* First quarter stores sales down 52%, online down 32%
* Stores shut since Britain went into lockdown on March 23
* Dividends and share buybacks suspended
* Banking covenants waived
(Adds detail, shares)
By James Davey
LONDON, April 29 (Reuters) - British clothing retailer Next
has shored up its finances to help get it through the
coronavirus crisis by selling property, suspending share
buybacks and dividends and cutting costs after first-quarter
sales fell 41%.
Next said the decline in sales had been faster and steeper
than anticipated in its March stress test. Store sales plunged
52% in the 13 weeks to April 25, its fiscal first quarter, while
online sales were down 32%.
Shares in the group fell as much as 8.2% in early trading
but were down 1.1% at 0817 GMT, extending losses for 2020 to
32%.
Next closed all its stores on March 23, when Britain began
its lockdown to stem the spread of the new coronavirus. Its
online operations shut three days later before partially
re-opening on April 14.
The group has taken further steps to secure its debt
finances by getting agreement from its banks to waive financial
covenants in its Revolving Credit Facility (RCF) for the coming
year. It has also secured additional borrowing facilities
through the government's Covid Corporate Financing Facility
(CCFF).
Next has saved around 290 million pounds ($361 million) on
stock purchases, while suspending dividends and share buybacks
will save it 480 million pounds. The sale and leaseback of
warehouses and its head office will generate another 155 million
pounds.
The group said it believed its finances were at least as
secure as when it updated in March.
Even in its new worst case scenario, with full year 2020-21
full-price sales down 40%, it said the mitigation in place means
it can operate comfortably within its cash resources and will
end the year with less net financial debt than at the end of the
previous year. It will, however, make a pretax loss of 150
million pounds.
Next said much will depend on its ability to increase the
capacity of its online operations within the constraints of new
safe working practices and on the timing of store re-openings.
Online capacity is running at about 45% of pre-crisis
levels, with 70% of ranges available, and the group hopes to
increase capacity to around 70% within the next two weeks.
Next has plans in place for its stores to re-open with
social distancing measures and will prioritise the opening of
larger out-of-town stores.
"We anticipate that it will take some time for customers to
return to their normal shopping habits and that sales will be
very subdued when trade commences," it said.
Britain's government is set to review lockdown restrictions
on May 7.
($1 = 0.8027 pounds)
(Reporting by James Davey; editing by Sarah Young, Kate Holton
and Barbara Lewis)
Next (NXT)
