Next boss: ‘People do not buy a new outfit to stay at home’

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The boss of Next has warned that the retailer faces a “very significant drop in sales” as a result of the effect of coronavirus on the business.

Lord Wolfson said online sales were “likely to fare better” than the shops, but would also suffer “significant losses”.

“People do not buy a new outfit to stay at home,” he added.

When coronavirus first appeared in China, Lord Wolfson said Next assumed the threat was to its supply chain.

However, he 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 for the duration of the pandemic”.

The warnings were contained in Next’s annual results statement which showed that in the year to January 2020 total group sales rose by 3.3% to £4.36bn, while profit edged up by 0.8% to £728.5m.

Online sales performed strongly, rising by 11.9% to £2.14bn, but retail sales fell by 5.3% to £1.85bn.

Lord Wolfson said the company had carried out a detailed stress test looking at the likely impact on cash and profits of different levels of sales decline.

These range from a fall in sales of £445m, or 10% of annual turnover, up to a loss of £1bn, the equivalent of 25% of annual turnover.