Next faces possible store closures following a pivotal equal pay tribunal.
- 3,500 predominantly female store workers were paid less than male warehouse counterparts.
- The potential cost of compliance could reach £30 million, affecting store profitability.
- Next’s leadership expresses confidence in their legal appeal despite concerns.
- The retailer has increased its annual financial forecast despite the ongoing legal challenge.
Fashion retailer Next is confronting a significant challenge that could result in store closures if its appeal against an equal pay ruling is unsuccessful. Recent tribunal findings in August highlighted that 3,500 predominantly female workers at Next stores were receiving less pay than their mostly male warehouse colleagues, a revelation inducing potential financial implications for the company.
If the retailer loses its appeal, the financial burden could be substantial, with estimates suggesting that compliance may cost up to £30 million. This figure could notably impinge on the profitability of individual retail locations, rendering some stores unsustainable.
Next has cautioned that an increase in operational costs due to this ruling, if upheld, could lead to more closures as their leases end. The decision not to renew leases on loss-making outlets aligns with strategic financial management, a sentiment echoed by Next’s leadership.
Lord Wolfson, Chief Executive of Next, refuted any suggestion of veiled threats regarding store closures, clarifying that heightened costs, whether from rent or payroll, inevitably influence strategic decision-making processes.
Despite these challenges, Next remains optimistic, supported by their confidence in their legal team’s appeal capabilities. In a display of financial health, the company recently revised its full-year guidance, raising the forecast by £15 million to almost £995 million, marking an 8.4% increase in profits from the previous year.
The outcome of Next’s appeal carries significant implications for its operational future and financial strategy.
