RE: Share Price3 Jan 2017 18:59
The high street fashion retailer Next will send a chill through the rest of the British retail sector on Wednesday when it sounds an alert on its outlook for 2017 amid deepening uncertainty over the impact of inflation on fragile consumer confidence.
Sky News has learnt that Next's chief executive Lord Wolfson is expected to strike a downbeat note when the chain publishes its fourth-quarter trading update covering the crucial Christmas period.
One City source said the trading statement could include a formal profit alert for the company's 2017 financial year, although the company declined to comment on this on Tuesday evening.
Lord Wolfson has already attempted to manage investors' expectations for Next's performance in the current financial year to the end of January.
In November, the retailer - one of the stellar performers on Britain's high streets for the last two decades - said full-price sales across its stores and Directory business fell by 3.5% in the third quarter, and by 1.5% in the year-to-date.
It reduced the upper end of profit forecasts for the current year from £845m to £825m.
In a note published on Tuesday, Deutsche Bank cut its recommendation on Next's shares from 'Buy' to 'Hold', warning about the extent of its dependence on British shoppers.
"It has 95% revenue exposure to UK consumers where we expect demand to weaken for the next two years and since costs are already tightly controlled it may be difficult to avoid operating cost deleverage," Deutsche warned.