Retailer Next details costs taken out in Covid-19 lockdown

Additional reporting: Geoff Percival

Clothes retailer Next said it has made further steps to secure its finances and preserve cash in the bujsiness as it warns that the effects of the sales slump from the Covid-19 crisis will be greater than it once thought.

It said it has struck an agreement with lenders having already halted dividend payouts and share buybacks and was confident it could achieve more costs savings.

In a trading update, the retailer said it was focusing on its plans to boost online sales even as "the fall off in sales to date has been faster and steeper than anticipated in our March stress test".

"Much will depend on our ability to continue increasing the capacity of our online operations within the constraints of new safe working practices and on the timing of store re-openings," Next said.

And it said it was increasing capacity at its warehousing with the aim of increasing "capacity to around 70% of normal levels within the next two weeks".

The retailer didn’’t specifically mention its Irish operations in the update.

Under a new stress teat, the retailer set out the numbers behind its plans to cut more costs.

It forecast savings in online and retail marketing, catalogues and photography of £40m (€45.6m); online distribution costs savings of £35m); and savings in "store occupancy costs" of £18m.

It also projects £135m in savings from its wages bill mainly through the UK’’s wage-support scheme, as well as savings in business rates and corporation tax of £250m.

Shares in the fashion retailer fell 1.5% and have now shed 16% of their value in the past year.

Meanwhile, electrical goods retail group Dixons-Carphone – which trades here under the Carphone Warehouse and Currys-PC World brands – said a recent acceleration in online sales has recovered around two-thirds of sales lost to Covid-19-driven store closures.

Last month, Dixons-Carphone – which reports full-year figures in May – said good online sales won’t be enough to see it achieve its previous £210m (€240m) annual profit target, or to lower debt.

The group said it saw 2% sales growth in its core UK and Ireland operations in the 16 weeks to April 25, albeit with online sales surging 66%.

Home office equipment and gaming and television sales were particularly strong.

The closure of its Irish and UK stores, however, will see it lose out on around £400m in additional sales. Dixons-Carphone said its year-end debt is likely to be around £300m.