Next Shares Slump 6%, As Retailer Tips Sharp UK Sales Slowdown

Core Viewpoint - Retailer Next has warned that tough economic conditions in the UK will significantly impact local sales in the second half of the year, leading to a 6% drop in its share price to £112.80 [2] Financial Performance - Total revenues for the first half rose to £3.2 billion, reflecting a year-on-year increase of 10.3%, with full-price item sales up 10.9% [2] - Pre-tax profits increased by 13.8% to £515 million [3] Sales Breakdown - Online sales in the UK grew by 11.1% year on year, reaching £1.3 billion, while store-generated sales rose 3.7% to £899 million [4] - International sales of the Next brand surged by 20%, while UK turnover increased by 6%, with online and in-store sales up 7% and 5% respectively [5] Future Outlook - Full-price UK sales are expected to slow to a growth rate of 1.9% in the second half, down from 7.6% in the first half, with internet sales projected to rise by 3.6% and store sales expected to decline by 0.6% [6] - The company anticipates "anaemic" economic growth in the UK, citing factors such as declining job opportunities and a rising tax burden as headwinds [7] Guidance and Projections - Despite the challenges, Next maintains its guidance, predicting total full-price sales to rise by 4.5% in the second half and 7.5% for the full year, with revenues forecasted at £5.4 billion [8] - Full-year pre-tax profit estimates remain unchanged at £1.1 billion, indicating a projected annual growth of 9.3% [8] Strategic Positioning - Analyst Dan Lane noted that Next has successfully adapted to the digital age, maintaining relevance and growth through its online platform and brand portfolio [9] - The importance of bolstering international operations is emphasized, especially in light of the predicted decline in UK sales [9]