British clothing retailer Next cuts profit guidance for this financial year and warns on the outlook for next, highlighting ''exceptional'' levels of uncertainty in the sector. Laura Frykberg reports.
The most successful British clothing retailer of the last decade is in danger of being overtaken by another trend. Next says instead of buying clothes - Britons are spending on eating out, holidays and events. It's caused the company to trim its profit guidance for the financial year from 805 million pounds to 792 million. Its 2017-2018 pretax profit, it warned, could come in a full 100 million below forecasts. The news dragged on others in the sector - Marks & Spencer, AB Foods and Debenhams all seeing sharp falls in their share price. Some analysts wondering whether Next may become another fashion victim itself. SOUNDBITE (English) FIDELITY GLOBAL'S INVESTMENT DIRECTOR, TOM STEVENSON SAYING: "There is a school of though that Next is becoming less relevant in today's market, it is suffering the same fate that Marks & Spencers suffered recently in that it has just become unfashionable." Like many other UK businesses, Next has been damaged by the falling pound. Following last June's Brexit vote, chief exec Simon Wolfson said he expects prices to rise by up to 5 percent. SOUNDBITE (English) FIDELITY GLOBAL'S INVESTMENT DIRECTOR, TOM STEVENSON SAYING: "The retail sector is particularly exposed to imported cost rises. Many of the clothes that it imports are priced in dollars, and as the pound has fallen the cost of those have risen. So that is a threat to the profit of retailers." Not ideal for a company which has long offered style for a reasonable sum.