What next for Next’s dividend?

Retailer Next has announced that it will be closing all its shops for now. What does that mean for its dividend?

Lord Wolfson, Next’s CEO, has said that the retail industry “is facing the toughest time since the oil crisis of 1973”, says Ashley Armstrong in The Times. This crisis will cost the group up to £1bn. This week it announced that it will be closing all its shops for now. 

However, Wolfson is confident that it will be able to survive thanks to a strong balance sheet; it also has options such as suspending its share-buyback programme and dividend, and delaying capital spending.

Good idea, says Ben Marlow in The Daily Telegraph. While there is “no way of predicting what effect Covid-19 will have on the industry”, Lord Wolfson has “been wargaming for years” to prepare his company for the “multiple doomsday scenarios” facing the high street. He has produced a “15-year stress-test of Next’s prospects” that is “astonishing in its scope and detail”. Given his realism, it is not surprising that Wolfson’s statement has pushed up Next’s shares.

Not so fast, say Jamie Nimmo and Harriet Dennys for The Mail on Sunday. It’s true that cutting or suspending dividends will help companies such as Next “to weather the storm and protect jobs”. But consider the bigger picture.

The news that “one of the high street’s strongest” firms is contemplating delaying its payout to shareholders is hardly good news for investors. Analysts warn that if Next is thinking of cutting, dividends, then “frankly pretty much no one is safe”, as even the biggest dividend payers in Britain “could be forced to follow suit”, with investors facing “billions of pounds worth of cuts to payouts”.

Recommended

Mark Slater: why UK stocks are so unpopular right now
UK stockmarkets

Mark Slater: why UK stocks are so unpopular right now

Merryn talks to Mark Slater of the Slater Growth fund about why investors have abandoned the UK – and why they are wrong to have done so. Plus, he pic…
11 Sep 2020
Rolls-Royce falls to huge loss
UK stockmarkets

Rolls-Royce falls to huge loss

Aero-engine maker Rolls-Royce recorded a £5.4bn half-year loss as the collapse in air travel wiped out demand for its engines.
3 Sep 2020
Private equity should make its move for struggling UK companies
UK stockmarkets

Private equity should make its move for struggling UK companies

Money is cheap and bargains abound – it’s a great time for private equity funds to make a bid for some struggling companies, says Matthew Lynn.
30 Aug 2020
Three UK stocks from the bargain basement
Share tips

Three UK stocks from the bargain basement

Professional investor Richard Penny of the TM Crux UK Special Situations Fund, reckons UK stocks are as cheap as they've been for a long time. Here, h…
24 Aug 2020

Most Popular

Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
James Ferguson: How bad data is driving fear of a second wave of Covid-19
UK Economy

James Ferguson: How bad data is driving fear of a second wave of Covid-19

Merryn and John talk to MoneyWeek regular James Ferguson about the rise in infections in coronavirus and what the data is really telling us.
17 Sep 2020