.png)
1 hour ago
3
Bosses at clothing and homeware chain Next are forecasting years of “anaemic growth” across the UK, as the retailer claimed regulation, government spending, and higher taxes would hurt jobs and productivity.
The FTSE 100 company, which is headed by the Conservative peer Simon Wolfson, said that while it did not believe the economy was heading towards a “cliff edge” the weakening outlook gave the company “another reason to be cautious”.
“The medium- to long-term outlook for the UK economy does not look favourable. To be clear, we do not believe the UK economy is approaching a cliff edge,” Next’s half-year earnings report said.
“At best we expect anaemic growth, with progress constrained by four factors: 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.”
The warning came as the company announced it would hand a further £99m to it shareholders, via a dividend worth 87p per share. It followed a near-18% jump in half-year pre-tax profits to £509m, on a statutory basis, as sales in the six months to July rose by 10.3% to £3.3bn.
Shares tumbled by 6% at the start of trading on Thursday morning, making them the biggest faller on the FTSE 100.
Next and Lord Wolfson have been strong critics of the government’s decision to employers’ national insurance contributions during last year’s autumn budget. They are now hitting out at the pending employment rights bill, which is expected to ban zero-hours contracts, end fire-and-rehire practices, and entitle workers to sick pay from their first day on the job.
The bill returned to the Commons this week with a pledge by senior government figures not to water down changes, despite the exit of its champion Angela Rayner, who quit as deputy prime minister earlier this month.
Next said on Thursday that while it welcomed “well-intentioned” reforms in the bill, it believed many measures would have “the unintended consequence of reducing jobs and eliminating earnings potential”. It added that while it never used zero-hours contracts, the bill may curb “low-hour” contracts for many workers “depriving them of the ability to volunteer for extra hours of work when it suits them”.
Overall, the retailer said entry-level employees were facing the “triple pressure of rising costs, increasing regulation, and displacement through mechanisation and AI”.
after newsletter promotion
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown said that Next was “clearly unimpressed by the current government’s performance”.
However, Next still “breezed past its original sales guidance over the first half, driven by favourable weather, major disruption at M&S and impressive international growth. In the UK, both online and in-store full-price sales grew at mid-to-high single digits.”
As well as the Next high street chain, the group also controls the UK distribution of the US brands Gap and Victoria’s Secret, creates Laura Ashley homeware, Ted Baker childrenswear and lingerie, and sells dozens of other brands it does not own via its website.
