Covid-19: Next performs above expectations as warehouse capacity grows

Next has reported a 28% year-on-year sales decline for the second quarter of 2020 (26 April to 25 July), which is substantially better than it expected in its previous trading update in April.

These results were boosted by a 9% growth in online sales over this period, with Next’s online warehouse picking and despatch capacity returning to normal levels.

The home and clothing retailer temporarily closed its warehouse and distribution centres on 26 March to ensure the safety of its staff, but restarted operations in a limited capacity on 14 April after making changes to its operations in line with Covid-19 safety guidelines.

Since then, Next has steadily built its online picking and packing capacity to meet the growth in demand on its eCommerce platform. The retailer added: “We are taking active steps to further increase the picking capacity of our online warehouses through the introduction of new 24-hour working shift patterns, along with greater support for warehouse activities in our stores during peak sale periods.”

Like-for-like store sales over the entire 13-week period fell 72%, but since reopening on 15 June sales have declined by 32%, which “has been more robust than anticipated.”

As a result, the retailer is confident about its outlook for the rest of the year. It said: “There is still much that remains uncertain and our central scenario cannot be accorded the same degree of confidence that our guidance would normally receive at this time of year. The duration of social distancing rules, post-lockdown consumer behaviour, earnings, unemployment, and, most importantly, whether there will be a second wave lockdown, all remain unknowable.

“Nonetheless, our experience over the last 13 weeks has given us much greater clarity on our online capabilities during lockdown and the state of consumer demand, and we are now more optimistic about the outlook for the full year than we were at the height of the pandemic.”