Clothing retailer Next (NXT.L) warned on Wednesday that the coronavirus pandemic could see its full-year sales collapse by as much as 40%.
The company said that the impact of the UK-wide lockdown had been “faster and steeper” than it had anticipated, and that it now expected lower sales in both the first and second halves of the year.
Sales in the first quarter of its financial year, which ended on 25 April, fell by 41% overall, largely driven by a 52% fall-off in high street sales.
Some 84% of its staff are currently furloughed under the government’s wage-subsidy scheme, meaning that the retailer expects to save £135m ($168m) on wage costs this year.
Next said that, in its worst-case scenario, sales in it second quarter could plunge by as much as 62%, even after it reopened its online store on 14 April.
The retailer reopened its warehouse and distribution network on the same day, following 18 days of closure during which it adjusted “all aspects” of its operations to ensure social distancing and improved sanitation, Next said.
But Next said that its online store was still operating at limited capacity, noting that customers were limited to purchasing the number of items its staff could safely dispatch each day.
The company said it hoped to reach 70% of its normal capacity within the next two weeks.
Next also said that it had plans in place so that it could repurpose its stores for when the lockdown is lifted, noting that it would first focus on opening out-of-town outlets.
It plans to introduce distance-marking walkways, sanitisation stations, as well as exit and entry-management systems, among other measures.
“The economic consequences and continued social distancing will mean that both retail sales and online sales will be disrupted even after full lockdown measures have been lifted,” Next said on Wednesday (29 April).
The retailer has cancelled around £290m worth of stock purchases, and has identified some £330m worth of summer stock that can be carried over into the 2021 season.
The company also expects costs savings of £120m related to lower marketing, distribution, and store occupancy costs.