Next shares plummet as retailer braces investors for a ‘difficult’ year
Next share price fell 7.44 per cent this morning as it assured investors that it is prepared for a “difficult” year ahead, as soaring inflation looks set to rattle the high street powerhouse.
The FTSE 100 listed retailer said that it was budgeting for full price sales to be down slightly by 1.7 per cent this year due to high costs and pre tax profits were forecasted at £795m – compared to its actual 2022 earnings of £870m.
“No one really knows how the continuing cost of living squeeze will affect consumers, and we do not know what effect lower selling price inflation will have in the second half,” the retailer said.
For the year, Next saw total trading sales of £5.1bn up 8.4 per cent from 4.7bn in the same period last year.
“We have prepared (and budgeted) for a difficult year. We are very clear on our priorities,” Michael Roney, chairman of Next said.
During the year, the listed retailer also rescued a number of struggling brands including JoJo Maman Bébé, Joules and MADE.com which delivered £16.8m profit to the group.
Just yesterday, Next snapped up the name and intellectual property of failing highstreet brand Cath Kidston in an £8.5m deal.
Charlie Huggins, a manager at Wealth Club, said: “Looking to the year ahead, the environment is set to get tougher. Next’s sales are expected to fall modestly, with profits down close to 10%, as cost pressures take their toll.
“Next expects cost inflation to peak at around seven per cent in the spring summer season before falling to 3 per cent in the second half. This is materially lower than previously feared, due in part to falling freight costs. It means Next doesn’t have to push through such big price increases, which in turn should support demand for its wares.”