In its latest update, Next says it has cancelled its dividend and its share buyback scheme in order to save £480 million as it expects sales to fall ‘faster and steeper’ then it had previously expected during the ongoing Covid-19 pandemic. In particular, it has said it could incur losses of £150 million with full price sales falling by up to 40 per cent. It had experienced a 38 per cent fall in sales for the three months to April 26th following the temporary closure of its entire store estate as well as its website. It has also said that it expects the decline in trading could continue beyond summer into the winter season.
As previously reported, the Next had re-opened its website temporarily with a limited range, only to be forced to stop taking online orders as demand exceeded the much reduced capacity in its warehousing due to safe distancing measures implemented to protect its workforce. It has since extended capacity and is selling online again.
CEO Simon Wolfson said that it remained unclear when Next would be able to start to reopen stores, saying: “There is no way that we or the Government can know. No one knows what next week’s infection rates will be and there’s no comparable event to what we are experiencing at the moment that allows people to use the past to inform a prediction about the future. Rather than bully the Government to give information it can’t give we have to prepare for all eventualities.”
He added: “We believe that the effects of the coronavirus will be felt for longer than we first anticipated. The economic consequences and continued social distancing will mean that both retail sales and online sales will be disrupted even after full lockdown measures have been lifted.”
Next has furloughed more than 80 per cent of its staff until such time as it can begin to re-open stores. It says it will focus first on its large out of town stores which would be easier for organising queueing systems and the safe navigation of departments for store customers, as well as protection for staff. In the meantime it has extended the ranges UK customers can buy online and will shortly recommence online ordering services for overseas customers.
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