Next CEO issues stark warning over the risks of a no-deal Brexit

Simon Wolfson, CEO of clothing retailer Next, has issued a warning over the the dangers of a no-deal Brexit, and said the UK’s departure from the EU needs to be “carefully managed”.

In a report released alongside the group’s latest financial update, Wolfson said there were “significant challenges” involved in preparing for a no‐deal outcome, and the retailer is now preparing for the possibility that the UK leaves the EU with neither a “transition period nor a free trade agreement in place”.

In the report Wolfson outlines what the potential risk are for the company in a no-deal Brexit scenario, which could include:

• Increases in tariffs and duty on goods imported into the UK from the EU and other countries.
• Increases in tariffs and duty on goods exported to the EU Low.
• Regulatory risks relating to the acceptability of product standards to UK and EU authorities.
• Reduction in the value of Sterling along with associated increase in cost of goods from overseas.
• Queues and delays at UK and EU ports as a result of increased customs declarations for other companies.

Wolfson said: “We believe that this indirect risk of interruption to the smooth operation of our ports represents the biggest risk to our business from Brexit. The more information that can be provided by the government on how they plan to manage and mitigate the increased workload would be helpful.

“In our own sector there is no reason why goods should not flow with relatively little friction through customs from the EU, in the same way they currently come into the country from non‐EU countries. The issue will be the preparedness of the UK authorities and UK businesses.”

Yesterday (25 September), Next posted a sales increase of 4.5% for the half year ending July 2018, but said it remained “cautious” in its outlook for the rest of the year.

The retailer’s in-store sales amounted to £925.1m while its online sales were £892.3m for the six months to July 2018. The total group sales was up 3.8% when compared with the previous year, while its profit before tax was up by 0.5%.