Next PLC warned on Thursday it may have to close stores if it loses an appeal over an equal pay ruling, in a landmark case for UK retailers, Bloomberg reported.

The Leicester-based clothing and homewares said there will be financial consequences if a ruling over its workers‘ pay is upheld. An employment tribunal said last month that Next’s shop-floor staff, who are mostly women and paid lower hourly rates, were at a particular disadvantage compared with men working in warehouses.

‘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,’ the company said in its half-year results Thursday. ‘Inevitably some of our stores will no longer be viable if this ruling is upheld on appeal.’

Law firm Leigh Day & Co., which is representing the claimants, has said they‘re entitled to more than £30 million in back pay, due to wage gaps that it’s argued are as high as £3 an hour.

Next Chief Executive Simon Wolfson stressed his company‘s argument in a media conference following Thursday’s results. ‘Anything that’s done to increase costs, whether that‘s wages or rents or rates, all the things that push up costs are likely to have an impact of the viability of some of the stores.’

https://www.bloomberg.com/news/articles/2024-09-19/next-warns-of-store-closures-after-losing-equal-pay-claim?srnd=homepage-uk

The news took the shine off strong results from the Leicester-based retailer which raised profit guidance for the second time in two months.

In the half-year ended July 27, revenue rose 14% to £2.86 billion from £2.52 billion a year earlier. Next’s pretax profit improved 3.9% to £432.1 million from £415.7 million.

Full price sales rose 4.4% during the period, and growth has picked up in the first six weeks of the second half.

Full prices sales during the six-week period have ‘materially exceeded our expectations’, rising 6.9% on-year.

Next now expects full-year full price sales growth of 4.0%, its outlook improved from 3.4%.

Next now predicts pretax profit of £995 million, which would be a year-on-year rise of 8.4%. The outlook was improved from £980 million. In August, Next had increased guidance by £20 million from £960 million.

Shares in Next closed 4.4% higher at 10,785.00 pence in London on Thursday.

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