NEXT has notched up a surge in half-12 months income, but warned UK gross sales might be weighed on by “anaemic” economic growth and a faltering jobs market because the Government’s tax hike takes its toll.
The trend and homewares group reported a 13.8% rise in underlying pre-tax income to £515 million for the six months to the tip of July as complete full-worth gross sales lifted 10.9%.
But it cautioned that UK gross sales growth will pull again sharply, to 1.9% within the closing six months of its monetary 12 months, in opposition to growth of seven.6% within the first half.
Chief Executive Lord Simon Wolfson mentioned: “The medium to lengthy-time period outlook for the UK financial system doesn’t look beneficial.
“To be clear, we don’t imagine the UK financial system is approaching a cliff edge.
“At best we expect anaemic growth.”
It mentioned the group’s UK efficiency was additionally boosted within the first six months by higher than anticipated summer season climate and disruption at rival Marks & Spencer after its on-line buying and selling was hit by a serious cyber assault.
With the absence of those within the coming months and mixed with a weakening financial system and dampened client spending, it expects gross sales growth to sluggish sharply.
The group mentioned the Government’s transfer to extend National Insurance Contributions (NICs) and the minimal wage was resulting in a steep drop in vacancies and making it more durable for folks to search out work, particularly younger employees.
This will hit client spending energy, it mentioned.
However, it caught to its lately upgraded full-12 months profit steerage for group gross sales to rise by 7.5% and income to extend by 9.3% to £1.11 billion.
Shares within the agency fell 6% on market opening on Thursday.
The group expects gross sales in shops to fall by 0.6% over its second half even after including new outlet area, with growth in its on-line enterprise to greater than halve to three.6% from 9.2% within the first six months.
NEXT mentioned that inside its personal enterprise, job vacancies are down 35% – with steeper falls inside shops – because it tackles hovering wage prices.
Applications have jumped 76%, with numbers per emptiness 2.7 occasions larger than two years in the past.
Lord Wolfson mentioned: “We first raised considerations a few potential weakening in UK employment in our report two years in the past.
“Since then, vacancies have continued to fall, and PAYE payroll numbers at the moment are transferring backwards.
“The problem appears to be that employment, particularly at the entry level, faces the triple pressure of rising costs, increasing regulation and displacement through mechanisation and artificial intelligence.”
The worldwide enterprise will assist it climate the storm, with NEXT forecasting full-12 months abroad gross sales to soar by 23.8% and efforts to maintain increasing this a part of the enterprise.