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MK3014N : CORPORATE COMMUNICATIONS

LONDON METROPOLITAN BUSINESS SCHOOL

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Marketing Diagram HISTORY

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• Next was established in 1982 • Sold women swear then began to expand in 1984 • Now have women swear, menswear, children's, home furnishings, flowers etc • Sell via directory, online and in store • Own young TEXT women’s fashion label Lipsy

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• Official Clothing and Home wear Supplier to the London 2012 Olympic and Paralympics Games


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Financial History


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Financial History


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Financial History


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Financial Crisis

Next’s annual report stated ‘As anticipated, the year to January 2009 was a challenging year for Next. Revenue fell by 1.7% to £3,272 million and earnings per share, our primary financial measure, fell by 7.5% to 156p.

Next said they were "budgeting very conservatively", and that it was anticipating continued weak demand for all of 2009. Next also warned that it was expecting further margin pressure in the Autumn Winter - primarily due to weaker Sterling.


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Media

Times Article “Two facts to turn you into an optimist”- April 2009 ‘At the beginning of this year Next plc forecast that its like-for-like sales would be down for the rest of the year - and we still believe that will be the case’

Times Article “Next Claims worst of high street gloom is over”- May 2009 “Next has remained extremely bullish throughout the downturn, refusing to follow its rivals into price cutting, and insisting that the price of high street fashion would soon go upward on the back of the weak pound”

RTT News Article - “Next Plc Autumn Winter combined sales down; backs FY08 profit view in line with estimates” – June 2009 “UK's second-largest clothing retailer Next Plc reported a 1.9% decline in the combined sales of Next Retail and Next Directory for the Autumn Winter period.”


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‘Next plc dropped 46 pence, or 2.7 percent, to 1,640 after the U.K.’s second-largest clothing retailer said an improvement in business probably won’t last after warmer weather boosted sales of summer fashions in the first three months of the fiscal year. The second quarter is expected to be “weaker” than the first.’ Bloomberg 2009


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Key Financial Performance

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The year 2009 was a challenging year for Next Plc Revenue fell by 1.7% Earnings Per Share fell by 7.5% Profit before tax was GBP £428m, down 13.9% Group Operating Profit declined by -11%, to £487m Profits for the core Next Brand Business (retail, directory, international and sourcing) were down -7% • Stock for the end of season sale across Retail and Directory was down 10% • The main decline elsewhere was in their outsourcing subsidiary, Ventura.


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From Next Annual Report

Next has said it expects fiscal 2009 “to be challenging, with negative like for like sales” and particularly difficult first half.

 “Next has emerged from a difficult financial year, in good financial health”  “The current economic climate in the UK is unstable, and this brings short term volatility in our sales” •

Simon Wolfson, Chairman of Next Plc, has said that “things have potentially bottomed out” and that the downturn is “not as bad as we thought it was going to be”.


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From the Media

“Revenue worsened at Next, which didn’t offer discounts until after the holiday and started its clearance sale with 8 percent less inventory to protect margins.” Bloomberg, 2009

“For the period from July 29 to December 24, retail sales were down 3%, while like-for-like sales fell 7%, in line with previous forecast.” RTT Article, 2009

“UK's second-largest clothing retailer Next Plc reported a 1.9% decline in the combined sales of Next Retail and Next Directory for the Autumn Winter period.” RTT News, 2009

“Next has remained extremely bullish throughout the downturn, refusing to follow its rivals into price cutting”. Times, 2009


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Impressions Management

Impression management is “the conscious or unconscious attempt to control images that are real or imagined in social interactions”

Impression management, provides a rationale for corporate communications, which is CONTROLED, and MANAGED, and its INFLUENTIAL, and PERSUASIVE

“Proactive” when it is designed to enhance a corporations image

“Control Protective” when it is used to protect an established image


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Impressions Management

 Images

Positive values are sought, negative values are avoided

 Asymmetries

Power asymmetries influence how much attention different

stakeholders receive

 Communications Strategy

Actions made visible by powerful stakeholders will be re-framed by verbal accounts in annual reports

 Language

used to blur distinctions about causes of poor performance

 Photographs used to persuade and distract readers from other information in the report

 Financial Graphs

frequently distorted to enhance perceptions of

management performance

 Hedonic Bias

general tendency to attribute anything negative to external , environmental causes, and favourable ones to internal disposition ones


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Impressions Management


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Impressions Management

Chairman Statement


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Impressions Management


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Operating and Financial Review LOGO Good Examples

NO. 36 The OFR should set out the directors’ strategies for achieving the objective of the business. “Our strategy remains to concentrate on the design, quality and value of our product together with excellent customer service and delivery.” “The Board remains convinced that the Group’s long term objective is best achieved by continuation of the following strategies in its operating businesses…….”


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Operating and Financial Review LOGO Good Examples NO.47 The OFR should analyse the main trends and factors that directors consider likely to impact future prospects OUTLOOK FOR 2009/10- “2009 presents a double challenge. Weakness in the general economy means we must plan for a fall in like for like sales for the full year� Outlook for the Economy Outlook for Sales The Impact for Currency Outlook for Retail and Directory Net Margins Product, Pricing and Market Positioning


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Operating and Financial Review LOGO Bad Examples NO.52 The OFR should include a description of the principal risks and uncertainties facing the entity, together with a commentary on the directors approach to them Risks & Uncertainties- “The Board has a policy of continuous identification and review of key business risks and oversees the development of processes to ensure that these risks are managed appropriately� Example Warehousing & distribution


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Operating and Financial Review LOGO Bad Examples NO. 50 The OFR should include a description of the resources available to the entity and how they are managed Resources NEXT Retail - NEXT Directory - NEXT International - NEXT Sourcing (NSL) – VENTURA Ventura had an extremely difficult year and continued to experience lower business volumes and margins in the second half. Sales for the year of £162m were down -20% and the impact on profits was significantly greater due to lower gross margins and fixed overheads Ventura Network Distribution, our new fulfilment service supplying warehouse and distribution facilities to third parties, now has six clients. We are in advanced discussions with other potential clients and expect further profitable growth in this business.


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10 Signs Of Greenwash LOGO


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Green Washing LOGO Irrelevant Claims No.4

 During the year all areas of the business have conducted trials and implemented energy saving initiatives. Examples include replacing existing lighting schemes with more efficient bulbs, installation of occupancy sensors to dim or turn off lights when areas are unoccupied, trialling new technologies for air conditioning designed to draw in cold air from outside, so called “free cooling”, and staff awareness training.


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Green Washing LOGO Just Not Credible No.6 Next recognises that it has a responsibility to manage the impact of its business on the environment both now and in the future. Key areas of focus continue to be: ● energy use and emissions from stores, warehouses, distribution centres and offices; ● fuel emissions from the transportation of products to either stores or customers’ homes; and ● waste created in stores, warehouses, distribution centres and offices.


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Green Washing LOGO No Proof No.9 GOOD START TO SUPPLIER ENERGY Efficiency PROJECT IKEA has set up a project group to develop tools for increased energy efficiency at suppliers with the ambition to reduce suppliers’ energy use by 30 percent or more by 2011. We believe we can help suppliers reduce their energy consumption and their energy costs, which in turn make them more competitive. We have chosen to focus efforts on the largest suppliers that rank the highest in terms of energy consumption. Suppliers in six material areas are included: textile, glass, stone ceramics, plastics, board materials and aluminium IKEA wants to reduce CO2 emissions from people transportation. Today, around 10 percent of IKEA customers use public transport to get to and from the stores, while most depend on their own vehicle. we are developing a number of tools that will help us to make it easier for customers to leave their cars at home, and support our co-workers to minimise travel and/or make informed travel arrangements


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No.10 Out Right Lying After evaluating our own environmental impact, we set goals to supply 100 percent of our energy needs through renewable sources, to generate zero waste and to promote markets for environmentally sound products. Already, we have made No proof Wal-Mart’s goalis to encourage improvements in sustainability and ethical practices among suppliers. We are committed to ethical sourcing to improve the quality of life for the workers who make and grow the merchandise and food we sell


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Thanks for Listening, any Questions?


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