Next faces potential store closures pending an equal pay appeal outcome.
- A tribunal ruled that 3,500 predominantly female staff were underpaid compared to male counterparts.
- Potential costs could reach £30 million if the appeal fails, affecting store profitability.
- CEO Lord Wolfson stresses increased costs lead to unviable stores, not a threat.
- Next remains confident in appealing, despite planning for potential financial impacts.
The retail company Next is bracing for possible consequences tied to an ongoing legal matter concerning equal pay. The issue arose when an employment tribunal determined in August that a significant number of the retailer’s workforce, predominantly women employed in store positions, were not receiving equitable pay compared to their male colleagues working in warehouses. This decision highlights a gender pay disparity affecting approximately 3,500 employees, which poses a substantial financial challenge for the company.
Should Next’s appeal against this ruling fail, the retailer could be liable for additional salary expenditures that are estimated by some to potentially reach £30 million. Such a financial burden is projected to adversely affect the profitability of individual store locations, compelling the company to reconsider the viability of certain outlets. The company stated that if the ruling stands, increasing store operating costs might lead to store closures upon lease expirations, and will materially hinder plans to open new stores.
Despite the seriousness of the situation, Lord Wolfson, Next’s chief executive, was keen to clarify that the company’s actions are not intended as a threat. He emphasised that decisions would be made on a case-by-case basis, influenced by factors such as rent and payroll costs: “You wouldn’t expect a retailer to renew a lease in a shop that was making a loss.”
In contrast to this challenging backdrop, Next has reported an optimistic financial outlook. As of this reporting, the company has revised its full-year profit guidance upwards for the second time in a relatively short span, adding £15 million to its annual forecast. This adjustment means that the forecast now stands at £995 million, representing an 8.4% increase over the previous year’s profits. Such figures are buoyed by a 7.1% rise in pre-tax profits for the first half of the year, totalling £453 million as of July.
This development reflects Next’s dual strategy of maintaining confidence in its legal appeal while also fortifying its financial position amidst potential challenges. The company’s legal team reportedly holds a strong conviction regarding the appeal’s merits, even as Next prepares prudently for any potential outcomes of the tribunal’s decision.
Next’s legal and financial strategies are crucial as it navigates the outcomes of its equal pay appeal.
