Next boss calls on government to support workers' wages

Next boss Simon Wolfson called on the government to help pay wages for shopworkers whose stores are forced to close as the retailer said it was prepared to lose up to £1bn in annual sales because of the coronavirus pandemic.

The FTSE 100 company said it could survive a £1bn sales decline representing 25% of annual turnover by conserving cash and without taking government help apart from the business rates holiday.

Reporting annual results, Next said it was impossible to publish guidance for the current year because there was no way of predicting how bad the impact would be on sales. Pretax profit for the year to January 2020 excluding the IFRS accounting measure rose 0.8% to £728.5m as sales increased 3.3% to £4.36bn.

Next said it had identified ways to conserve an extra £835m cash in 2020 to keep the business comfortably within its bank and bond obligations. Options for saving cash include suspending share buybacks, delaying its August dividend and suspending dividends and delaying capital spending.

Wolfson, who sits in the House of Lords as a Conservative, said Next had no plans to lay off workers or cut wages but that without government help in the event of a long closure it may have to take more severe action on wages. He welcomed the government's £350bn package to support businesses but said Chancellor Rishi Sunak should do more, including subsidising workers' pay.

"We would recommend that the Government urgently put in place measures to support the incomes of those who work in shops that are forced to close," Wolfson said. "We understand the immense pressure the Treasury are under at this time but would emphasise that clarity and speed on this issue would be useful for retailers and employees alike."

Wolfson said if the government delayed collecting taxes from businesses it would help companies survive. He said deferring national insurance, corporation tax and VAT for the rest of the current financial year would give Next an extra £240m of cash headroom at the end of the year.

He said Next's other options for conserving cash included selling and leasing back a warehouse, securitising customer receivables and redeeming a loan to its employee share ownership trust.

"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," Wolfson said.

Delaying national insurance, corporation tax and VAT for the rest of the financial year would give Next