Retail chain Next issues warning over impact of coronavirus on sales

Next retail has been shut following the Covid 19 lockdown Picture: CHARLOTTE BOND

Next retail has been shut following the Covid 19 lockdown Picture: CHARLOTTE BOND - Credit: Charlotte Bond

Retail giant Next has issued a warning over the impact of coronavirus on business saying its effects have been “faster and steeper” adding sales will remain down throughout 2020.

The clothing and homeware retailer - which has stores in Ipswich, Bury St Edmunds and Colchester - reported a 41% plunge in full-price sales over its first quarter to April 25, with high street sales crashing 52% and online sales down 32%.

It said the impact on sales could continue beyond lockdown and may cause full-year sales to fall by as much as 40%, with the effects of the Covid-19 pandemic expected to leave sales lower in every quarter.

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Sales are expected to tumble by as much as 62% over its second quarter and could still be 28% lower over the fourth quarter to next January in the worst-case scenario.

Next chief executive Lord Simon Wolfson told the PA news agency the group is working on plans to reopen up to 200 of its 500 stores initially when lockdown is lifted, but would be prioritising out-of-town outlets, where it is easier to operate in a “socially distanced world”.

But he warned that the group is not expecting a sudden rush of shoppers to hit stores or that trading will return to normal in the autumn and winter.

He said the sales hit had been “pretty brutal” so far, falling sharply even before the lockdown.

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The group said: “The fall-off in sales to date has been faster and steeper than anticipated in our March stress test and we are now modelling lower sales for both the first and second half of the year.”

It 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 closed its online operations in late March amid the coronavirus crisis, following criticism from staff who felt unsafe at work.

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It reopened for internet shopping in mid-April, but the website closed by 9am on the first day, saying it had already received all the orders it could process for the day and would return the following day.

Next began by selling only childrenswear and some home items initially, but said in its latest update that it now has 70% of its range on offer.

Nearly a quarter - 24% - of its 8,794 warehouse staff are unable to work due to childcare or because they are vulnerable or living with vulnerable people, but it hopes to get back to around 70% of its normal workforce capacity within the next two weeks.

It initially furloughed 88% of its staff through the government scheme, though this figure has now reduced to 84% after opening the internet operation.

Lord Wolfson praised the furlough scheme and said Next would otherwise have had to cut jobs.

But he called on the Government to provide clarity on whether staff who are vulnerable or have childcare needs will be able to remain furloughed once lockdown restrictions begin to ease.

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