Retail chain Next is gearing up for a worst-case drop inn sales of up to £1 billion during the coronavirus pandemic.
The £4.2 billion turnover retailer said full-year sales could drop 25 per cent in a worst case scenario and completely decimate sales over some weeks - but management assured investors, shoppers and staff the firm could "comfortably sustain" the hit.
Next shares have almost halved in value in the past month, and were today trading marginally up at just short of £39.
Next boss Lord Simon Wolfson told the PA news agency the group would keep its 498 stores open, unless the Government advises widespread shop closures.
He said: "As long as the Government feels it is appropriate to keep shops open, we should keep the service available to customers."
In the event of a prolonged closure period and no government assistance, Next cautioned it may be forced to take "radical" action on wages to help cut costs - including redundancies and forcing staff to take time off.
It comes as the smaller retail chain Joules - which is also based in Leicestershire - has urged the Government to do more to help workers in the 海角视频 retail sector as the economic impact of coronavirus continued.
That business – which has seen its share price plummet from £1.70 to 40p in the past month – said it had cash in bank to tide it over as it works to maintain the “long-term value” of the brand. It is also cutting non-critical capital expenditure.
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Next - which employs around 30,000 people - hopes it can offset a severe trading hit by not requiring staff to work more than their contracted hours and, in the short term, not replacing leavers.
Its recent figures showed the toll taken as Britain has begun to go into lockdown, with its high street sales falling by as much as 46 per cent since Sunday.
Sales have declined markedly each week since mid February, with total sales including online down 8.8 per cent last week and 30 per cent so far this week.
Lord Wolfson said online sales are likely to fare better than stores due to social distancing measures, but gave a bleak outlook for trading in the coming months, cautioning that "people do not buy a new outfit to stay at home".
The comments came as Next reported a better-than-expected 0.8 per cent rise in pre-tax profits to £728.5 million for the year to January as overall full-price brand sales lifted 4 per cent.
Lord Woflson said: "When the pandemic first appeared in China, we assumed that the threat was to our supply chain.
"It is now very clear that the risk to demand is by far the greatest challenge we face and we need to prepare for a significant downturn in sales for the duration of the pandemic."
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Next cautioned that sales would continue to fall for as long as a month, before gradually improving as the outbreak passes - leaving overall sales 53 per cent lower over the affected period.
But the group said this is seen as an "overly pessimistic" sales scenario and is assuming a 20 per cent fall in annual sales at this stage.
Russ Mould, investment director at stockbroker AJ Bell said “Stress tests are normally the domain of banks to prove they could survive a sharp economic downturn.
"Now this practice is likely to become commonplace across many other sectors as companies seek to prove to investors that they have adequate strength to survive the coronavirus pandemic.
“Next’s stress test accompanies its full year results and shows that it can sustain more than a £1 billion loss of annual full price sales without exceeding its current borrowing facilities.
"That’s very impressive and a credit to the financial strength of the business which was already facing a retail sector crisis before the current pandemic took hold.
“It will be interesting to see if widespread home working results in stronger online orders. This is certainly not a given as there will be a lot of people worried about their jobs and whom may not be confident enough to spend money on clothes.
"There is also the consideration that people won’t be going out so they don’t need to buy new shirts or dresses to look smart. Any old clothes may suffice if you’re stuck indoors.
“Like many other companies, Next says it has levers it can pull to try and preserve cash to support the business, including suspending share buybacks and delaying dividends depending on the severity of trading in the coming months.
“Investors must understand that such actions would help to keep the business ticking over and hopefully keep staff in their jobs.
"Giving up shareholder rewards like the dividend is the least investors can do in order to ensure Next, or any business in the same situation, gets through the crisis.”