Next set to reveal slide in profits

HIGH street giant Next is poised to report a fall in fullyear profits this week, as the market looks for any signs of price rises to mitigate the effects of the plunging pound.

The retail bellwether is expected to reveal a 4 per cent slide in annual pre-tax profits to £792 million, down from £821.3m last year, as a shift in spending away from clothing and footwear takes its toll on sales.

The group said in January it predicts overall full-price sales to fall by 1 per cent after tough trading over Christmas sparked a 0.4 per cent fall in the quarter to December 24.

Chief executive Lord Wolfson, a pro-Brexit campaigner, has also warned that the cost pressures driven by the Brexit-hit pound could see it hike prices by up to 5 per cent.

Graham Spooner, investment research analyst at The Share Centre, said: “The market will be hoping for better news from Next following its fourth-quarter trading update in early January which showed Christmas sales at high street stores below expectations.

“A major issue for the group is the increase in import costs due to the weak pound and investors are keen to see if that is going to be passed on to customers or absorbed by the company.”

Chief executive Lord Wolfson offered a gloomy outlook for Next when he updated the market in January, forecasting 2017 to be “even tougher” for the firm and 2018’s profits to tumble to between £680m and £780m.

Retailers face a choppy road ahead as consumers brace for a spending squeeze, with inflation reaching a two-and-a-half-year high at 1.8 per cent in January.

Ballooning import prices are a key factor behind the rise as companies pass on soaring costs to consumers.