Next from the UK warns of a second cost of living crisis following the fall of the pound sterling

  • August trading fell short of expectations
  • Cost of living pressures expected to rise
  • The pound will plunge to inflate selling prices next year
  • Shares down 7.2%

LONDON, Sept 29 (Reuters) – The fall in the value of the pound is set to create a second cost-of-living crisis for Britons, clothing retailer Next (NXT.L) warned on Thursday, slashing its sales forecast and of profits.

The company’s shares fell more than 7% after it said August trading fell short of expectations and pressure on household budgets is expected to intensify in coming months.

“It looks like we’re about to have two cost of living crises: this year a supply squeeze, next year a currency-induced price hike as the devaluation takes effect,” said CEO Simon Wolfson.

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Next, which trades in around 500 stores and online and is often seen as a bellwether for UK consumers, said it now expects full-price sales in the second half of its financial year. financial fall 1.5% and profit before tax of 840 million pounds ($905 million), up 2.1% from 2021-22.

It previously forecast full-price sales growth of 1% in the second half and pre-tax profit of 860 million pounds for the full year.

The company said lowering its guidance was a tough decision, given September sales improved and the company could reap benefits from recent government measures, such as an energy price cap. Year-to-date sales in August and September are down 0.3%.

The group reported pre-tax profit of £401m for the six months to July, up 16%, with full price sales up 12.4%.


Britain’s consumer confidence levels hit a record high this month as they battle the accelerating cost of living, even before the government’s mini budget on Friday wreaked havoc on the mortgage market, resulting in warnings of a sharp drop in property prices.

Wages are failing to keep pace with inflation which was 9.9% in August and Next rivals Primark (ABF.L), ASOS (ASOS.L) and Boohoo (BOOH.L) have all warned of profits this month.

The government announced a series of tax cuts and energy cost relief for consumers and businesses, but the pound/US dollar exchange rate fell to near parity, pushing the price of imports.

Wolfson said while it seemed inevitable that apparel and homeware sales would slow, healthy employment and savings levels provided some comfort.

He said it was too early to tell what the impact of government assistance would be, although the scale of the measures was likely to support spending.

Looking to 2023-24, he said continued weakness in the pound would likely inflate selling prices, especially in the second half.

Separately on Thursday, H&M, the world’s No. 2 fashion designer, launched a cost-cutting campaign after reporting weaker-than-expected profits.

($1 = 0.9282 pounds)

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Reporting by James Davey; edited by Jason Neely and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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