Next chief makes price cuts promise over no-deal Brexit
The boss of Next has insisted the retailer will cut prices by around two per cent if the UK crashes out of the EU without a deal as he unveiled a half-year profit rise.
Chief executive Lord Wolfson – an outspoken Brexiteer – said the Government’s temporary tariff regime means a no-deal Brexit would be likely to reduce the fashion and home furnishing chain’s import duty costs by about £25 million, which it would pass on to customers.
He said these cuts would probably be seen in shops from January onwards if the UK left in a cliff-edge withdrawal on October 31, although he stressed he would rather a deal was secured.
He said: “Britain is in a much better place today than it was in the run-up to the March deadline.”
But he said the biggest risk remained the potential for gridlock at ports and urged the Government to publish its plans to keep the flow of UK imports and exports moving in a no-deal outcome.
His comments came as the group reported a 2.7 per cent rise in pre-tax profits to £319.6 million for the six months to July as online sales growth continued to offset high street woes.
Next reported a 4.9 per cent fall in like-for-like sales across its 499 high street shops, but online sales jumped 12.6 per cent, leaving full-price brand sales up 4.3 per cent.
It cautioned that autumn trading so far had been “disappointing”, which was likely to lead to a weaker third quarter, but it put this down to warm weather rather than Brexit uncertainty.
Lord Wolfson said: “If you get a warm week in September, people won’t rush out to buy winter clothing.”
Shares in Next fell 4 per cent.
But Lord Wolfson said the group remained on track for a 0.3% rise in profits over the full year to £725 million and overall full-price sales growth of 3.6%.
The retail like-for-like sales fall was better than feared by the firm, but it revealed the toll taken on its high street operation, with profit from bricks and mortar outlets down 23.5%.
Lord Wolfson said: “The weight of rent, rates and service charge costs remain stubbornly fixed in the stores where the leases have yet to be renegotiated.”
But he said rents on those being renegotiated were coming down sharply, which means it will shut fewer shops this year than expected.
It now plans to close around six shops, down from as many as 13 originally.
Lord Wolfson also said although the demise of UK high streets has been “concerning”, the firm has sought to insulate itself from this impact.
He said he expects rents across the industry to become substantially lower over time as landlords recalculate the value of retail sites in the current environment.