticipated.
Wolfson has said he is “extremely cautious” about the outlook for the year ahead as shoppers continue to spend less on clothes, growth in consumer incomes weakens and prices rise as a result of the fall in sterling.
House of Fraser finance director Colin Elliot said on Tuesday he was also cautious and expecting “another challenging year” in 2017 amid uncertainty over the UK’s relationship with Europe and the snap general election announced on Tuesday.
He said the department store chain would be updating its shops and adding in more restaurants and cafes as it tried to use its high street space differently in the face of a tough clothing market. The group is planning to drop five own-label womenswear lines including Therapy, Linea Weekend, Episode and Dickins & Jones as part of the shift in emphasis.
Elliot said womenswear had been the toughest sector for House of Fraser in 2016 but strong sales of beauty products and a good Christmas helped more than double pre-tax profits, before exceptional items, to £3.4m. Sales remained steady at £1.3bn, helped by a 16% rise online.
Chairman Frank Slevin said a new chief executive for House of Fraser, to replace Nigel Oddy who formally exits later this month, would be announced very soon. He said the group’s Chinese owner Sanpower, which bought a controlling stake in 2014, was committed to opening stores in its homeland despite rumours that it might have lost interest. “House of Fraser is not up for sale,” Slevin said.