We will move on to questions. There we go, ready. Hi, it's Simon Irwin from Credit Suisse. Three for you, just. We're going to limit it to two questions. OK. We have all sorts of inflation going on here, so Simon, we're not going to have question inflation as well. We'll stick with two then. How should we think about OPEX next year? Is there a kind of nice number you can give us on elasticity? So volumes, say, are down 10. How should we think about unit OPEX? Down 5, you know, or just give us some kind of color around that? And secondly, on Label, you're obviously buying a lot of product in sterling. The brands presumably are going to be taking a bit of a hit on not passing through costs. Are there going to be constraints on you being able to pass through effectively sterling costs on labeled product into euros and dollars? Yeah, look, I mean, the second question is a very important question. And I think when people always say this, like, are you going to be able to pass it on? At the end of the day, there is no going to be no law as yet. You know, never know what this government's going to do. But there is no law dictating what we can and can't put our price by. So of course we can pass on. The real question for us will be, and we'll take this on a brand by brand and product by product basis, is what is the margin sales equation Next from not taking the hit? Whenever we looked at this in the past, actually, the sales you gain by not passing on the increasing costs, it's very hard to ever get to a sensible number for sales to make up for that. I can't say what we'll decide to do because as yet, we haven't done our budgets for next year. We don't know what our prices are going to look like in autumn and winter. What I can tell you is that the method we will use is to say very simply, if we don't pass on this price increase, what do our sales need to go up by or not go down by in order to pay for that? The answer we've always come back to in the end in the past is actually, you've got to pass it on. I think the one exception to that would be, and I'm hypothesizing now, which is very dangerous, but I'll do it anyway. Amanda won't like this. If we got to the stage where the dollar, the rate at which we bought autumn and winter next year was much worse than the rate we got for the following spring and summer, in order to keep our prices the same from summer to winter to autumn next year, we may choose then to take a hit on margin. Because you're not just then talking about the sales you achieve in that year. You're also talking about hanging on to customers that you'll have next year. And putting your prices up in order to bring them down is never a sensible thing to do. But again, I'm sort of straying into the hypothetical. But hopefully, it gives you a flavor of how we will handle those questions as and when they arise. In terms of OPEX, what I would hope is that our manual labor costs would come down pretty much in line with any unit reduction we get in sales. And you can already see in our accounts, we've got some benefit from that this year. In terms of the actual unit cost for handling, one of our big objectives is to reduce that as we get the luxury of more capacity. Whether that will be enough to offset the increase in fixed costs from that new capacity and any top-line erosion is very difficult to know. And particularly as we haven't done our budgets yet. So really, I think the time for me to answer that question in detail is next March when we will have proper budgets for next year. Hey, it's Adam Cochrane from Deutsche Bank. I was really pleased that you didn't have any storm clouds or down escalators or nothing. Yeah, no, we thought about it, honestly, and we thought, no, done that. But when you sort of think about the utility costs, we can obviously have a view on the consumer. How is it as an impact for your own business in addition to wage inflation? I don't know if you have a view on that for next year at this stage. But is there sort of OPEX pressures coming through as well? So any work you have to do to offset any cost of goods sold, there are some competing pressures on OPEX as well. Yeah. Then, secondly, when you think about passing through your prices or not passing them through, historically at least, I think you've always tried to talk about maintaining percentage margin rather than the cash margin. Is it getting to a stage where you're uncertain because the number's so big, it's going into a different environment rather than the policy of how you would think about it has changed? Thanks. Yeah, it's a great question, and we have discussed it. We haven't come to a conclusion. My gut feeling today is that we will focus on the cash. We will focus on the cash margin next year in the middle of the crisis. I think it would be pedantic of us to focus on maintaining a percentage, which already by industry standards at 16% for the group is high. So I think that, you know, I think cash margin and cash profit has to be the overriding priority for next year. I think. Would you agree with that, Amanda? Yeah. Yeah, okay. You see, there we are, so Finance Director agrees. That's great, but we know. We definitely think that, and it comes down to the fact that the strength of our margins allow us to do that. I don't think, you know, if our margins are over 14%, 15%, and we maintain our cash profit, I don't think the business becomes markedly more risky through that. The second thing, in terms of OPEX pressures that we can see next year, the biggest single pressure is going to be what happens to minimum wage. And we don't yet know that. I think whatever happens, though, it's likely to be less than the cost of goods. I'm going to say, you never know with this government, but it is likely to be less than the cost of goods. So whilst we still foresee OPEX pressures, we think the one that we've most got to worry about is cost of goods in the second half. May not be the same in the first half. In terms of electricity, this year our electricity bill has gone up, correct me if I'm wrong, about GBP 27 million on GBP 30 million. So we have. Electricity and gas. Electricity and gas together. Apologies. Thank you. Has gone up by GBP 27 million on 30. We're capped until March. After the cap comes off, it's anyone's guess, and it will depend on market prices as and when that cap comes off and indeed whether it is continued, but it could be as much as another GBP 25 million-30 million. Thanks. It's Anne Critchlow from SocGen. Two questions from me, please. Could you comment a bit on how home has performed relative to clothing, both in the half and in current trading? And then secondly, on price inflation, I think previously you said you expected 6.5% for clothing and 13% for home for autumn and winter. Is that still your view? Thanks. Yes. So yes is the answer to the second question. No change in our outlook on inflation, either fashion or home for the current season. In terms of home's performance, against last year, home has performed much, much, much worse than fashion and clothing. In the first half, it performed worse than fashion against both last year and three years ago. We have seen a moderation of the decline in the last two months. So both against last year and I think I'm right in saying three years ago. So it looks like sort of the sort of peak decline in homeware, both against three years ago and last year, is behind us. But I would hate for anyone to think I was an optimist on that. But it does look vaguely encouraging. Pleasure. Hi. So, Simon Bowler from Numis. I'll stick to the two. First one, you haven't referenced Total Platform in any kind of meaningful way. So just wondering if you have a little bit of an update on how you're seeing that part of the business and development there. And then secondly, you made reference to kind of product mix within the presentation and kind of more going into some of the higher returning categories, I think, was where I picked it up from. What do you think that is? Do you think you've made more progress in those sorts of categories? Or do you think that's kind of a release of some kind of pent-up demand that, again, to reference your point about good quarter being a worry for next year, we need to be thinking about in terms of next year? Yeah, very good. I agree. I think the product mix, I think, is partly driven by fashion. Fashion has definitely we have seen a return to more formal fashion. Fewer people with open-neck shirts, more people with ties and jackets, and actually, to the extent that people with open-neck shirts now feel slightly uncomfortable when they look at their sharper colleagues, sharper-dressed colleagues, I should say, sitting next to them, so we're definitely seeing both on men's and women's a return to formal dressing. I think part of that fashion trend is pent-up demand, but because people haven't bought a new suit or a new dress for three years, they're buying a new one, but the two things become self-fueling because the act of everyone going out and buying one means that people begin to notice their friends and see new designs, and you sort of get a virtuous circle. So I think it's difficult to see which is which. But I think where you're right to be cautious is Next Q2, part of what we saw. So part of that exceptional performance was people going to a party or a race course or a wedding for the first time in three years. The other question you asked about Total Platform. In terms of Total Platform, there are two important things about that. The first is that we are in the process of making the system far more adaptable so that the time taken to take on a new client in terms of IT time has come down from over a year to significantly less than six months. So in terms of the ability of our ability to take on new clients, we are in a much, much better position than we have been. In terms of recent launches, the Gap launch was the best launch we've ever had. Reiss launch went extremely well. We're very pleased with what we've done. The rate determining step on Total Platform and the reason that there's no news about it is because really, until we've got the automation open in our warehouse back end of next year, we would be uncomfortable taking on a new client. It's not to say that we couldn't. If we wanted to gamble, we could say, well, let's look at our own declining units as a result of increasing selling price. We could gamble and take on a new client. At this stage in the business's development, and indeed, I think any sort of service provider, the worst thing we could do is take on a client and make a whole exhibit. Really, we're not looking at taking on any new clients or actually going operational with any new clients till the very earliest, the fourth quarter of next year when we've got the automation picking open and the beginning of next year. In the interim time, we will go live with a client we've already won, which is the JoJo Maman Bébé business. I'm really expecting Total Platform to come into its own 2024. We will begin to start negotiating and recruiting new customers in earnest next year. There's no point in talking to people now if we say, well, you've got to wait 18 months, two years before we can go live. Caroline. Hi, Caroline Gulliver from Stifel. We've talked a lot about rising costs this morning. But in the changing guidance, I think you alluded to a GBP 6 million increase in costs since you last gave guidance in August. And I just wondered if you could give us a bit more detail specifically on that. And my second question is, in your customer segmentation analysis, I just wondered if you had a view on how many of your customers have a mortgage. Yeah. On the mortgage side, it's very difficult to model. And I'm not going to give you a number because what matters is not the number of customers we've got that have a mortgage. It is the term for which they're fixed. So we don't have a number for that. What we do know is that in the long run, as mortgages begin to unfix, that is going to begin to weigh on consumer expenditure. And again, it comes back to the same thing, really, in terms of prices. The benefit that we may or may not get this season, we're going to pay for next year in prices. The year after that, maybe in mortgage rates. In terms of the six million rising costs, some of that is provision, a provision increase. Most of it is wages. About GBP 2 million of it are wages that we incurred in August, where the sales were significantly below our expectations. And each week, we thought it would get better next week. So things like our store staff and warehouse staff, we didn't moderate that fast enough. So GBP 2 million of that GBP 6 million cost is sort of in the bank, if you like, or not in the bank. And the other GBP 4 million is either provision or expectation that some of our wage costs will continue to rise throughout the rest of the year. Yeah, Richard. Thanks, Richard Chamberlain, RBC. Can I just ask a couple, please? Can you just give us an update, please, Simon, on your sort of full price sales percentage or some maybe thoughts there versus where it was pre-pandemic? And then also the recent sort of summer trading period, particularly the, I guess, weaker August, better September. To what extent was September affected by sort of depth and timing of sale activity versus last year? Thanks. Yeah, OK. Good. So first of all, I should stress that the numbers we've shown you on the week-by-week chart are all full price. And this year's markdown wasn't significantly different to last year. Slightly more, actually. It would have affected to have more of a negative effect on full price. So I think those numbers. I wouldn't factor in any significant effect of markdown on those full price sales that we've shown you over the last eight weeks. In terms of the company's total markdown versus three years ago, it looks broadly comfortable. I think there are areas where we can tighten up, particularly on Label wholesale. Some areas in particular, for example, sportswear, where although we cut our budget on various wholesale sports brands, we didn't cut it by enough. So there are definitely pockets where I can say, look, actually, we can do better on markdown. But if I'm looking at what's going to drive profitability going forward, it's really the management of the markdown rather than total markdown that I think will make the difference. Not, for example, putting it through aggregators and selling at a loss, would be a start. Hi, it's Georgina Johanan from JP Morgan. Two as well from me, please. First of all, appreciate you've given the difference in freight versus what you expected and therefore the kind of headline drag within the margin. But is it possible to share the cumulative drag that you're seeing from freight so far, please, just so we can get a sense as that eases from here how much kind of offset you've got against currency? And then the second one was just I'm not sure if this is something you'll share. But given the price rises that you're kind of talking to, is that a similar rate that's coming through in kids' pricing as well, please? Or is that different? Thank you. Yeah, very good. So in terms of freight, I think the best way of answering your question is to say that at the moment, freight costs are around 6.5% of the cost of goods, of the landed cost of goods. So there is definitely flexibility in the freight line. But it's not the best way in the world. It's not going to be much more than 1% or 2%, maybe 3%. Then in terms of kids' prices, we're seeing exactly the same sorts of pressure on kids that we're seeing elsewhere. Your rate and your. We haven't lowered this year. We've basically maintained our margins. We've maintained our margin targets year on year. So no area is getting special treatment other than in home. We did take a hit on some of the areas where the prices would have had to go up by more than 15%. We took a view on some of those product areas. Thank you. It's James Grzinic from Jefferies here. Just a more generic question, Simon. Can you explain what sort of conversation is going on in the industry in Dublin right now to suggest that you guys are very much in the receiving end of our decisions that you're not really involved in in terms of thinking? And can you perhaps within that suggest what the industry is thinking in terms of price caps going into next year? I can't. I haven't had any conversations with governments on any issues. I can't speak for the rest of industry. We have said we will continue to say what we think, which is that whether or not this stimulus package is a disaster or not will depend entirely on the supply-side measures that government introduces combined with any savings they can make in their own expenditure. So our view as a business is that what the government ought to be doing are two things: being as aggressive on supply-side reform as they have been on the demand side. And that means looking at things like planning, energy markets, trade, administration, tariffs, economic migration, all of which could provide significant boosts to growth if tackled quickly and aggressively enough. And then they should also look to their own budgets. I should stress, without prejudging it, as we have said in our document, look at very big capital projects that might provide no value at all, such as HS2. Yeah, sorry. Front row first. John Stevens in Dublin. Two questions, please. On the current trading, you talked about feeling there's something more behind. Is there something in the customer trends, in the way they're shopping that sort of raises a red flag as something is coming to September? And then secondly, over the pandemic, on the demographics, you picked up a lot of growth in younger and older customer demographics. Are those customers stuck in that their spending habits to save as well? Yeah, and the second is we've seen no significant difference that we've found or that I've seen in the various different demographics that we've recruited in terms of their overall behavior. So generally, we've seen an increase in spend per customer across the demographic base. And that's because in a lot of cases, they buy multi-generation anyway. The second is that in terms of what made us think that there might be more to the downturn than we saw in August, I think it's really just experience that when you see the levels of decline we saw, there is always an excuse. On any given day, you can always say, well, the weather isn't right, or last year was particularly good, or we didn't have the stock. But when you see the levels of decline, you think, actually, no, there is more to this than that. So it's really a sort of gut feeling based on experience rather than any scientific evidence. Yeah. Andrew Hollingworth, Holland Advisors. Just a couple of questions, really. You're not known for hyperbole. But when you launched Total Platform, you did say some quite bullish things about an important moment and groundbreaking operation in the UK. That's a little different to a useful source of revenue, which you said today. I'm not trying to pick you up on it. It's obviously there's other things to talk about today. But my first question is, I know you can't sign clients yet. But do you still have the same optimism for Total Platform? And when you talk to people in the industry, when people talk to you about what it could do for them, do you think there's a really strong pent-up demand when you can sell the product or the service rather? Lots of people. There are more people talking to us than at the moment. We are actually saying to people, actually, not at the moment. So it's a handful of people because there aren't that many clients. But we have got more clients than we're prepared to take on, more potential clients than we were prepared to take on at this point in time. And we've limited ourselves at the moment to people we can take equity stakes in because we think that's where a lot of the upside is. Going forward, 2024, when we've got more capacity, we won't limit ourselves in that way. I suppose the embarrassment for me is that I allowed anything like hyperbole to creep into my language before. And I thought at the time we'd said not to get carried away with it. It was never going to be that it was a relatively small part of the business. I think where I think we are consistent is that it's going to be some time before it makes a meaningful contribution towards the group's profit. I do think it is a very exciting service because I don't think anyone else can do it in terms of clothing and homeware, in terms of what it can do in joining up online service, stores, warehouses, distribution networks. There's no one else in the market at the moment that can provide that service. We're still very excited about the service. We are as cautious as we were before about the economic outlook for it. I should stress, we've made more money this year than we were anticipating when we started it. OK, that's very clear. Thank you. If I could just follow up with one on Label. I think you have had your two questions, haven't you? Am I miscounting? OK, go on. On Total Platform. Don't want anyone else to try this, though. OK, I just separated them to make it easy. OK, very good. On Label, I mean, obviously, Label's grown very strongly. It's becoming an important part of the group. You've talked about the margin and how the margin's sort of flat, but there's pluses and minuses. Could you just talk about, obviously, during that period of time, it's become less risky in the sense that it's more commissions and less warehouse, which is what you've put in the statement? And maybe you could tell us how much you've reduced commissions to third-party suppliers during that time. And also just talk about just how big Label could be in the sense that as an aggregator, as a part of Next, it looks big. But as an aggregator, it doesn't look big. So where could Label be if you look forward five or ten years? Yes. Well, first of all, and again, hopefully, I'll be consistent here. I don't want to deprive any retail analysts of their work. So I'm not going to make a prediction about four or five years' time. Our job is to grow it as fast as we can within the constraints of value, margin, return on capital. Your job is to guess where it could be in five years' time. And I wouldn't want to cloud your judgment with my over-optimistic views, as I obviously did on Total Platform. In terms of commission, we have lowered our commission consistently over the last five years. I can't remember where it was in 2019. I know we lowered it last year by 1%. And it's now running at 37% for normal brands. We do have a slightly higher rate for very high-returning, lower average selling price fashion brands. But the vast majority of commission brands are on 37%. And commission is still growing faster than wholesale. Thank you. I think it was 39%. It was 39%. There we are. So it's come down twice in that case. Yeah. Thanks, Simon. Tony Shiret from Panmure Gordon. Small question for Amanda because she hasn't answered any so far. I wonder if you could just tell us what the IFRS 16 benefit overall was for these figures end to last year? In the half, it will be something like GBP 10 million, I think. So across the year, Ian's nodding furiously in the back. So broadly, GBP 10 million pound boost. So what's your rent? Sorry. What's your rent for the half? What's our rent bill for the half? Actual rent or lease? Real rent, I think it's about GBP 150 million. 150 for the full year. Yeah. OK, thanks. And secondly, a bit more of a question, I guess. I sort of get the feeling coming into this room I was a bit more optimistic than having listened to you now. And. Job done. Yeah, good. I just wonder, it doesn't sound to me like you think sales are going to go up next year in pound terms. And I just wonder at what point you decide you need to get a bit more defensive and what levers you've got in case it all goes a bit pear-shaped. Yeah, I mean, what we talked about is what we're going to do. And I think it's very first of all, there aren't any magic levers that aren't dangerous. Because the reality is, if we could do something to boost sales and profit in tough times, we should be doing those things already. So there is no silver bullet to say, well, if things get really tough, what will you do? The answer is you can only stop doing things that you otherwise think are a good thing to do. And generally, we're committed to not doing that. So what could we do? We could slash our expenditure on technology. I think it'd be the wrong thing to do. We could do it. That would be the most obvious lever to pull. We could stop the development of our new Elmsall warehouse. That would be the wrong thing to do. So there aren't any magic bullets. We haven't yet taken a view on what happens to nominal sales next year. And I think our view on nominal sales for next year will be very much driven by what we experience in the run-up to Christmas, wage inflation. And really, I think the earliest sensible view we can have on that for the purposes of forecasting is going to be the January trading statement. We have a budget we're working to. But we just don't know. And it comes back to Jake Galbraith. Is that it? It is not worth pretending that you know something you don't know. And we don't know what nominal sales will be. But there's going to be some lead time on some of this stuff. So you yourself will have presumably scenario analysis and have some idea what you would do if sales were down 10% nominal or something like that or down 5%. Yeah, no. Again, I should stress that the key thing we would have to do in that situation, I think that's unlikely. But the key thing we would have to do is make sure that we pared back our variable wage costs as fast and as efficiently as we possibly could. But I should stress again, without damaging the company, there is no magic lever that we could pull if sales were down 5% other than cutting costs that we think are generally in the interests of the company. Simon, Rebecca McClellan, Santander. Just further on to Tony's question, can you talk about how reactive your sourcing is and your inventory flows, et cetera, in the case that revenues do start to sort of come under further pressure? Yeah, I mean, I suppose that the key thing in managing our stock for next year is to start conservatively. As you can see from our numbers, if we look at the stock that we sell at full price, we're buying between 25% and 30% of planned and unplanned markdown. So our experience during the pandemic and many times in the past is that if you start to beat your target, you can capture a lot of those sales by eating into your markdown. So we are taking a very conservative view of stock going into next year. We think it's a conservative view of stock and sales going into next year. We haven't finalized our budget yet. But our starting point is very conservative. And we do that in the knowledge that if we're wrong and sales are much better than expected, it won't be as good as it could have been. But it won't be a disaster. If we order too much, then it will be a real mistake. It's very expensive. And on that, OK, I'm sorry. I thought it was a bit of a downer to end on there. So I was going to have a slightly more optimistic question. I just wanted to ask on your Buy Now, Pay Later sales and if you've seen any change, any major jumps in that, in the number of customers using Buy Now, Pay Later. And then on your Label business, and you clearly said you at the moment make a lot more margin than what other aggregators out there make. Would you give your view on why that is? And if that's a lever that you can pull to accelerate the growth in this business by reducing commission a bit more? Yeah, I mean, I think it all depends on what you're doing the second question first. I think it all depends on what your ambition is. If your ambition is growth, then yes, of course, we could pull that lever. If your ambition is profit, then I don't think it is, and actually, I think the margins that we have in the business are its key strength going into next year, and it would be unwise of us to undermine those to fuel growth at the expense of profit. That doesn't mean that those margins don't give us the flexibility. For example, if there was a one-off hit on the pound and then it came back, it gives us the flexibility to fund that next year if we had to. But what I wouldn't do is permanently undermine the profitability of the company in order to grow to super-size because we've seen how that plays out elsewhere. And it's not pretty, we think. What was the other question? Buy now, pay later. We don't have buy now, pay later other than the credit offer that we have, which kind of all the numbers are in the presentation. And I think the key yeah, the three-step. But it's all within the credit numbers. The key metric there is the one that we pointed to in terms of the average percentage of our customers' bills that they are paying off each month. And what you can see is that is still higher than it was pre-pandemic. So that suggests at the moment consumers aren't pulling that lever. Thank you. Pleasure. And on that joyous note, we'll end the presentation. That's it. Amanda and I will be here to talk to you individually if you want to ask us questions outside of the gaze of each other. Otherwise, thank you very much for coming today. And I look forward to seeing you all again in six months' time.