The retail giant is planning to appeal against the decision last month that saw more than 3,500 former and current workers at the group win their equal pay claim after a six-year legal battle
High street giant Next has sounded the alarm over possible store closures after being dealt a blow in a high-profile equal pay legal case.
The fashion and homeware chain is preparing to challenge the verdict from last month which saw more than 3,500 past and present employees win a wage dispute following a lengthy six-year court battle. A ruling by an employment tribunal found that Next did not adequately justify the disparity in base salaries between retail staff and warehouse workers, failing to dispel claims of gender-based wage discrimination.
The company, spearheaded by chief executive Lord Wolfson, has signalled its intention to contest the decision but admitted that should the appeal fail, it could lead to significant shop closures due to escalating expenses. Announcing its semi-annual financial results, Next said: “In the possible (but unlikely) event we lose this case on appeal, there will be a financial cost to the group and its ongoing future operating costs.”
“Each of our stores is treated as a business in its own right, and must remain individually profitable if they are to open in the first place and continue trading at lease renewal. Inevitably some of our stores will no longer be viable if this ruling is upheld on appeal.”
Next warned that rising store running costs may lead to a greater number of closures upon lease expiration and significantly hinder prospects of launching new outlets. Additionally, the company highlighted that the lawsuit’s outcome might also threaten the “viability of our warehouse operation” should it prove unable to enhance warehouse workers’ remuneration.
The group has raised a point of concern, questioning: “If, for many people, warehouse work is less attractive than work in stores… how can a warehouse attract the number of employees it needs? “. Amid legal challenges, the company remains upbeat about their appeal, with their legal team asserting they are “very confident of our grounds for appeal” but noting that the process may take at least a year.
The verdict last month stands as a significant milestone, marking the first victory in an equal pay claim against a national retailer, potentially paving the way for further claims. Around 60,000 Asda workers have taken their decade-long fight for equal pay to an employment tribunal.
Meanwhile, Next has ramped up its yearly profit forecast again, predicting that prices will dip across their autumn and winter collections. Boosted by strong sales figures, Next reported a robust 7.1% increase in underlying pre-tax profits to £452m over the first six months ending July 27, buoyed by an overall sales increase of 8%.
Despite only a 1% climb in UK sales, weighed down somewhat by its own brand’s struggles which saw a sharp 7.4% decline in June due to lacklustre demand during the unusually cool early summer, the fashion giant didn’t falter. However, with international sales experiencing a 23% surge in the first semester and the UK market rebounding significantly post-half-year thanks to the warmer August weather, the firm’s fortunes appear on the uptick.
Next has reported a 6.9% increase in full price sales over the first six weeks of the second half so far, and now anticipates a 4% overall rise in sales for the year, with UK retail growth of 5% in the third quarter. The company has increased its full-year profit guidance by £15m to £995m, which would represent an 8.4% increase on 2023-24.
