Retail giant Enderby Next’s share price fell sharply this morning after the company issued a profit warning.
In early trading this morning (September 29), Next’s share price was down more than 10% to £47.69, from an opening price of just over £50.
Earlier this morning, Next lowered its full year profit forecast due to the cost of living and mortgage crisis.
In a statement, Next said it now expects to earn £840m for the 2022/23 financial year – down from a previous forecast of £860m – as it expects sales to fall by 2 % over the next six months.
In a defined two-half year, Next said its sales were up 12.1% on a year ago, while profits rose 16% to £401m.
A statement from Next said: “Sales in August were below our expectations and, despite the improvement in sales in September, we believe it is reasonable to moderate our expectations for sales and earnings in the second half of the year. It is important to point out that with so many variables in play, it is exceptionally difficult to predict short-term sales trends, especially since recent government stimulus measures have yet to take full effect.
Commenting on Next’s trade update, Richard Lim, CEO of Retail Economics, said: “It is clear that this will be a year of two halves for the retailer. The impressive performance of recent months is overshadowed by a much bleaker outlook, with earnings forecasts reduced.
“The tone is really very dark. The retailer is preparing for battle knowing it is in a stronger financial position than many competitors. Their focus on efficiency, targeted digital investments and profitability will ensure the long-term success of the business. Now is the time to leverage the competitive advantage they hold in many areas of the business to emerge stronger than the competition.
“Nevertheless, the cost of living crisis and housing affordability shock will make life extremely difficult for whole swaths of households as we head into 2023. Trading peaks will be incredibly difficult and likely to push many industry players to breaking point.”