The boss of retail giant Next has warned over the threat of gridlock at ports and price hikes from increased tariffs if the UK crashes out of the European Union with no deal.
Chief executive Lord Simon Wolfson - a prominent Brexit supporter - has called on the Government to give businesses clarity on what measures could be taken to relax customs procedures and border controls.
He said the likelihood of queues and delays at UK and EU ports posed the biggest risk to Next from a no-deal Brexit.
Lord Wolfson said: “If the ports seize up it will be a problem.
“In fashion you’re always selling out of the best-sellers. The ports that will have the biggest problems will be the ones having more EU goods, so basically Dover.”
In an unusually detailed document outlining the group’s no-deal contingency plans, Next also cautioned that another sharp fall in the value of the pound and increased tariffs also posed a threat.
Next said in the “unlikely event” that free-trade agreements were not put in place, it could send the cost of imported goods soaring by up to around £20 million, which could push up prices by around 0.4%.
With only six months to go Brexit, the group said there was “no certainty” that a deal can be reached with the EU.
It said it was “well advanced” in its preparations in case a free-trade agreement is not in place by next March, but said the risks do not pose a “material threat” to the group.
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 £190 million turnover business in the EU.”
Details of its no-deal plans came as it upped its full-year profit outlook after a better-than-expected first half, with interim pre-tax profits up 0.5% at £311.1 million.
Shares leapt nearly 10% higher on the profit cheer.
The group said it sourced around 10% of its products from the EU and Turkey.
But it played down the impact on prices from tariff hikes, saying that “in reality some of these additional costs would be shared with suppliers or eliminated through alternative sourcing routes”.
The group put forward a number of suggestions to help address customs and port problems in the event of no deal and urged the Government to take early action to ease firms’ fears.
“The more information that can be provided by the Government on how they plan to manage and mitigate the increased workload would be helpful,” the group said.
It also wants greater clarity on tariffs in a no-deal scenario.
Its half-year results showed full-price sales surged by 4.5% in its first half as a robust online performance continued to offset high street woes.
Its retail stores saw full-price sales fall 5.3%, or 6.9% down including markdowns, over the six months to July 28, while operating profits dropped 23% to £73.2 million.
But online sales jumped 16.8%, with earnings up 21.2% to £163.3 million.
The group said fears of a slowdown in trading after the summer heatwave did not come to pass.
It now expects full-year profits of around £727 million, up slightly on the £726.1 million seen the previous year.