Clothes retailer Next could be forced to close stores after losing a landmark legal battle over equal pay.
The fashion giant issued the warning after an employment tribunal ruled last month that it should pay 3,500 store staff, who are predominantly women, the same hourly rates as it pays its mostly male warehouse workers.
According to law firm Leigh Day, which represented the claimants, sales consultants received between £0.40 and £3 less than warehouse workers, and claimants’ average salary loss was more than £6,000 each.
Next told investors earlier this week that the ruling will threaten its ability to make stores “individually profitable”, as they pursue an appeal against the decision.
Equal pay claims
If unsuccessful, Next could have to pay more than £30m to settle the claim, which was first lodged in 2018.
Next laid out the potential impact of this in its half-year results on Thursday: “Inevitably some of our stores will no longer be viable if this ruling is upheld on appeal.
“Materially increasing store operating costs will result in more shops being closed when their leases expire, and will materially impede our ability to open new stores going forward.”
It also warned that the case meant it would be unable to raise wages in warehouses without doing so in stores.
The company said: “If, for many people, warehouse work is less attractive than work in stores (as the evidence before the Tribunal showed), how can a warehouse attract the number of employees it needs?”
However, despite the warning, Next said it was now expecting profits to come in £15m higher than its previous forecasts for the full year to the end of January. Pre-tax profits are set to be under £1bn.
The upgrade came after sales that materially exceeded its expectations in the first six months of the year. Revenues were up 13.6% in the period to hit £2.9bn while profits rose by almost 4% to £432m.
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