Next warns on no-deal Brexit as delays and tariffs could cost it £20m
Next’s CEO may have been a big supporter of Brexit but he is also concerned that the negotiations haven’t led to any clarity on what will happen next March and that the prospect of a no-deal EU exit could drive prices up and lead to problems at ports.
Simon Wolfson said after delivering strong results on Wednesday that the environment remains “extremely challenging”.
And he added that the firm is preparing for a potential no-deal Brexit with the biggest risk set to be long queues and delays at UK and EU ports. Higher tariffs on goods from the EU would also be an issue but a fall in the value of the pound could make imported products from all over the world more expensive.
And delays to bestselling items that have been re-ordered could also suppress sales if such goods are held up at ports. “In fashion you’re always selling out of the best-sellers,” Wolfson said.
The company has prepared for the EU exit by setting up new companies in Germany and Ireland, but with the bulk of its ops being in the UK, any no-deal scenario could be a major headache.
“Departure from the EU without a free trade arrangement and managed transition period is not our preferred outcome,” said Wolfson. “However, Next is well-prepared for this eventuality and we have all the administrative, legal and IT framework in place to ensure that we are able to carry on running the business as we do now.”
With ports under pressure, he has suggested that the ‘trusted trader’ scheme allowing for certain checks to happen away from the ports could be extended. And he also thinks a self-assessment scheme for customs duties would be an option.
He believes the government should also consider reducing tariffs on non-EU goods to offset the effects of higher taxes on goods coming from EU countries after the UK leaves the bloc.
Next currently sources around 10% of its goods from the EU and Turkey and said that could mean an extra £20 million in costs, which could add 0.5% to prices.
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