Next boss fears ‘significant hit’
RETAIL chain Next has warned it is preparing for a “significant” trading downturn amid the coronavirus pandemic as it braces for a potential £1billion in lost sales.
The group said the outbreak could see full-year sales plunge by 25 per cent in a worst-case scenario and completely decimate sales over some weeks, but assured the firm could “comfortably sustain” the hit.
Next boss Lord Simon Wolfson revealed the group would keep its 498 stores open, unless the Government advises widespread shop closures.
He said: “As long as the Government feels it is appropriate to keep shops open, we should keep the service available to customers.”
In the event of a prolonged closure period and no government assistance, Next cautioned it may be forced to take “radical” action on wages to help cut costs – including redundancies and forcing staff to take time off.
But the group – which employs around 30,000 people – hopes it can offset a severe trading hit by not requiring staff to work more than their contracted hours and, in the short term, not replacing leavers. Its recent figures showed the toll taken as Britain has begun to go into lockdown, with high street sales falling by as much as 46 per cent since Sunday.
Sales have declined markedly each week since mid February, with total sales including online down 8.8 per cent last week and 30 per cent so far this week.
Lord Wolfson said online sales are likely to fare better than stores due to social distancing measures, but gave a bleak outlook for trading in the coming months, cautioning that “people do not buy a new outfit to stay at home”.
The comments came as Next reported a better-than-expected 0.8 per cent rise in pre-tax profits to £728.5million for the year to January as overall full-price brand sales lifted 4 per cent.
Lord Wolfson said: “It is now very clear that the risk to demand is by far the greatest challenge we face and we need to prepare for a significant downturn in sales.”
Shares in Next improved by 204p to 4,054p despite the concerns.