Now Next profits to be hammered in High St bloodbath
THE crisis hammering the High Street continues to gather pace, with shopping stalwart Next set to be the latest to uncover a dramatic drop in profits this week.
Analysts expect profits at the 154-yearold firm to fall 8pc to £725m as the rout of bricks and mortar retailers by online behemoths such as Amazon continues.
Fellow retailer Kingfisher is also expected to report a slide in profits, capping a bleak opening three months to 2018 for the High Street.
So far this year Toys R Us and electronics seller maplin have gone bust, shedding nearly 6,000 jobs.
Debenhams, mothercare and Carpetright have all been forced to issue profit warnings. Fashion retailer New Look has closed stores. Tesco and Sainsbury’s have cut staff.
Along with the retail woes, families are also deserting mass-market restaurant chains, which were once seen as the future as the internet wipes out shops.
Jamie’s Italian, burger chain Byron and Prezzo have unveiled hundreds of closures between them.
The rout has also hit budget retailers, with Conviviality, the owner of off-licence chains Bargain Booze and Wine Rack, this weekend putting together a business plan to help raise emergency funds.
The chain of 700 stores and 2,600 people imploded last week after it revealed it owed the taxman £30m, suspended shares and issued a profit warning. AIm-listed Conviviality is now preparing to raise around £100m from shareholders to help keep its shelves stocked and pay its bills.
Discount chain Poundstretcher is also believed to be struggling, with discount shops hit by the fall in the pound since Brexit and slower consumer spending.
Credit insurers have reportedly reduced cover for Crown Crest Group, its parent. The move means suppliers will be less certain about getting paid and may demand payment upfront, putting further pressure on the firm. Rival Poundland, the market leader, has also been hammered by an accounting scandal at its parent Steinhoff. Richard Hyman, retail analyst, said high streets were struggling amid over- capacity worsened by the online shopping surge. He said: ‘I think we are going through a big shake-out at the moment – there are too many mouths to feed.
‘Being good in this market is not good enough any more – you have to be better than good. I think that the weaknesses of some retail businesses are being exposed in a way they were not when the market was more buoyant.’
Next’s figures on Friday will be seen as a barometer for the wider High Street, and shares across the retail world are likely to fall if its profits disappoint.
It managed a surprise sales rise over Christmas and upgraded its profit forecast for the financial year. However, this was largely because strong online growth offset weaker in-store sales – a trend analysts are sure will continue.