Fresh full lockdown could cost Next nearly £60m in lost sales

High Street stalwart Next has warned that a fresh full two-week lockdown across England, Northern Ireland and Scotland would cost it nearly £60million in lost sales.

The retailer said that its in-store sales in the last three months were around half of levels seen since last year, with fears already mounting about the potential impact of Wales’ two-week circuit-beaker shutdown imposed last week.

Next also said: ‘We have found no evidence of the virus being transmitted in our stores, nor are we aware of any studies that suggest clothing and homeware retail presents a significant risk of infection.’

Last month, the boss of Next, Lord Wolfson, said there was a clear threat to thousands of jobs in retail because lockdown had triggered a seismic shift to online shopping.

Impact: High-street stalwart Next has warned that a fresh full two-week lockdown across England, Scotland, and Wales would cost it nearly £60million in lost sales

But, amid the doom and gloom looming over potential further shutdowns, Next still upped its full-year profit forecast for the third time this year.

The chain now expects its pre-tax profit for the year to hit £365million, which is £65million more than first expected, with net debt forecast to fall by £487million to £625million.

Online sales during the summer were 23 per cent higher than they were a year ago with shopper demand for homeware lines and children’s clothes remaining high.

With many still working from home and formal events off the cards, sales of suits and party clothes remain down on levels seen last year.

Next said: ‘Online sales remain strong, both in the UK and overseas. In retail, out-of-town retail parks continue to perform better than high streets and shopping centres.’

Total sales in the three months to 24 October rose by 1.4 per cent, or 2.8 per cent, when interest from consumer credit is included.

The number of products sold with a markdown dropped by 12.3 per cent on a year ago, but Next explained this was due to fewer customers in stores and a focus in its warehouses on full priced goods.

Sales outperformed particularly strongly in the final two weeks of August, as the Government was encouraging workers back to offices and before the ‘rule of six’ was introduced.

Risks: Lord Wolfson, the boss of Next, has warned that thousands of retail jobs are at risk as a result of the pandemic

They fell sharply in September, but regained momentum in October and beat figures from a year earlier, the retailer said.

Looking ahead to Christmas, Next’s bosses said sales could fall by 8 per cent based on their ‘central scenario’, which includes further lockdowns, customers avoiding busy stores and increased self-isolation.

An alternative ‘upside’ scenario predicts a flat period of sales, compared with last Christmas, where ‘busier stores prove no further deterrent to retail shopping’, and there are no further lockdowns.

The ‘downside’ scenario would see a two-week lockdown being imposed triggering an expected 20 per cent drop in sales, Next said.

It added: ‘The biggest single unknown is whether England, Scotland and Northern Ireland will follow Wales’s decision to shut non-essential retail shops.

‘A two-week lockdown in England, Scotland and Northern Ireland in November would reduce retail full-price sales by around £57 million depending on timing.’

Richard Hunter, head of markets at Interactive Investor, said: ‘Christmas has not quite come early for Next, but the signs are promising ahead of the important retail season.’

He said the retailer continued to make progress, with a major reduction in net debt and an upgraded profit forecast which was ‘a further sign of recovery.’

‘Given the fact that the pandemic has taken the ultimate toll on some of its competitors, for Next to be booking a profit of this size is testament to its enduring appeal,’ he added.

Meanwhile, Russ Mould, investment director at AJ bell, remained upbeat about Next’s prospects.

Mould said: ‘What you can be pretty sure of is that Next will be prepared this time round and at least investors are getting a detailed read on how sales might perform under different scenarios.

‘The strength of Next’s brand, proposition, balance sheet and infrastructure should also set it up to be a retail survivor which can thrive in a recovery.’

Shares in FTSE 100-listed Next are up 2.76 per cent or 168p to 6,258p this morning.