Next’s managing director said the main street in Britain was facing a crisis “unprecedented in living memory” when the fashion retailer joined a number of companies warning of the devastating effects of the corona virus pandemic.
Simon Wolfson said Next plans to generate sales of up to £ 1bn next year as the UK prepares to block to slow the spread of the virus. He urged the government to take measures to support the income of employees in stores that need to be closed.
“Our industry is facing a crisis that is unparalleled 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 postponing a dividend for shareholders and lowering the investment by £ 45m as it gathers cash to weather the crisis.
Next warned that annual profit could drop to just £ 55m, less than a tenth of the £ 594m booked in January 2020, and said total sales in the three days to March 17th The virus started to hit by 30%.
Wolfson said the industry has not seen a similar situation since the 1973 oil crisis and that it cannot rule out closing Next’s UK operations, even if the government does not require such a move.
The UK’s largest furniture retailer, Ikea, announced on Friday that it would temporarily close all 26 UK and Irish stores along with Selfridges and international brands such as Abercrombie & Fitch. IKEA CEO Peter Jelkeby said: “These are exceptional times, and our absolute priority is to ensure the health and safety of our customers and employees.”
Regardless, Burberry said that sales in stores that have been open for more than a year have dropped 40% to 50% since last month’s warning that profits would be affected by the virus. Around 40% of stores are closed, and further closings are expected in the coming days.
Burberry’s CEO, Marco Gobbetti, said the company had tried to cut costs, including rent reductions from landlords, and expected sales to decrease by up to 80% for the remainder of the fiscal year ending March 28.
Other companies also warned of the impact of the crisis on their business.
National Express, the bus and train operator, has seen a significant drop in passenger numbers in North America, the UK, Spain and Germany in recent weeks. Top executives and plant managers cut wages for the duration of the virus outbreak, but expect to be paid back as soon as it is over.
In the UK, National Express buses switch to a service similar to Christmas Day, while the buses switch to a typical Sunday service.
Australian national airline Qantas was under fire from the unions after it announced it would cut two thirds of its 30,000 employees without pay and end international flights. It was said that some could find work at the Australian supermarket group Woolworths.
Everyman, which operates 33 boutique cinemas in the UK, is in talks with lenders to help address possible breaches of contract.
Bloomsbury, the publishing group, pointed to disruptions in bookstores and academic institutions, but books – print, e-book or audio book downloads – are likely to be very popular at home.
Insurer Direct Line, which owns the Churchill and Green Flag brands, stopped its £ 150m share buyback to save cash as travel claims related to the Coronavirus outbreak erupted from £ 1m within 14 days GBP 5m rose. The group has discontinued the sale of travel insurance along with rivals Aviva and LV =.
Young’s, the pub group, has announced a three-month rental vacation for its tenants. It said: “Let us have no doubt that the upcoming closure of pubs, albeit hopefully only for a short time, will severely affect all companies in our industry.”
Auto Trader, the online marketplace, said it will not charge its retail customers fees for their advertising packages in April and will postpone payment of the advertising costs for March by 30 days. This will drive the group into an operating loss of £ 6 to £ 7m in April.
The German airline Lufthansa said it could not estimate the extent of the expected decline in earnings due to the crisis.
Carsten Spohr, CEO of Lufthansa, 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 had temporarily laid off 90% of its employees.
Home builder Crest Nicholson is suspending all financial forecasts and will use its £ 250m revolving credit facility to release £ 185m in cash.