And with that, we will move on to questions. Who would like to go first? Yeah, Warwick.
Good morning, it's Warwick Okines from BNP Paribas Exane. I've got one question about the beer and one the froth. On the core business, the retail division has performed, I think, better than you'd expected, obviously better than your 15-year stress test. And you said that some of that is one-off with competition shifting. But what would it take for you to reassess the opportunity in the retail business, be that more investment in city center or opportunity for third-party brands, etc., in store? And then my second question on Total Platform, what sort of clients do you think you'll be signing up over the next few years? Because a number of your deals so far have come from distressed retailers or overseas retailers. What sort of mix would you expect?
Yeah, so I'll answer the easy question first. We don't know what to expect. We didn't know what to expect when we started the business. And the only, you know, our only hurdle is going to be that it's profitable to engage. And we would, as many as we can that are profitable, we'll do. And those that aren't profitable, we won't do. The mix is not really going to, is not within our control. And I've got no idea how it'll pan out. When we started the business, we didn't even expect to take stakes in our clients. So we're kind of feeling our way forward on that business. In terms of retail, what would it take? I think another year of like-for-like growth to convince me that retail has stabilized. I wouldn't want you to think that we're passing up all opportunities to relocate stores.
You know, we have continued to, you know, in Watford, we opened a very big new store as a result of the closure of John Lewis. So, you know, we haven't said, don't spend any more on retail. We're still spending GBP 40 million a year on CapEx on retail. But it's just actually, when you look at our current GBP per sq ft, in most locations, it's not enough to justify growth in the store. So this is not a global decision. This is not us sitting in the boardroom thinking, well, shall we or shall we expand retail? It's us looking at Nottingham, thinking, well, we're taking GBP 302 per sq ft. We could double our space, but at GBP 300 per sq ft, it's not screaming out for new space. We've got all the products that we want in Nottingham.
Why would we take a new shop, or should we take a new shop? So it'll be a location-by-location decision rather than a sort of global, how do we feel about retail, conversation anyway? In answer to the question about third parties, we have tried putting third-party brands in retail. There is one significant problem we've encountered with it, and that is we can't make any money out of it, and we don't think it's a coincidence that so many of the casualties were in effect mass market brands sold through retailers that didn't own them. Because I'm not sure there's enough profit. If you look at the net margins of our retail business, I'm not sure there's enough profit there for two brands.
And what we found when we introduced brands into it, we did a big trial in our Metro centre shop, quietly, obviously, put lots of brands in there. We found that they did take enough money just about to justify the space they were taking. But 80% of those sales came off our own sales. And once you looked at the margin diminution necessary to pay the brand something, it just wasn't worth it. So I wouldn't hold out a lot of hope on that, other than where we've got a license. Where we've got a license and we're making decent margins, then we can put it in. And we already do have, you know, Joules and Victoria's Secret, where we own half the U.K. franchise. We do, we are putting those into our stores. Good questions. Yeah.
Yes, Adam Cochrane from Deutsche Bank. On pricing, you've had the opportunity to maybe take a bit more pricing. You clearly decided to pass it back to the consumer. Was that a decision that you thought the consumer needs the pricing? You don't think that you get the volume uplift? What's the sort of rationale on having outlined already some price increases that you're going to take to make them a bit lower? And then secondly, when you talked about the lower and quicker development costs on Total Platform, again, is that something that makes your business more profitable, or is that something that you just pass it through to the end client? Thanks.
Okay, good question. So first on prices. Look, I mean, we're very, as you know, we're simply focused next. Over the last 20 years, the vast majority of our prices have come down, and we have always passed on the benefit to our customers. Our view is make your margin. And if you want to improve your margin, do it through your operating costs, not through the gross margin you make on cost of selling. And the reason for that is we want to remain competitive. And again, you can see this in countless retailers that each year they've added 0.5% to their bought-in gross margin, 0.5%, 0.5%, until one day they become very uncompetitive. We never want to get to that position. So our view is prices go up, we have to charge our customers more.
But if they go back down, we certainly don't want to undermine the future competitiveness of the company by what might at the time be opportunistic, but would be sort of long-term unwise. Then in terms of TP Total Platform profitability, I think service provision is an area where it's very hard to make fat margins. So I think it will contribute to the competitiveness of our pricing rather than the margins we're likely to make. I think what it will mean is that we're much more likely to make the margin we think we're going to make at the beginning of the project. We didn't make as much margin out of Reiss as we thought we were going to make, largely because those development costs were much bigger than we thought they were going to be. Yes, Simon.
Simon Irwin, guilty as charged, by the way. Two questions. Firstly, for Total Platform, is there a concern that people use you simply as a kind of an incubator while they grow, and that eventually, as they become mature, they kind of decide to take back control? And you've done an awful lot of work over, say, a three or four-year period, and then they kind of take all those learnings. And is that an argument for taking an equity holding to kind of stop them walking away because you now control it?
And secondly, in terms of the 1.6% reduction in EBIT margins you talked about, I know you gave us lots of the kind of whys and wherefores at the various points, but maybe if you could just focus that down into those elements which you think are structural and likely to stay or maybe get worse, and those elements which you think are down to kind of areas of execution or timing which you think you can improve.
Yeah, okay. So a question, are we worried about our customers growing with us enormously and then walking away? Not really. And the main reason for that is twofold. The day we worry about that is the day we haven't got a very good service. Because if a customer wants to walk away because they think they can do it better or faster or cheaper themselves, it means that we haven't got the right service and we're not as efficient and excellent as we thought we were. But secondly, and much more importantly, any capital we invest, and we hypothecate some of the capital, so we do account for the capital we have to invest in warehousing when we're doing a Total Platform appraisal, and we depreciate it. Even if we've got a big empty warehouse, we'll allocate some of it to the Total Platform client.
And that has to deliver its target internal rate of return over the course of the contract. So any capital we invest in that client has to pay back over the course of the contract. And if they leave at the end of it, the worst that's happened is that we've had a profit stream that we wouldn't otherwise have had. But I think, you know, if you go into a marriage worrying about the divorce, you're never going to have a very happy time. And you're going in on the wrong basis, as my wife reminds me regularly. So can I go through the EBITDA margins and talk to you in detail about which ones we think are structural and which ones aren't? I could do, but I don't think everyone else would thank me for it. I think there's a conversation you can have with Amanda going forward.
I think the big structural ones, I think, are the technology, where I think we are looking at a permanent step change in the amount we spend on technology. I think a lot of the other ones, like for example, warehousing inflation, I think over time, we would aim to get efficiencies out of our new warehouse that would begin to pay for that. So we're looking for those, the sort of margin reversal we suffered last year and this year to reverse out over the coming years. And what we would hope as well is that our fixed cost base as a business would not grow as fast as our turnover, you know, certainly over the next five, six years, because we've had this big fixed cost. So once we get back to growth, we would hope that would naturally lead to improving margins.
But that does depend on getting back to growth. Yeah.
Richard Chamberlain, RBC. A couple from me, please. Simon, the first one's on cash flow, I guess the working capital outflow we saw. Was that more than you expected late last year? And do you expect to get most of that back over the next couple of years? I think you mentioned GBP 100 million or something as a likely sort of reversal. And then just the second one is on Reiss. I just wondered why you're not fully consolidating it. Now you've got 51%, because I guess effectively, I guess you've got a controlling financial interest at least now. So why is that still being accounted for as a JV?
Okay, well, I'm going to hand over the accounting question to Amanda.
Yeah. So we do have 51%, but we don't actually have control of some of the decisions within the business. So that is the distinction. While it is technically 51%, we don't actually have control. So within the.
What sort of operating decisions?
Exactly. Exactly.
So we went into the shareholder agreement.
Yeah. Yeah.
It's done in such a way that actually we don't have to consolidate it. We've seen over, I mean, it makes our accounts hugely confusing if we do.
Right, okay.
And then do you want to answer the working capital one as well, Amanda, as I've got you?
Exactly. So there were some fairly big one-off outflows last year. ESOT is one of them. We will have an outflow this year with ESOT, but it won't be anywhere near as big. Last year it was about GBP 90 million. I expect this year it'll be GBP 50 million. So we saw less of our employees exercising their share options because of where the share price was. We also saw a fairly big outflow from stock. Again, we don't think we'll see that. So we've laid out our cash flow. We've given actually an estimate for working capital. Last year, in total, it was GBP 200 million. This year, we think it's going to be less than GBP 20 million outflow. And that's the outflow. Really, it will just be the ESOT. So there's nothing unusual in there this year.
Okay, great. Thank you.
Thanks. It's Anne Critchlow from SG. In overseas, what's the EBIT margin difference, please, between the aggregators and your own website? And then secondly, just a quick update on how home performed versus apparel in the second half and also into the current trading period. Thank you.
So aggregators and home performance, yeah. So aggregator margin, it varies by aggregator. And obviously, it's extremely commercially sensitive. It's not something I'd like to share necessarily, but it's at least 2% less. And then in terms of home, home has had a really torrid year, both against last year and three years ago. We are beginning to see that pain is easing. Literally week by week as we get into this year, the comps begin to get much softer. But it's been a very difficult year for home sales. Sorry, right at the back there, you had a Tony.
Yeah, thanks, Tony Shiret of Panmure Gordon. Just a couple of things. First of all, I just wondered whether in terms of the tech, you've always done everything in a very bespoke fashion. And this year, you know, with the Total Platform, you've sort of had to revisit how you've done it. And the business is getting more complex, clearly. I wondered whether there are any thoughts about how much of the tech you want to keep in-house and whether there is anything truly special about what you do with your tech that someone else couldn't do for less outside. That's the first question. And the second one's on automation at Elmsall.
When you kindly took us up to see another warehouse in that sort of vicinity a few years ago, there was an automation experiment going on, which I think involved sort of robotic things, sort of doing a bit of a sort of strictly thing around a massive floor. And next to it, there was a bloke throwing things into a hopper, doing the same thing in about a millionth of the space. I just wondered, you know, exactly how much automation is going into Elmsall 3 or whether it's just a bit of automation.
Yeah, okay, it's a really good question. So I'm going to start with the technology question. I think first of all, there are some cases where we are going outside. And we've had good and bad experiences going outside on technology. We had a very bad experience, you might have read about it, with our payroll system sending it outside. Now, I think we would still go outside with that, but we would delegate, we wouldn't go outside with as much of the functionality. We would only go outside the business for the functionality that was generic, not the special functionality we wanted, which they had to adapt and which sort of caused a lot of problems. We've had a very good experience in our call center where we've bought in some third-party software and layered it on top of our bespoke software.
It does a lot of the sort of call handling and data management. But the underlying applications, the functionality, the way we deal with customers, the sorts of the way the returns are dealt with, all of the underlying code applications are our own. But the code that presents it to the user, which is generic and became in every call center we have contracted out. We're not theological about technology. But in the vast majority of cases, what we want from our retail technology is our things that other people aren't doing. Therefore, to get in a consultant to build those applications is sort of A, literally it triples the cost. And B, the first thing they do is they regularly ring me up and say, "Oh, hello, Simon. I just want you to know that I work for X, Y, and Z, your big competitors.
And we've just done a big system for them. We'd like to do the same for you." So actually, if we see technology and systems as being part of our advantage, contracting it out, A, doesn't make sense financially, and B, it's part of the competitive advantage we want to build. So it's not an article of faith, and where we can contract things out, we do. But where we think we're creating value, we should be able to do that ourselves. I can see no reason why we shouldn't be a good retail technology business. Secondly, on automation, the robots you saw, unsurprisingly, perhaps failed. So they didn't work. We have got other similar robots that are called Geek+ that look like R2-D2 whizzing around carrying things. They have worked. The new warehouse is very highly automated.
The big difference between the new warehouse and our existing warehouse is that all of the items are picked into a pouch. At the moment, in our normal warehouse, our items are picked into a tub and then sorted on a big automated sortation system. In the new warehouse, essentially, items are picked, many of them automatically, from bulk into a pouch. And that pouch is then delivered to an individual packer with its other partners readily available. And that eliminates the sortation that the packer has to do at the moment. And it also means, for example, you can have different packaging for different clients. Because once the packer has packed the item, the parcel is then resorted to destination. At the moment, the sortation to packer is also the sortation to destination. So each packer is, in effect, packing for a courier rather than just packing generally.
So the new warehouse, both in terms of picking and packing, is much more automated. To give you a flavor of that, in terms of the actual labor cost in the new warehouse versus the old one, it's about.
About 40% less.
About 40% more automated than the existing warehouse, which already has a lot of automation in it. Okay, yeah, sorry. Sorry, second row back, yeah. Not you, Simon. Now, so thanks. You're next, Gina.
Hi, it's Georgina Johanan from JP Morgan. Three questions, please. The first one.
Oh, no, it must be a first time. We only have two here.
Two.
No room for inflation in this room here.
I'll stick to two. So two questions, please. First one, just in terms of online penetration from here, where do you see that going in the U.K., please? Particularly where some retailers are actually rolling back the convenience or increasing the cost to consumers to shop online. And then second question, we've all sort of read a lot about elevated inventories in the market. And just to understand what you're seeing and hearing from your brand partners on that in the U.K., is it sort of less of an issue in the U.K., please? Thanks.
Okay, the second question is very relevant. So first of all, I think that graph that we showed of our own stocks is pretty representative of everything we're hearing from the rest of the industry. That everyone bought in, ended up with far too much stock last year, and they're all working their way through their stocks. I don't sense that we've got anything, certainly NEXT hasn't got a, you know, our stocks are where we want them to be. I don't get the sense that the industry is very different, but people don't necessarily share with you. It's a bit like stock pickers. They don't necessarily share with you the ones that have gone down. You know, I think if people are overstocked, it's not necessarily something they're going to share with us readily. But I certainly am not hearing that.
Then in terms of U.K. penetration online, we obviously, we just don't know. And we think that we have this extraordinary resource of all these highly intelligent analysts who make their own predictions and have a much better idea of these sorts of things than we do. So we'd much rather rely on your general sense of the market than our own in that sense. And we don't need to predict general market penetration, so we don't. Simon.
Thank you. Simon Bowler from Numis. For two questions. First one, in the interim, you spoke quite a bit around kind of tightening ranges and how you felt kind of breadth had gone too far. Just wondering, A, what learnings you've had from reversing that and also how to then contrast that with a bit of the messaging today, which seems to be around broadening ranges or choice again. And secondly, just regards to kind of Total Platform, there's a few references around kind of integration costs being a bit higher, clearance costs and reestablishing full price sales being a bit harder and not working for smaller clients.
Just in terms of where you think about the visibility you've got on that proposition of business going forward here, are you confident there's no more, skeletons is a bit harsh word to use, but no more kind of unforeseen challenges around how you model and think about that business going forward?
We're not confident about any other business, obviously. I think we are, yes, I think we have kitchen sinked it, but who knows? You know, it's in our nature to try and kitchen sink these things, but I wouldn't want to, I wouldn't want to fine-tune it. And I think the other thing is in the context of the GBP 800 million, whether that's seven or eight or six, it's not something we're spending an awful lot of time on. It's a big amount of their profit, but it's a very small amount of our profit. And it is, as I sort of stated, it's really down to the managers of those businesses, chief executive of that business to manage that profitability. I've got no reason to think that that number isn't right at this point in time.
Something less around kind of this year's numbers per se, but just in terms of some of the challenges that you've been, you know, operational as much as anything that it sounds like you've potentially had kind of launching over, I guess, teething problems with that as a new proposition.
No, I think this, sorry, you're talking about the Joules one?
Yeah, Joules was all about and across the administration costs, across some of the others as well.
Joules was all about their stock coming in via the administration process. So I think we have learned a lesson there about stock and administration and how much of it turns up on time and how you should value it. But I don't think, I don't think it's a big lesson. If I look at the successes we've had on the acquisitions out of things like Made, on balance, I think we've bought things that are much more valuable than the money we paid for them rather than not. But I think we wanted to highlight the fact that in Joules, that wasn't the case.
Simon, are you referring to Joules' website, sorry, the Reiss website that took longer than we thought? Is that the point you were?
It wasn't on any kind of specific point. It was more just like the aggregation of some of those challenges that you've had and the extent to which you think you kind of threw those.
No, I think in terms of, I don't think the issues have been operational. I think they have been all about actually, it took longer to code some of the things than we thought it would take. But we're very confident, because we're well into the Made project now, we're very confident that it's going to be much more efficient going forward. So it's not something we're overly worried about or worried about at all in terms of onboarding new clients.
And then sorry, just on the ranges.
Yeah. I think the key here is there is a world of difference between broadening your offer and duplicating it. And we were very clear at the time, we wanted to continue to broaden the real choice for our customers, but offering them seven different versions of blue stretch chino in the same fit isn't a broader choice. It's just more of the same. So we wanted to cut out the duplication, but continue to push the breadth of offer.
Yeah, hi, Geoff Lowery at Redburn. Just one question. Your NEXT Brand UK online margin, 22% pre-COVID, 19.9% last year, 17.5% this. Which of those three numbers do you think is a closer approximation to where you think you go medium term? And within that, is the cost of the new warehousing effectively in this fiscal year, or is there another step change next year given what you've said about Q3 onwards, automation, step-ups, etc.?
I think most of the cost is in this year and very few of the benefits. There is some cost to come through next year, 2024, 2025, but all of the lion's share of the efficiencies we'll get from the automated picking, which doesn't come on stream till October, and the packing, which comes on stream next March, we won't feel until next year. So I kind of think it's the other way around, actually. I think this year we take the lion's share of the pain, and next year, all being well, we'll get the benefits. In terms of long-term, I'm not going to try and give you a forecast for our long-term profitability. I think what I would say is that I would not expect NEXT Brand's margin to decline in any of the years that we grow going forwards.
So if it is seven and a half this year and next year online grows, I would expect that to grow going forward, NEXT Brand.
Hi, Nick Coulter from Citi. Perhaps a follow-up to Geoff's question, if I can ask something about the big picture section. I guess beyond this year, what sorts of earnings growth or CAGR do you aspire to if the 5% or 6% that you showed on screen is disappointing? Thank you.
Yeah, it's a big mistake to give CAGR aspirations. It's very easy to deliver CAGR through increasing risk. It's very hard for shareholders to see that risk. So, you know, we're certainly not going to make that mistake. And the mistake starts with setting yourself glorious ambitions. And what I can say is I would definitely want it to be more than 5.5%.
Great, thank you. Perhaps I can ask a granular follow-up then on freight. I think you said it peaked at around 6.5% of COGS. Where do you think that goes to this year, and do you expect any movement thereafter? Thank you.
Amanda, do you want to?
I think it's certainly halving. It's come down significantly.
Historically, it would have been two.
Yeah.
So I think somewhere between two and three. Long term, this year, three.
Brilliant, thank you.
Morning, Andrew Hollingworth from Holland Advisors. Just one question. It's great to hear you talk in more detail about Total Platform. And obviously, it sounds like it's a pretty compelling prospect, the 5p saving, the GBP 0.30 saving, sorry, the 5p benefit to you, the 30p benefit to Reiss and so on. The only question I've got is it sounds like it's right now, from what I'm hearing, appealing to a sort of narrow range of brand in the sense that a business is obviously in trouble that you're taking an equity stake in, that you're hugely improving the efficiency of the business and benefiting via the equity stake. Is that right, or is there a much broader range of customers that can benefit from this that you might charge a different price for that you maybe don't take an equity stake in?
Yeah, I think it's a very good question. At the moment, because we are so limited on capacity, we're only really talking to clients where we think we've got the opportunity to get both benefits. Once we're taking on eight clients a year, we'll be very happy with the 4%-5% of their turnover, and I think that does broaden the sort of funnel of businesses that we'll talk to.
Okay, thank you.
Hi, Simon. David Roff from Bank of America. I've just got two questions. Firstly, on the Total Platform, once you've worked through all the warehousing capacity constraints and the automation, what will the GTV capacity be for Total Platform? And then my second question is just on current trading. It's good to see some commentary back in the release. The full price sales in January, if I recall correctly, were flat year on year, and that went down to - 2%, I think, in the last eight weeks. I appreciate there's some variance in the base, etc. Are you perhaps able to add some color on what that was on a three-year basis? Thank you.
Yeah, we've actually put in the three-year number in the pack.
Yeah, just over 21%.
So we're in a rather odd situation where, against last year, we're bang in line with the quarter's target, but against three years ago, we're beating it.
I should say that's four years.
Four years, yeah, four years.
Yeah, four years.
Three years it was last year, this year.
Okay, so sequentially from January to the last eight weeks, there's no slowdown on a three or four-year basis?
No.
Great.
No, and you know, but take what encouragement you will from that, because who knows which comparative year is the right one. In terms of what GTV we could take on, obviously, it will depend very much on our client's average selling price, because our constraints are units, our warehouse capacity is units rather than value. So I wouldn't want to put a value on it. I think what we can say is that it will give Next, at Next's average selling prices, around an increase, the new warehouse will give us an increase in boxed around 40%-45% in capacity for NEXT. Bear in mind that our turnover in our own brand is in the order of GBP 2.5 billion.
Yeah.
In NEXT money, it's sort of, it's over GBP 1 billion.
Thank you.
We've also, we have got the capacity to expand that warehouse further, the existing shell, and we've got planning permission on the site next door. So we're not going to get, we're not planning to get in the same pickle that we got into this time and sort of end up chasing capacity that we need. Yeah, James.
Morning, James Grzinic from Jefferies. I guess two quick ones. The first one is, can you perhaps share a little bit more the experience of conversions, how they developed in Powered by Total businesses? I'm just trying to get a little bit more of a sense of the KPIs of just how superior the economics are when you plumb those into Total.
No, we can't. It varies hugely by client, and what you'll see in the first month is a drop in conversion, because any big change you make to a customer's website, people aren't used to, you'll see a bit of a drop. Generally, I think Reiss is probably the best example, because it was the only one that wasn't in distress of any type. They did experience a step forward in their total sales growth as a result of moving on to Total Platform. Do you want to add anything to that, Amanda?
I'm trying to think what the number was now, but it was double digits.
Yeah.
Yeah.
Secondly, do you sense you need to remap a little bit your sourcing by geography? Some of your peers seem to be thinking that post-COVID. Is that something you're thinking much about?
Yes, but it's not. The way we think about it is not in the boardroom. You'll be pleased to hear. You know, so we're not big fans of sort of clever people sitting in the boardroom going, you know what, we need to be more in China and less in Taiwan, because what do they know? What do we know? The reality is that all of the movements over the years, we've gone from 50% of our stock made in China to, you know, 10%-15% of it made, and a lot of that's moved into Bangladesh. At no point has that been driven by the people at the top of the company.
The way that our sourcing business moves is partly mainly through our buyers and quality assurers who go out, source new factories, compare prices, compare capabilities, and if they can find a better factory in a new territory than the one they've got in existing territory, they will move the stock. At no point do we try and manage it top down. We help that process by making sure that in every major area of production, whether that be Bangladesh, Sri Lanka, India, Hong Kong, Shanghai, we have local feet on the ground and a local office so that our buyer going there is very easy for our buyers. They turn up, ring the local office, say I'm turning up, they get picked up in a car, taken to different factories.
So we are actively looking in all of these areas, but that is to create the opportunity for our buyers to move their production, not in order to point them in one direction or another.
Thank you. Sreedhar Mahamkali from UBS. Just picking up on James's question there, please. You've also referred to improving factory gate prices in the release, and you've discussed it quite a bit, increasing capacity in your own efforts. Is there anything structural you're able to identify there in the efforts that you're putting through that actually you can see better prices or better margins in the medium term, or is that just a comp effect?
It's not structural. It is that, you know, when I went to Bangladesh just before Christmas, every factory I went to, all the factories work, you know, normally they're obliged to give the workers eight hours, but they can give them ten. Customary practice is to give ten, and that's what people want. They want extra hours. All of them pretty much are cut down to the minimum. Every factory I visited, they'd cut down to the minimum. This is a fact that as average selling prices have risen, consumers haven't spent any more money. If anything, they spent a little bit less. So the number of units being produced in those factories has fallen dramatically. Layer on top of that, the fact that everyone had overordered, they'd accelerated their order. They pushed their order book further forward than they would normally do.
When they start to decelerate, when they start to buy to more normal lead times, that leaves a hole in the factory. So there is a loss of capacity at the moment. And that's, if you want to look at what's really driving prices back to where they were, it is the availability of capacity. What drove them up in the first place was there wasn't any capacity. What's driving it now is that there is.
A quick one closer to home. In terms of retail occupancy costs, they've clearly been a very big driver the last five, six years. Do you have a view on where we might go on a three-year view? Do you think we have much more to go? I think there's an interesting chart you presented there in terms of cost sources.
Yeah, I'm very confident that we have room to go, largely because we've still got leases that were written before 2017 that haven't yet expired, and those ones we know are overrented. So we're still getting the tail-end effect of the downturn that began in 2017. We will continue to get that downturn feeding through into rents, we think, over the next two, three years. What happens beyond there, I think, will depend on two things. One is alternative use, and the other is retail sales. The second of those is by far the most important. I think what this downturn has proven, though, is that in the long run, in the absence of alternative use, ultimately retail rents do adjust back to where they need to get to in order to allow retailers to trade profitably.
I think that the interesting sort of bit of color on that is retail parks. In retail parks, where there seems to be a floor between GBP 11 per sq ft and GBP 14 per sq ft, and that's where there is alternative use from people like their value, food retailers, B&M, all those sort of that value sector, they provide a floor. So we're not seeing the drops. The lower the rent, the less likely it is we'll see a big percentage drop in it. Good, and I think 10:34, you've all had enough. Those who haven't had enough, we're here to answer questions for the next 10 minutes. Okay, thanks very much, everyone. Have a good day.