Next share price sinks as retailer flags ‘toughest year’ since financial crisis
Shares in Next (LON:NXT) have slumped in London this morning after the blue-chip retailer warned that it might be facing its worst year since the financial crisis amid expectations that consumers will spend less on clothing. The warning came as the company updated investors on its full-year performance, posting a five-percent rise in underlying earnings.
As of 09:15 GMT, Next’s share price had tumbled 8.71 percent to 6,080.00p, underperforming the benchmark FTSE 100 index which has lost 1.07 percent to stand at 6,132.93 points. In the year-to-date, Next’s shares have lost 16.87 percent of their value, as compared with a 1.76-percent fall in the Footsie.
Next said in a statement today that it expected 2016 to be “a challenging year with much uncertainty in the global economy,” and a less benign outlook for consumer spending. The company noted that the latest available data showed that growth in experience-related expenditure such as eating out, travel and recreation was much stronger than growth in clothing expenditure.
“The year ahead may well be the toughest we have faced since 2008,” Next’s chief executive Simon Wolfson said in the statement. “It may well feel like walking up the down escalator, with a great deal of effort required to stand still.”
The retailer managed to post a rise in profits for last year, saying that its underlying earnings per share had climbed five percent to 442p in the year to January. Next also hiked its ordinary dividend by five percent to 158p. Going forward, however, the group expects sales of full-price Next brand items to fall by one percent or, at best, rise by four percent this year. The forecast marks a reduction from the group’s previous guidance issued in January when Next said that it expected sales to come in between one and six percent in the year to January 2017.
As of 09:38 GMT, Thursday, 24 March, NEXT plc share price is 6,062.50p.