Fashion giant Next's shares tumble after profits alert
High Street fashion giant Next, which has more than 20 stores across Northern Ireland, yesterday warned the year ahead would be the "toughest" the firm has faced since 2008 as it cautioned over profits amid fears of a consumer spending slump.
The retail bellwether's gloomy prediction sent its shares tumbling to their lowest level for more than two years - down as much as 10% - and sparked losses among listed clothing rivals Marks & Spencer and Debenhams.
Next said it was bracing itself for a slowdown in consumer spending on a level not seen since the financial crisis and for profits to fall by up to 4.5% as global and UK economic growth eases back.
Chief executive Lord Wolfson said that, as well as the wider economic woes, he also feared that consumers were shifting spending away from clothing towards other areas, such as eating out and travel.
"The year ahead may well be the toughest we have faced since 2008," he added.
"There's going to be a consumer slowdown this year, but we're not going as far as predicting a recession."
Next's warning came despite the group reporting a "solid" set of annual results, with underlying pre-tax profits up 5% to £821.3m for the year to the end of January and company-brand sales rising by 3.7%.
But it had already warned over results in January after unusually warm weather in December led to a disappointing Christmas performance.
Next is forecasting profits for the year to the end of January 2017 of between £784m and £858m - ranging from a fall of 4.5% to growth of 4.5%.
The group's predictions for full-price brand sales - a key measure of the company's performance - range from a fall of 1% to growth of 4%.
Lord Wolfson said while trading in January had been "good", the volatility of its sales performance since the beginning of the year had added to fears of a consumer slowdown.
The group's gloomy comments will spark concerns for UK growth, which has been propped up by consumer spending and a thriving services sector in recent years.
Retail analysts at Peel Hunt said it was "not unusual" for Next to be overly cautious, but added it appears "this time they mean it".
Next's annual results showed sales across its 540 stores rose 1.1% after growth was held back by a dismal Christmas performance, when sales dropped 0.5%.