Covid-19: Next reports 32% reduction in online sales

Next has reported that sales have fallen faster and steeper than anticipated during the Covid-19 pandemic. This includes a 32% reduction in online sales during the period 26 January to 25 April 2020, following the 18-day closure of the clothing retailer’s warehouse and distribution centres on 26 March to protect its staff.

Next resumed eCommerce operations on 14 April following changes to working practices, and is gradually increasing the number of staff working in its warehouses. The retailer said it hopes to increase capacity to around 70% of normal levels within two weeks.

eCommerce sales for clothing retailers have tumbled during the Covid-19 crisis due to temporary warehouse closures and reduced demand in this area. 

Overall sales for Next fell by 41% in the three-month period. Next believe there was not a material effect on sales until the second week of March as the Covid-19 crisis developed, with declines accelerating as each day went by. In the three days before the government enforced the closure of non-essential stores on 23 March, retail sales were down by 86%.

Next also set out revised full-price sales for the rest of year, and expects both online and retail sales to continue to fall substantially throughout 2020 due to continued social distancing.

Despite the devastating impact the virus has had on its business, Next has taken steps to mitigate loss of sales through cost savings, stock cancellations, and increasing cash resources, which it hopes will help see it through the crisis.

The retailer commented: “Much will depend on our ability to continue increasing the capacity of our online operations within the constraints of new safe working practices and on the timing of store re-openings. Nonetheless we believe that, even in our worst scenario, with full year full price sales down -40%, the mitigation we have put in place means that: (1) the company can operate comfortably within its cash resources and (2) we will end the year with less net financial debt than at the end of last year.”