"Retailer Next has a reputation for straight talking, so its stark take of the prospects for the UK economy will carry weight. A gloomy assessment allows for some expectation management about Next's future sales, with growth forecast to slow significantly in the second half of its financial year. It is worth remembering that the company has got under-promising and over-delivering down to a fine art - a key component of being a successful public company."
"As a case in point, Next easily beat its first-half sales guidance with its latest results, helped by one-off factors like the sunny weather and picking up business as rival Marks & Spencer struggled with a cyber-attack. The company's overseas operations are still in their infancy but are growing rapidly, and this could be important if Next's domestic market becomes more difficult."
Next shares dropped 6% after the retailer warned that the UK economy is likely to weaken and described the medium-to-long-term outlook as unfavourable. The company reiterated its full-year profits and sales guidance despite a first-half sales beat. Growth is forecast to slow significantly in the second half of the financial year. First-half performance benefited from one-off factors such as sunny weather and business taken from a rival affected by a cyber-attack. Overseas operations are growing rapidly, mainly in Europe and the Middle East, and could help offset domestic weakness without major additional capital expenditure.
Read at London Business News | Londonlovesbusiness.com
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