The clothing retailer Next may be forced to shut down stores after losing an important legal battle regarding equal pay.
The warning was issued after a tribunal , which ruled in the last month, ruled that the fashion giant should pay its 3,500 female store employees the same rate per hour as they pay their male warehouse workers.
Leigh Day, the law firm that represented the claimants said that sales consultants earned between PS0.40 to PS3 less per hour than warehouse workers. The average salary loss for claimants was over PS6,000.
Next informed investors that they will be appealing the ruling, and that it could affect their ability to make individual stores “profitable”.
Next may have to pay up to PS30m in order to settle a claim that was originally filed in 2018.
Next’s half-year results were released on Thursday. “Inevitably, some of our shops will not be viable if the ruling is upheld in an appeal.”
“Materially raising store operating costs will lead to more shops closing when their leases end, and it will materially hinder our ability in the future to open new outlets.”
The company also warned it would not be able to increase wages in the warehouses if they did not do so in the stores.
The company asked: “If warehouse work is not as attractive to many people as work in a store (as evidence presented before the Tribunal demonstrated), how can it attract the employees that are needed?”
Next, however, said that despite this warning, it now expects profits to be PS15m higher for the entire year up to the end January than their previous forecasts. The pre-tax profit is expected to be below PS1bn.
Upgraded after sales exceeded expectations by a large margin in the first half of the year. The company’s revenues increased by 13.6% to PS2.9bn, while its profits grew by nearly 4% to PS432m.
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