High street retailer Next warned this morning that full-year sales could dive as much as 40 per cent after the impact of coronavirus on trading was “faster and steeper” than expected.
Next’s share price dropped as much as four per cent after the retailer said total full price sales including interest income were down 38 per cent in the year to 25 April.
Retail sales plunged 52 per cent due to the closure of all non-essential stores during the coronavirus lockdown.
However in the three days before shops were ordered to close on 23 March Next’s in-store sales plummeted 86 per cent as consumers made the decision to stop shopping before the lockdown.
Online sales dropped 32 per cent during the period. The retailer reopened its online operations this month after shutting it down when the lockdown was announced.
Product full price sales were down 41 per cent and finance interest income increased two per cent during the period.
“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,” the retailer said this morning.
Next reopened its online operations on 14 April following a temporary closure in March and is now offering 70 per cent of its product ranges for sale.
The retailer, which has been taking a limited number of orders each day before closing the online store, said it is aiming to increase capacity to 70 per cent within the next two weeks.
Next also unveiled plans to reopen stores with social distancing measures in place, and said it will prioritise the opening of its larger out-of-town branches first.
However the retailer warned that “it will take some time for customers to return to their normal shopping habits and that sales will be very subdued when trade commences”.
Retail Economics chief executive Richard Lim said: “This makes for a sobering read and puts into context the size of the challenge at hand.
“The reality of the sales drop was worse than previously feared. It feels like the industry is coming to terms with a recovery that will undoubtedly be slow and protracted.”