Next feels the full force of COVID-19

Following today’s release of Next H1 figures for FY2020/21,

Emily Salter, Retail Analyst at GlobalData, a leading data and analytics company, comments:

‘‘Though a sobering set of results that illustrate the decimated demand for clothing & footwear due to COVID-19, Next’s Q2 full-price sales growth far exceeded expectations at -28%, compared to a dire scenario of between -50% and -62% stated in April. The retailer now expects FY full-price sales to fall between 18% and 33% in a worst case scenario as the full effects of social distancing and economic uncertainty are felt. This indicates the haemorrhage of sales many other fashion retailers will be experiencing as Next’s wide product offer and robust online platform offers it some protection. Despite negative online sales growth in the period due to the initial warehouse closure and reduced capacity, Next is better positioned than many of its rivals to deal with the long-term impacts of COVID-19.

The retailer’s 9% growth in online sales in Q2 is testament to the continuous improvements it has made to its online proposition over the last few years. Though other retailers will have experienced higher online sales growth, a significant proportion of Next’s sales already came from the online channel, standing it in good stead to deal with greater demand – for instance it is introducing 24 hour shifts to increase warehouse picking capacity.

Prior to COVID-19, Next was experiencing a slowdown in the shift to online, but the impacts of COVID-19 have further increased the dominance of the online channel, making the retailer’s innovations to transform stores into destinations and support the online channel ever more important. Like-for-like store sales have not seen a significant improvement since reopening, remaining at around -24% for the last three weeks of the period (versus -32% since re-opening), indicating that many shoppers are still reluctant to visit non-essential stores. Next’s retail park locations significantly outperformed shopping centres and high street branches given their larger size that will make many shoppers feel more comfortable, a protection not offered to many clothing & footwear retailers.”

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