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Next profits slide by 1.5% amid 'challenging' trading

By Ravender Sembhy

Published 16/09/2016

The chain’s new lines have failed to lift profits
The chain’s new lines have failed to lift profits

High street giant Next, which has more than 20 stores across Northern Ireland, has posted lower first-half profits after seeing store sales slide

The chain, which warned that trading remained "challenging and volatile" posted a 1.5% drop in pre-tax profits to £342.1m for the six months to the end of July, dragged lower by a 16.8% tumble in earnings across its shops.

An impressive end-of-season sale performance in July helped boost trading towards the end of the first half, but the group dashed hopes of a bounce-back in consumer spending since the EU referendum.

Chief executive Lord Wolfson said: "We do not believe that July trading represented any change in underlying consumer spending patterns.

"Trading since July, which to some extent may have been affected by the sale, has remained challenging and volatile."

He added: "It has been a challenging year so far, with both economic and cyclical factors working against us, and it looks set to remain that way until mid-October at the earliest."

Lord Wolfson said the September heatwave had done little to help clothing retailers.

He added: "Consumers are only buying clothes when they need to. In this weather, no one's buying winter clothes."

The group is bracing itself for a difficult quarter to the end of October, saying that the period is set to be the "toughest" of the year as it comes up against tough comparatives.

But the all-important Christmas season may see some improvement after mild weather hit the end of 2015/16, according to Next.

The group also repeated warnings first made last month that it may have to hike prices by up to 5% next year to offset the sharply weaker pound since the Brexit vote, which will push up the cost of importing clothes from overseas suppliers.

Next said that this could hit sales further, knocking between 0.5% and 1% off like-for-like figures.

Its gloomy comments were echoed by rival John Lewis Partnership, which posted a 14.7% slide in half-year pre-tax profits to £81.9m, citing "deep structural changes in the retail market".

John Lewis chairman Sir Charlie Mayfield said the results were not a result of the EU referendum, but "far-reaching changes taking place in society in retail and in the workplace".

The group, which also owns Waitrose, said its commitment to competitive pricing and increasing pay and investment held back profits in the six months to July 30.

Next has been cautioning over retail prospects for a number of months, warning of a consumer spending shift away from clothing.

Belfast Telegraph

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