Next cuts profit forecast as shoppers feel the squeeze

August trading below expectations as cost of living pressures rise

British clothing retailer Next cut its profit and sales forecasts on Thursday, saying August trading was below expectations and cost of living pressures were set to rise in the coming months.

Next, which trades from about 500 stores and online, said it now expected full price sales in its second half of its financial year to fall 1.5 per cent, and a full year pretax profit of £840 million (€938 million), up 2.1 per cent versus 2021-22.

It previously forecast second-half full price sales growth of 1 per cent and a full year pretax profit of £860 million.

Next said cutting its guidance was a difficult call, given sales in September had improved and the company may see benefits from recent government measures.

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The group reported a pretax profit of £401 million for the six months to July, up 16 per cent, with full price sales up 12.4 per cent.

Confidence levels among Britain's consumers sank to a record low this month as they struggle with the accelerating cost of living, even before the government's mini-budget on Friday sowed turmoil in the mortgage market, leading to warnings of a sharp drop in house prices.

Wages are failing to keep pace with inflation that was 9.9 per cent in August and Next's rivals Primark, ASOS and Boohoo have all warned on profit this month.

The government also announced a raft of tax cuts and help on energy costs for both consumers and businesses, but the pound/U.S. dollar exchange rate has fallen to almost parity, raising the price of imports. - Reuters