The FTSE 100 clothing and homewares chain, Next, has announced in its half-year report that a recent £30 million equal pay ruling could potentially impact the profitability of its individual stores.
Last month, an employment tribunal ruled in favour of 3,540 current and former female store staff who argued they were paid less than predominantly male employees in the company’s warehouses. Next is appealing the decision, which dates back to October 2018, with the retailer’s legal team expressing high confidence in their grounds for appeal. However, Next has acknowledged that the case could take more than a year to resolve.
This landmark decision—the first of its kind against a British retailer—could set a precedent for further claims. Indeed, a similar equal pay case involving over 60,000 Asda employees is expected to conclude early next year. Next underscored the potential ramifications of the ruling in its report, stating that increased operating costs could lead to more store closures when leases expire and could hinder new store openings.
The retailer also raised concerns about its warehouse operations, noting that wage increases in warehouses would necessitate matching increases in store staff salaries, further impacting the company’s cost structure. Despite the gravity of these warnings, Next’s chief executive, Lord Wolfson, clarified that the retailer is addressing the financial realities rather than issuing threats. “Whether we open or close stores will depend on each individual store’s profitability,” Wolfson explained. He noted that many high street shops have closed in the past decade due to rising costs and declining sales.
Next operates 458 stores across the UK and does not employ workers on zero-hours contracts, instead offering additional hours to existing staff during peak periods such as Christmas.
While the appeal is ongoing, Next faces significant financial challenges that could reshape its high street presence. The outcome may influence broader industry practices regarding equal pay.
