- Clothing retailer Next said it its sales had slumped 38% in the first quarter, a decline that it said was steeper than it had feared.

The company also suspended dividends and cancelled its share buyback as it moved to conserve cash during the Covid-19 crisis.

Product sales in the period between 26 January and 25 April fell 41%, including a 52% drop in stores sales and a 32% drop in online sales.

The fall in total full-price sales was limited to 38% by a 2% gain in finance income.

'The fall off in sales to date has been faster and steeper than anticipated in our March stress test and we are now modelling lower sales for both the first and second half of the year,' Next said.

The company said that in a worst-case stress test scenario, where annual full-price sales fell 40%, it could report a £150m annual loss. If sales fell 35% it would break even and if sales fell 30% profit would be £150m, Next estimated.

Next had expected to spend £280m on buybacks and had already spent around £20m in January. The rest would be retained.

'We will suspend shareholder distributions until the situation stabilises,' it added.

Next said it had initially furloughed 88% of its staff, the vast majority coming from stores and warehouses that were closed. That figure has now reduced to 84% following the reopening of its online business.

The company also said it had received agreement from all its banks to waive covenant compliance tests until January 2021.

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