Next shares fall following Christmas sales gloom
UK retail giant Next has cut its profit forecast for the current financial year after a poor Christmas and warned of a further decline in 2017-18, sending shock waves through Britain's clothing sector as the most successful performer of the last decade stumbled badly.
The company, which trades from about 540 shops in Britain and Ireland, was disappointed with its Christmas sales and highlighted "exceptional" levels of uncertainty in the sector.
Next, which has said repeatedly that Britons were spending less on clothes, warned that 2017-18 pre-tax profit could come in a full £100m (€117m) below market forecasts, wiping 9pc off a share price that had already slumped by a third in 2016.
The downbeat statement from the first major British retailer to report on Christmas trading hit shares in rivals. Marks & Spencer, Primark owner AB Foods, and Debenhams fell 4.8pc, 3.5pc and 4.5pc respectively.
"Not only do we face a continuing cyclical downturn in clothing, but over and above that we've got price increases and a squeeze on real earnings," ceo Simon Wolfson said.
"So it makes sense to be conservative...I don't think we're being overly gloomy," Mr Wolfson, a Conservative Party member of the House of Lords and a supporter of Brexit, said.
Following the plunge in sterling after last June's Brexit vote, he also expects prices to rise by up to 5pc.
The company, which also has franchised stores overseas and the Directory online and catalogue business, forecast that full price sales could fall by up to 4.5pc in 2017-18. (Reuters)