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Next has pared back its full-year forecasts and warned that the weakness of sterling will inflate selling prices further next year.
The UK fashion retailer now expects full-year pre-tax profit of £840mn against an earlier estimate of £860mn. That would still be a small increase on last year. Full-price sales in the second half of the year are forecast to fall 1.5 per cent against previous expectations of a 1 per cent rise.
The London-listed group, whose chief executive Lord Simon Wolfson is a Conservative peer, said “it seems inevitable that clothing and homeware growth will slow if not reverse” despite high levels of employment and savings.
“It is too early to tell what impact government support will have, though it seems likely that the scale of the measures announced recently will serve to support spending in some way,” Next said in a statement on Thursday.
“Looking into next year it now looks as though the weakness of the pound, if it continues, will serve to inflate selling prices, particularly in the second half of the year,” it added.
Next had already indicated that clothing prices would rise by about 6 per cent this autumn because of higher factory gate and freight costs.
In the six months to end-July, full-price sales were up 12.4 per cent against a comparative period where shops were shut for a sustained period, while pre-tax profit was 16 per cent higher at £401mn.
The pound has shed about a fifth of its value against the dollar this year. Shares in Next fell 7 per cent in early London trading, pushing the decline for the year to 38 per cent.
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