Next, the UK-based fashion retailer, has issued a warning about potential “anaemic” economic growth and diminishing job opportunities, attributing these concerns to current tax levels and government spending commitments. The statement was made by Lord Wolfson, the company’s chief executive, following a report indicating a 13.8% increase in pre-tax profits to £515 million for the six months ending in July.
Despite the profit surge, shares in Next dropped by 6% during early trading. The retailer clarified that it does not foresee an immediate economic crisis but described the outlook as cautionary. Next’s projections indicate that the medium to long-term economic conditions may not be favorable, citing factors such as declining job opportunities, increased regulation, burdensome government spending, and a growing tax burden that could affect productivity.
Next’s comments come in the context of heightened competition, particularly following operational disruptions at rival Marks & Spencer due to a cyber attack. However, the company forecasts a significant slowdown in sales growth influenced by economic conditions and decreased consumer spending.
Concerns regarding weakening employment have been echoed by Next since their report two years ago; they noted vacancies are down by 35%, especially in-store positions. The company has indicated that entry-level employment is under pressure from rising costs, increased regulation, and automation.
In advance of the government’s upcoming Budget in November, a Treasury spokesperson highlighted that the UK experienced faster economic growth than any other G7 nation in the first half of the year, emphasizing initiatives to lower business costs through trade deals and interest rate reductions.
Industry experts recognize the challenges facing retailers, with one noting the financial burdens imposed by National Insurance and rising costs. Despite strong profits, observers suggest that Next and similar retailers may face difficulties in investing in growth due to these economic pressures.
Source: https://www.bbc.com/news/articles/cwywkegwnyeo?at_medium=RSS&at_campaign=rss