Next reveals ‘unnerving’ profits drop

Enderby-based retail giant Next has seen a fall in profits for the six months to 31 July 2016 – news that retail analysts are calling “unnerving”.

Profits at Next were down 1.5 from £347.1m to £342.1m against the backdrop of what the firm’s chief executive is calling “challenging”.

Lord Wolfson, chief executive, said: “As expected, it has been a challenging year so far, with economic and cyclical factors working against us, and it looks set to remain that way until mid-October at the earliest.”

Richard Lim, chief executive, Retail Economics said: “These latest figures from Next are unnerving and suggest British fashion retailers are facing their toughest challenge in over a decade.

“Retailers are facing rising costs resulting from the collapse in sterling, higher wages through the implementation of the National Living Wage and rising rates which will all bear down on profitability. In fact, the suggestion that passing on rising costs to consumers will be less damaging than taking a hit on profit margins is very telling.

“The rising cost of living will be the first real sign of a Brexit impact for many households. Although total retail spending has held up remarkably well so far, consumers won’t need too much encouragement to tighten their purse strings as disposable incomes are put under pressure in the coming months.”