Next says shortfall in seasonal workers threatens to hamper festive services

Retailer Next has warned that Christmas deliveries could be disrupted unless the UK Government relaxes post-Brexit immigration rules.

Issuing its fourth profit upgrade this year, the company said in its half-year results that it has not yet experienced “material difficulties” in recruiting for stores and most of its head office functions. However, staffing for peak seasonal demand in warehousing and logistics has come under pressure.

“We anticipate that, without some relaxation of immigration rules, we are likely to experience some degradation in our service in the run-up to Christmas,” Next said.

The clothing and homeware giant, headed by Conservative peer and Brexit supporter Simon Wolfson, added that the shortage of lorry drivers that has exacerbated difficulties across UK supply chains was “foreseen, and widely predicted for many months”.

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“For the sake of the wider UK economy, we hope that the government will take a more decisive approach to the looming skills crisis in warehouses, restaurants, hotels, care homes and many seasonal industries. A demand-led approach to ensuring the country has the skills it needs is now vital.”

The group also predicted continuing cost inflation, with fashion prices expected to rise by 1 per cent in the first half of next year and homewares up by 6%. However, it described these increases as “not overly worrying”.

Pre-tax profits during the six months to July were up 5.9% against the same period two years ago, which Next chose as the basis for its presentation as a more meaning comparison than 2020’s Covid-disrupted trading. The pre-tax figure of £347 million was accompanied by a 7.6% rise in sales to £2.2 billion.

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Online sales were 52% higher than two years previous, while revenues from in-store sales fell 38% to £540.1m.

However, upon opening in mid-April the recovery in store sales was “far stronger” than anticipated, while online sales fell back by less than expected. The positive trend continued through August into the second half of the year, despite stock shortages caused by Covid disruption and high sales volumes.

Next is now predicting £800m in pre-tax profits for the full year, 6.9% higher than in 2019 and £36m more than its previous guidance for 2021. Its full-price sales guidance is for a 10% increase for the rest of this year.

Shares in Next closed nearly 4% higher yesterday at 8,394p per share.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992