Challenging times for the retail giants
RETAIL giants Morrisons and Next are tipped to warn of challenging trading conditions on the high street at their annual results this week.
On Wednesday, Morrisons is expected to say that its full year revenues were flat at £17.7 billion, even though its pre-tax profits for the 12 months to the beginning of February are forecast to come in 29.1 per cent higher at £413.3 million.
Its profits for the previous year were suppressed due to pension scheme closure and debt repayment costs.
It is thought that chief executive David Potts will say that like-for-like sales fell for a third quarter in a row.
The following day, Next is likely to say that profits grew by 0.7 per cent to £728million, despite its revenues rising 4.3 per cent to £4.3 billion. Growth in its own label sales, as well as third party brands, are expected to offset a decline in Next’s store sales.
Analysts will also be looking for Next to update the market on the potential threat the coronavirus poses to its supply chain.
Economic activity in China has ground to a halt and Shore Capital analyst Greg Lawless noted that as approximately 19 per cent of Next’s Spring/summer 2019 range was manufactured in China, its supplies could be at risk of disruption.
He said: “Comments about the availability of fabric manufactured in China, and potentially exported to be made into garments elsewhere will be welcomed too, as we have been highlighting the risk to Autumn/ Winter ranges that land from July 2020 onwards.”