The chief executive of Next has issued a scathing critique of the UK economy as the company posted strong sales and tens of millions in profit growth.
Next’s CEO, the Conservative life peer Lord Wolfson, said the high street chain has reason “to be cautious” and “at best” expects “anaemic” economic growth.
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Economic expansion is being held back by “declining job opportunities, new regulation that erodes competitiveness, government spending commitments that are beyond its means, and a rising tax burden that undermines national productivity”, Lord Wolfson said.
His comments come as the high street bellwether saw double-digit sales and profit growth, which was attributed to “favourable weather and competitor disruption,” as the UK recorded the hottest spring and summer on record, and department store Marks and Spencer (M&S) reeled from a cyberattack.
M&S’s online sales and click and collect were down for weeks, while some shelves were empty after the attack was detected after the Easter bank holiday weekend.
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This helped overall Next sales rise far more than it previously expected to 10.3% and profits grow from £452m to £515m in the six months to July, compared with a year earlier.
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Also boosting sales was expansion in the UK and international growth. Nearly a third of international sales come from aggregator websites like Zalando.
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Such a showing will be difficult to maintain due to a weakening economy, Next said.
“The first half [of the year] was boosted by factors that are unlikely to continue, and the belief that the UK economy is likely to weaken going forward”, Lord Wolfson said.
“To be clear, we do not believe the UK economy is approaching a cliff edge”, he added.
Despite the dreary outlook, analysis from financial services firm Hargreaves Lansdown said “Next is in a strong position to continue dominating the UK market”.
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“Strong demand in its online channel remains a running theme, and it’s likely to remain the main growth driver,” said the firm’s equity analyst Aarin Chiekrie.
