Next has said the impact of the lockdown on its sales has been “faster and steeper” than expected.
The fashion retailer reported a 41% plunge in full-price sales for its first quarter to 25 April, and warned they will remain under pressure for the remainder of the year.
Next said it has plans in place to reopen stores when the coronavirus lockdown is lifted but said it will “take some time for customers to return to their normal shopping habits” and that trading would remain “very subdued” even then.
The group said: “The fall-off in sales to date has been faster and steeper than anticipated in our March stress test and we are now modelling lower sales for both the first and second half of the year.
“We believe that the effects of the coronavirus will be felt for longer than we first anticipated.
“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.”
Shares were 2% lower in morning trading on Wednesday.
The update comes a day after rival Marks & Spencer also issued a downbeat assessment of the retail sector’s recovery after lockdown measures are lifted.
Next, like other high street retailers, has closed all its stores during the lockdown and for a while shut its website too, before resuming online sales earlier this month.
Over the first quarter it saw sales in its brick-and-mortar stores plunge by 52%, while there was a 32% decline online.
In an updated worst-case scenario, it said it now believes full-year sales could fall by as much as 40%.
Next disclosed that it has agreed with banks to ease borrowing terms while also securing the promise of further lending under a Bank of England corporate financing scheme.
It also outlined savings of more than £900m on stock purchases and property costs. Dividends and share buybacks have been suspended, and the retailer is planning to recycle unsold spring/summerwear worth £330m 2021.
Next chief executive Lord Simon Wolfson told the PA news agency the group is working on plans to reopen up to 200 of its 500 stores initially when lockdown is lifted, but would be prioritising out-of-town outlets, where it is easier to operate in a “socially distanced world”.
But he warned that the group is not expecting a sudden rush of shoppers to hit stores or that trading will return to normal in the autumn and winter.
He said the sales hit had been “pretty brutal” so far, falling sharply even before the lockdown.
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