Next has reported revenue growth of +2.4% and profits up +1.9% to £610.2m for the year to January 2020 (on a statutory basis), and revealed its stress-test scenarios around coronavirus' impact on the business.
YoY, full-price online sales were up +11.9% and profits up +13%, while in-store full-price sales fell -4.3% (and total sales, including markdowns, by -5.3%), with profits down -23%.
Next closed seven stores during the period, and plans to close another 14 this year, while adding two new trading locations and relocating five existing stores – a net reduction of -65,000 sqft (-0.8%).
Despite acknowledging the unprecented nature of the coronavirus crisis, Next has modelled scenarios up to a loss of £1b (-25% of annual turnover). It says savings measures including the suspension of its buyback programme, delayed expenditure, loan redemption and dividend deferral could save the company more than £835m, which would enable it to "comfortably sustain the loss of more than £1b of annual full-price sales, without exceeding our current bond and bank facilities".
Evidence from sales to date indicates that although operation will be impacted, the greatest damage will be caused by falling demand (although online is likely to fare better than in-store selling, and homewares appear to have been less affected than adult clothing).
"Over and above managing the business through the pandemic we must ensure that we continue to develop the business – its product ranges, operations and online systems," says chief executive, Lord Wolfson. "Our industry is facing a crisis that is unprecedented in living memory, but we believe that our balance sheet and margins mean that we can weather the storm."