Fashion retailer Next has reported a 28% drop in full price sales for the second quarter of 2020. In this period online sales actually rose 9% year-on-year but in-store sales slumped by 72%. Looking at the first 6 months of its financial year sales were down 33% year-on-year.
The retailer said that second quarter trading was better than it had forecast and ahead of its best-case scenario. Next said that consumer demand had picked up more than anticipated. The company also said that the pandemic had accelerated shifts in how consumers shop with online retail becoming ever more important. It said that its online capabilities had responded positively and achieved higher capacities than expected.
“These results from Next are somewhat reassuring and show that the retailer is nearly back on track. Sales at Next have held up better than anticipated at the start of lockdown, a second-quarter decline on full-price sales of 28% was more than 20 percentage points ahead of its most optimistic estimate for the period in April, where the retailer estimated declines of 50% at best. This is even more impressive as Next had halted all operations from the start of lockdown on the 26th March until mid-April yet it still expects to post a profit for the year. Although in-store sales are significantly down, a decline in retail sales is something Next has been experiencing even prior to the pandemic (in the same period last year in-store sales were down 4%). Instead, it has pivoted online quite successfully over the last few years and has also been helped by fewer online returns as consumers have made more considered purchases in order to avoid having to go out for returns. It is worth noting that Next has behaved thoughtfully throughout the pandemic, even when reopening stores it ensured not to publicise its discount period to avoid the usual queues and rush that would make social distancing difficult and limited the number of items available online so that its warehouse staff could stay safe. Data from Mintel's upcoming Ethical Retailing Report shows that three in five (61%) people felt that retailers should only operate if workers can safely socially distance. The way Next has conducted itself is likely to work in its favour.”