Next warns of potential store closures following a £30m equity settlement
Next warned it may have to close stores after losing a major legal battle over equal pay, which could cost the retailer more than £30 million.
The FTSE 100 clothing and home goods group announced in its half-yearly report that the decision could affect the profitability of individual stores. Last month, the labor court ruled in favor of the 3,540 female workers currently working in the stores who complained that they were paid less than most of the male workers in the company’s stores.
Next appeals the decision, which began in October 2018, and said its legal team is “highly confident” in its grounds for appeal. However, the seller admitted that the case could take more than a year to be resolved.
The landmark ruling is the first of its kind against a British retailer, opening the door to further claims. A similar equal pay case involving more than 60,000 Asda workers is expected to be settled early next year.
In its report, Next highlighted the potential consequences of this decision, warning: “Some of our stores will no longer operate if this decision is upheld on appeal. The increase in operating costs will lead to more stores closing when leases expire and will hinder the opening of new stores.”
The following also raised concerns about warehouse operations, noting that raising wages in warehouses would require a corresponding increase in wages for store workers, which would also impact the company’s cost structure.
Despite the warnings, Lord Wolfson, the chief executive of Next, explained that the retailer does not issue threats but only talks about the financial facts of the store’s profits. “Whether we open or close stores will depend on the profitability of each store,” explained Wolfson. He also pointed out that many high street shops have closed in the last decade due to rising costs and falling sales.
Next, which has 458 stores across the UK, does not employ staff on zero-hours contracts and instead offers overtime to existing staff during peak periods such as Christmas.
