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Next warns of unprecedented high street crisis over coronavirus | Business


The chief executive of Next has said the British high street is facing a crisis that is “unprecedented in living memory” as the fashion retailer joined a slew of companies warning of the devastating impact of the coronavirus pandemic.

Simon Wolfson said Next was planning for a sales hit of up to £1bn in the year ahead as the UK prepares for lockdown to try to slow the spread of the virus. He called on the government to put in place measures to support the income of staff at shops that are forced to close.

“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,” he said. The retailer is considering delaying a shareholder dividend and slashing investment by £45m as it hoards cash to try to survive the crisis.

Next warned that annual profits could dive to just £55m, less than a tenth of the £594m booked in the year to January 2020, saying full-price sales slumped 30% in the three-day period to 17 March as the effects of the virus began to hit.

Wolfson said the industry had not experienced a similar situation since the oil crisis in 1973 and he could not rule out closing Next’s shops in the UK, even if such a move was not demanded by the government.

On Friday the UK’s biggest furniture retailer, Ikea, said it would join Selfridges and international brands such as Abercrombie & Fitch in temporarily closing all 26 of its UK and Irish stores. IKEA boss Peter Jelkeby said: “These are extraordinary times, and our absolute priority is to ensure the health and safety of our customers and co-workers.”

Separately, Burberry said sales at stores open more than one year had slumped by between 40% and 50% since last month’s warning that profits would be affected by the virus. Around 40% of its stores are shut and more closures are expected in the coming days.

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Burberry’s chief executive, Marco Gobbetti, said the company was trying to cut costs, including seeking rent reductions from landlords, and expected sales to be down as much as 80% for the remainder of its financial year, which ends on 28 March.

Other companies also warned of the impact of the crisis on their business.

National Express, the coach and rail operator, has suffered a significant drop in passenger numbers in recent weeks across North America, the UK, Spain and Germany. Its top executives and operational managers are taking pay cuts for the duration of the virus outbreak but expect to be paid back once it is over.

In the UK, National Express coaches are moving to a service similar to Christmas Day, while buses are moving to a typical Sunday service.

Australia’s national carrier, Qantas, has come under fire from unions after it said it would stand down two-thirds of its 30,000-strong workforce without pay and end international flights. It said some could be found jobs at Australian supermarket group Woolworths.

Everyman, which runs 33 boutique cinemas in the UK, is in talks with lenders to bridge any potential covenant breach.

Bloomsbury, the publishing group, flagged up disruption to bookshops and academic institutions, but books – print, ebooks or audiobook downloads – are likely to be popular at home.

The insurer Direct Line, which owns the Churchill and Green Flag brands, halted its £150m share buyback to conserve cash, as travel claims related to the coronavirus outbreak jumped to £5m from £1m within a fortnight. The group has stopped selling travel insurance, along with rivals Aviva and LV=.

Young’s, the pub group, has announced a three-month property rent holiday for its tenants. It said: “Let’s be in no doubt that with pub closures imminent, albeit hopefully for only a short period, all businesses in our sector will be severely impacted.”

Auto Trader, the online marketplace, said it would not charge its retailer customers for their advertising packages in April and would let customers defer payment of their March advertising costs by 30 days. This will push the group into an operating loss of £6m-£7m in April.

The German airline Lufthansa said it could not estimate the magnitude of the expected decline in its earnings due to the crisis.

Carsten Spohr, the chairman of Lufthansa’s executive board, said: “The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid.”

Iberia, part of the IAG airline group which also includes british Airways, said it was laying off 90% of its workers temporarily.

The housebuilder Crest Nicholson is suspending all financial guidance and will tap its £250m revolving credit facility to release £185m of cash.



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