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Coronavirus; Next expects 40% sales drop amid crisis

Next shopfront

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PA Media

Next has warned that sales will suffer this year with shoppers kept away amid coronavirus.

The fashion retailer said on Wednesday that full-price sales in-store and online could drop by up to 40%.

The company said that it was hard to think of a time when sales and profit had “been more difficult to predict”.

In the three days before non-essential shops closed under government instruction on 23 March, in-store sales plummeted by 86%.

The Leicestershire-based firm said: “In reality, the majority of our customers had decided to stop shopping in retail stores before the order came to close them.”

Next said store sales plunged 52% in the 13 weeks to April 25, its first quarter, while online sales were down 32%.

The retailer, which typically makes more than half of its sales online, was forced to temporarily shut its online operations on 26 March.

After a three-week break, the firm started selling some items online including children’s clothes, following improved social distancing measures at its warehouses.

It says it has since increased the number of products available, with up to 70% of its range now online.

It has put shopping limits in place to protect workers. Once a certain number of orders has been placed, the website now becomes “browse-only”, to ensure those workers can cope.

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Next

The firm initially furloughed just under 90% of its staff, the vast majority being from stores and warehouses that were closed. It says that has now dropped to 84% as online sales have picked up.

Anxious shoppers

It also said it had plans in place to re-open its out-of-town stores first, once any restrictions on non-essential retailers such as clothing stores have been lifted.

These larger stores tend to trade longer hours, reducing the numbers of people in the shop at any one time.

Next says it will bring in Perspex screens to separate workers and customers at the tills, distance markings on the floor and hand sanitiser stations.

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Next plans to bring in 2m social distance markers as seen in supermarkets

Richard Lim, chief executive of Retail Economics, said: “Understandably, consumers will remain anxious about shopping in crowded locations.

“Shopping has always been a social event, but new restrictions on our movement and personal interaction risk undermining the experience.”

“The key question is whether consumers will be confident enough to return to shopping destinations when stores begin to reopen and whether the level of demand will be strong enough to make it commercially viable.”

In April, the British retailer also put its headquarters and warehouses up for sale in a bid to secure its future during the coronavirus pandemic.

The firm appointed two agents to sell its head office at Enderby in Leicestershire and three of its warehouses in West Yorkshire. It hopes the sales will raise up to £100m.

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