Retail giant Next has confirmed it hopes to sell its national headquarters in its efforts to free up spare cash during the global economic emergency.
The high street chain – which shut all its stores and closed its online operation last month – wants to sell the Leicestershire head office, then lease it back.
The site comes with a huge car park, several office blocks and is about one mile from junction 21 of the M1.
It also wants to sell and lease back three warehouses, in a separate package, as part of its mitigation plans to deal with the downturn.
Company documents suggest the sales could raise £100 million, although the commercial property market – just like other industrial sectors – has inevitably taken a hit from the economic shock of the virus.
Next has brought in property specialists Savills to market the Enderby head office – its home pretty much since the day it was founded in the early 1980s – while Acre is acting as agent for the warehouses.
A spokesman for the business said: “The sale and leaseback of these properties has absolutely no effect on staff or stores.”
Last month Next chief executive Simon Wolfson told reporters the high street giant was in it for the long-term – and that the huge impact of coronavirus on the UK economy will, one day, pass.
Its plans to deal with the crisis include working around a worst-case scenario of a three month company shutdown, leading to a £1 billion drop in turnover over the next year.
Under that, pre-tax profits for the year would drop 10-fold to £55 million.
The business said it could "comfortably sustain" the hit without exceeding its current banking and bond facilities.
In its best case modelling, full price sales could be down £445 million – or 10 per cent year-on-year.
However, since then Next has closed all 500 stores and last week went one step further and closed its online and warehousing operations.
Lord Wolfson spoke on March 19 as the chain’s 2019 trading figures – showing healthy sales of almost £4.4 billion and profits of more than £728 million – were totally overshadowed by the current crisis.
At the time he said: “What we believe to be the worst case scenario, we’ve called minus-25 per cent of our whole year sales – which is more like minus-55 per cent during the affected period.
“That would be the equivalent of the company being completely shut for three months.
“We think that is the most extreme that things could get, but clearly we don’t know.
“The important thing is the cash flow modelling. We have £1.6 billion worth of cash resources, made up of bank and bond facilities.
“We think even in the worst case scenario, as long as we take mitigating action within the business, we would still have, at our peak cash requirement, £110 million of cash resources available to the business.
“So we do not think that the business will need to draw on Government facilities, although obviously that option is open to us.”
Hinting at selling the Leicestershire HQ, the annual accounts said: “We have some freehold warehousing and other property which could be leased back.
“We estimate we could realise £100 million from these sales.”
The accounts added that leasing back “high quality assets”, would have “little impact on the operations of the business” but would “mildly” dilute earnings in future years.
It said: “For example, the cost of rent on a leased‐back building is likely to be higher than prevailing interest rates on the proceeds of sale.”
