Next is preparing for a “significant” downturn in trading due to the Coronavirus outbreak, with sales falling by 30 per cent this week.

The fashion and home furnishings retailer’s results for the year to January included stress testing results in response to the pandemic, suggesting that it could “comfortably sustain” more than £1 billion (25 per cent) loss of annual sales over the full year.

The group stated that online sales are likely to perform better than its 498 stores, due to the UK government’s social distancing measures.

The Next Online Platform saw full price sales up 11.9 per cent for the year, with profits up 13 per cent on last year.

Overall, the company reported a 0.8 per cent rise in pre-tax profits to £728.5 million, on the back of a four per cent increase in full-price brand sales.

Chief executive Simon Wolfson commented: “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.

“Online sales are likely to fare better than retail but will also suffer significant losses – people do not buy a new outfit to stay at home.”

The final week of January saw Next’s sales rise by 2.1 per cent, but this fell by 8.8 per cent last week and by 30 per cent since Sunday.

In the event of a prolonged closure period, Next warned it may have to take “radical” action on wages to help cut costs, but it will look to offset a severe trading hit by not requiring staff to work more than their contracted hours.

“There will be many challenges to our working practices as the pandemic develops and we are putting plans in place to protect our most vulnerable employees, comply with differing levels of government restrictions and cope with illness throughout the business,” stated Wolfson.

“In particular, we are adapting our technology for greater home working and seeking to segregate critical operational teams so as to keep all our vital operations and projects on track.”

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