Fashion and home goods brand Next has issued a stark warning of possible store closures following a significant legal loss in an equal pay case.
In a legal battle that lasted more than six years, the retailer was dealt a blow last month when more than 3,500 former and current employees claimed victory in a pay dispute.
The Labor Court found that Next had not convincingly demonstrated that the difference between the basic salaries of sales consultants and warehouse staff was not due to gender discrimination. Led by the retailer’s chief executive Lord Wolfson, Next expressed concern that while it anticipates a successful challenge to its appeal, failure could lead to store closures as costs mount.
It follows revelations that the Next boss pocketed £4.5m in pay last year as the retailer’s profits hit a record £918m. Meanwhile, the CEO received a fixed salary of £908,000, benefits of £36,000 and a pension of £136,000, The Mirror reported.
In its recently released half-yearly report, Next warned: “In the possible (but unlikely) event that we lose this case on appeal, there will be a financial cost to the group and its ongoing future operating costs.”
It went on to clarify the company’s approach to its stores: “Each of our stores is treated as its own business and must remain individually profitable if they intend to open and continue to trade upon lease renewal.”
The retailer went on to warn: “Inevitably some of our stores will no longer be viable if this decision is upheld on appeal. The material increase in store operating costs will result in more stores being closed as their leases expire, and will materially impede our ability to open new stores going forward,” reports Somerset Live.
The following bosses feared the decision could “threaten the viability of the exit”. [its] warehouse operations,” unless it can raise wages for workers at those locations.
They asked: “If warehouse work is less attractive to many people than working in stores…how can a warehouse attract the number of workers it needs?”
Their legal team remains “highly confident in our basis of appeal”; However, they have emphasized that the appeals process may take more than a year to resolve.
Next predicts optimistic business prospects as it raises its annual profit forecast for the second time in less than two months and anticipates a decrease in its prices in the autumn and winter collections.
In addition, the brand recently reported a remarkable 7.1% increase in underlying profit before tax to £452m for the six months to 27 July.
This financial boost comes amid an eight per cent increase in overall sales, although UK sales rose by just one per cent, hampered by the Next brand, which saw sales fall by as much as 7.4 per cent in June due to a surprising lack of demand for seasonal offers during the period. cool early summer.
The following revealed a significant 23% rise in overseas sales in the first half, noting in particular that UK trade has since been “substantially” stronger than expected thanks to more favorable weather conditions in August.
The retail giant saw a 6.9 percent increase in full-price sales in the first six weeks of the second half, prompting an upward revision of its annual sales growth forecast to four percent. third quarter.
Its full-year profit outlook has been upgraded by £15m, forecasting a strong £995m – 8.4% year-on-year growth.
In addition, pinch-hit shoppers should be relieved when Next announced that it will lower prices even further on its products for the coming fall and winter. The decrease was 0.3 percent after a previous decrease of 1 percent in the first half of the year.
