Next said it had sold property, suspended share buybacks and dividends and delivered higher cost savings to shore up its finances and get the clothing retailer, whose quarterly sales plunged 41%, through the coronavirus crisis.
The group said today that the decline in sales had been faster and steeper than anticipated in a March stress test.
Store sales had slumped 52% in the 13 weeks to April 25, its fiscal first quarter, while online sales dropped 32%.
Next closed all its stores on March 23, when Britain began a coronavirus lockdown, while online operations, which account for more than half of group sales, shut three days later before partially re-opening on April 14.
Online capacity is running at about 45% of pre-crisis levels, with 70% of ranges available, and Next said it hopes to increase capacity to around 70% within the next two weeks.
Next also said it had agreed covenant waivers with its banks and secured further borrowing capacity through the UK government's Covid Corporate Financing Facility (CCFF).
"While this year's scenarios remain fluid, we can only gain confidence from management’s actions and control over the business," analysts at Peel Hunt said.
The Confederation of British Industry said this week that UK retailers had endured their biggest sales fall since the 2008 financial crisis in the first half of April. But those with an effective online operation, such as Dixons Carphone, are faring better.
Next said its finances were at least as secure as when it updated in March. It has saved around £290m on stock purchases, while suspending dividends and share buybacks will save it £480m.
The sale and leaseback of warehouses and its head office in Enderby will generate another £155m, the group added.
Even in its new worst case scenario, with full year 2020-21 full-price sales down 40%, Next said it can operate comfortably within its cash resources and would end the year with less net debt than at the end of the previous year.
In that scenario it would, however, make a pretax loss of £150m, compared with a profit of £729m in 2019-20.
The UK is set to review lockdown restrictions on May 7 and Next said much will depend on its ability to increase online capacity within the constraints of new safe working practices and on the timing of store re-openings.
"One of the reasons we're ramping up (online) slowly is to make sure that at every stage we don't go past the point at which we can cope," chief executive Simon Wolfson told Reuters.
Next, which plans to re-open stores with social distancing and safety measures such as perspex screens at tills and sanitisation stations, will prioritise opening larger out-of-town stores.
"I'm expecting in the next two or three weeks that we'll be ready to open a meaningful number of stores," Simon Wolfson said, adding that he expects sales to be subdued.
