High street retailer Next has outlined its contingency plans in case the UK leaves the European Union without a deal, as it warned higher tariffs and queues at ports could threaten the firm.
The chain, whose CEO Lord Simon Wolfson is a prominent Brexit supporter, said it was “well advanced” in its plans should a free-trade agreement not be reached by the end of March next year.
The firm cautioned that prices could rise by 0.5%, or £20m in the “unlikely event” of a no-deal scenario, while a drop in the value of the pound also posed a threat.
However, a no-deal Brexit would not put “ongoing operations and profitability” at risk.
On Brexit planning, Next said: “There are significant challenges involved in preparing for a no-deal outcome and we would not want to understate the work we are doing to prepare for this eventuality.
“However, we do not believe that the direct risks of a no-deal Brexit pose a material threat to the ongoing operations and profitability of Next’s business here in the UK or to our £190m turnover business in the EU.”
The company called on the government to ensure operations at ports are not affected in the case of a no deal.
It said: “We believe that this indirect risk of interruption to the smooth operation of our ports represents the biggest risk to our business from Brexit.
“The more information that can be provided by the Government on how they plan to manage and mitigate the increased workload would be helpful.”
Some 10% of the retailer’s goods are source from the EU and Turkey, but the firm suggested that increased tariffs could be offset by “alternative sourcing routes” or sharing the costs with suppliers.
The comments come as Next’s accounts are shaping up to be in a stronger position than expected – with full year profits forecast at £727m, up from £726m last year.
Company pre-tax profits for the first half of the year rose by 0.5% to £311m.
Online performance boosted the firm’s success with a 16.8% increase in sales up to July 28, leading to a 21.2% rise in earnings to £163m.