Share price slumps as Next issues profit warning
The share price at Enderby retail giant Next has fallen sharply this morning after the firm issued a profit warning.
On early trading this morning (September 29), Next’s share price was down over 10% to £47.69, from an opening price of just over £50.
Earlier this morning, Next downgraded its full-year profit guidance on the back of the the cost-of-living and mortgage crises.
In a statement, Next said it now expects to make £840m for its full-year 2022/23 – down from previous guidance of £860m – as it predicts sales dipping by 2% over the next six months.
In a definite year of two halves, Next reported sales rose by 12.1% against last year, while profits rose by 16% to £401m.
A statement from Next said: “Sales during August were below our expectations and, despite improving sales in September, we think it is sensible to moderate our expectations for sales and profit in the second half. It is important to stress that, with so many variables at play, predicting near-term sales trends is unusually difficult. All the more so with recent Government stimulus measures yet to take full effect.”
Commenting on Next’s trading update, Richard Lim, CEO, Retail Economics, said: “It’s clear that this will be a year of two halves for the retailer. The impressive performance in recent months is overshadowed by a much gloomier outlook as profit guidance is slashed.
“The tone is very sombre indeed. The retailer is preparing for battle in the knowledge that they are in a stronger financial position than many competitors. Their laser-like focus on efficiency, targeted digital investment and profitability will secure the long-term success of the business. This is a moment of leveraging the competitive advantage they hold across many areas of the business to emerge stronger than the competition.
“Nevertheless, the cost-of-living crisis and shock to housing affordability will make life extremely difficult to swathes of households as we head into 2023. Peak trading will be incredibly tough and is likely to push many in the industry to breaking point.”
