Next declares it could survive a £1bn Covid-19 collapse in sales

High Street bellwether Next today assured investors it could withstand a £1 billion sales hit without going bust or seeking government support.

The fashion and homewares retailer said that – after a “stress test” of its balance sheet – it had access to £1.6 billion of funds, and is in discussions with banks about access to a further £200 million.

Next chief executive and Tory peer Lord Wolfson said: “This is an unprecedented challenge to the business. It is very very serious. We have very good margins and are well placed to weather the storm.”

Wolfson said he is witnessing the worst sales declines of his 28-year career, including shocks seen after the 9/11 terror attacks, the financial crisis and the Brexit vote. Sales fell 30% on last year between Sunday and Tuesday. “People do not want to buy a new outfit to stay at home,” he said.

Its stress test laid out the company’s plans to cope with a sales plunge. It can “comfortably sustain” its worst-case scenario – a 25% fall in full-price sales – which would cost more than £1 billion in revenues.

The retailer said it has a string of options to conserve cash including suspending share buybacks, cutting spending and delaying its dividend. Investors were reassured, and shares rose 3% to 3958p.

Wolfson said the Government’s support so far – which have included loan guarantees, and a business rates holiday for retailers – were an “enormous relief”.

He added that he would like a “measure on continuity of income for people who cannot work because they work for a businesses that are shut or cannot open is the next step”.

Next intends to keep its stores open unless the Government demands a shut down. If a shutdown is ordered it would then keep some staff in store “to keep the shop safe”.

“When shops shut it will be down to the government. As long as government is saying we can trade, we will be open to customers.”