May 21, 2024

Red Sea Will Not Reconsider Disruption Purchase – March 21, 2024 at 3:59 pm

British clothing retailer Next will not use disruptions to Red Sea shipping as an opportunity to rethink where it sources its products, its boss said on Thursday.

Next, which sources most of its products from Asia, warned in January that sales growth would slow if disruptions to Suez Canal exports from attacks by Iran-aligned Yemeni Houthi militias in the Red Sea continued into 2024.

On Thursday, the company said it did not expect a significant financial impact, although transit times had increased by seven to 10 days as ships rerouted around the southern Cape of Good Hope in Africa.

“Where we position our products is the capabilities and value for money we get from our suppliers,” CEO Simon Wolfson told reporters at a full-year earnings press conference.

“Trying to position the company for geopolitical reasons is a mistake,” he said.

Extending the lead time to seven to 10 days “isn't critical to the manufacturing base, it's not a reason not to go to the Far East and place an order seven to 10 days in advance,” Wolfson said.

Next is closer to the UK, particularly in North Africa, “but not because of the Red Sea, because you can find better produce there”.

Next previously had a significant resource business in Portugal and North Africa, which has declined over the past 15 years, he noted. The company still has a distribution base in Turkey.

Wolfson said it would be wrong to assume that the Aadhaar platform is being controlled from Nexts' boardroom, rather it is being dictated by individual buyers and quality inspectors.

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“They decide where we buy the product, and the process is controlled from the bottom up, looking at different factories and traveling around the world looking for the best sources.”