Shares in companies that depend on consumer spending have plunged after Next, the fashion to homewares retailer, cut its sales forecast for the second half of its financial year and annual profit guidance.
The company used the publication of its half-year results to the end of July to say that there were too many variables at play amid the cost of living crisis to have much confidence in determining consumer demand ahead.
Next, which is widely seen as the most consistent high street performer, reported that it had enjoyed a stronger than anticipated first half with full price sales up 12.4% on the same period last year.
But it revealed that sales suffered during August before some demand returned in the current month.
Next, which trades from about 500 stores and online, said it now expected full price sales in its second half to fall 1.5%.
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It had previously guided an increase of 1%.
The full-year pre-tax profit forecast fell by £20m to £840m but it still represented a rise of 2% on 2020/21.
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The company’s shares fell by 10% in early deals while those of high street rivals and other consumer-facing stocks also suffered.
The FTSE 100 and FTSE 250 indexes were both down more than 2% while growing recession fears were also evident on the continent, with the German DAX and French CAC also significantly lower.
Those worst hit on the London Stock Exchange included housebuilders and personal investment platforms.
Next said it was hoping to “see benefits from recent government measures” – namely help for household energy bills – but admitted it was tough to have a clear picture of what lay ahead.
The economy is enduring challenges on many fronts, with sterling hitting record lows this week and government bonds under severe pressure after the mini-budget, prompting Bank of England intervention.
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‘Inflation is going up across the economy’
Both the pound – at $1.08 – and bond yields – the interest rate demanded to hold UK government debt – were relatively stable on Thursday morning as the PM defended the government’s growth plan and the handling of it following the market backlash.
“There are so many variables at play – energy, freight, employment, tax, economic migration, exchange rates, etc – that today, more than ever, it is not possible to predict the future on the basis of the past,” Next said.
“It is over 40 years since the UK last experienced an inflationary shock on the scale we are witnessing today; and the UK economy of the 1970s – with its reliance on highly subsidised and geographically concentrated heavy industry – was incomparably different to the economy of today.
“We have used our recent trade, along with some internal and external economic data, to build a picture of what we think is going on and how the company is likely to be affected over the coming months.”
The company’s results followed weak recent trading updates from rivals including Asos, Boohoo and Primark.
Charlie Huggins, head of equities at Wealth Club, said of the Next results: “The fact that many retailers are struggling shouldn’t be a surprise.”
“This is arguably the most difficult trading environment since the 2008/09 financial crisis. Inflation is at levels not seen for four decades.
“Sterling is in the doldrums, trading at its weakest level against the dollar since 1985. Add to this, the war in Ukraine and the spectre of further interest rate rises. It’s not exactly conducive to consumers restocking their wardrobes.
“Perhaps the biggest issue for the whole sector is that while things look challenging right now, they look set to become even more so.
“This is due to the precipitous decline in sterling which will only exacerbate inflationary pressures.
“Next looks better positioned than most of its peers to weather the storm, and emerge stronger in light of its high margins, robust cash flows and strong balance sheet. But 2023 could be a very difficult year the way things are shaping up.”
An amber warning for snow and ice, with the risk of freezing rain, covers most of Wales and central England until midday on Sunday.
Freezing rain, which makes up what are commonly known as ice storms in North America, is a rarity in the UK because the conditions for it are quite specific, according to the Met Office.
But what is it and how is it different to snow?
Freezing rain is rainfall that has become “supercooled” as it falls from the sky.
It starts when snow, ice, sleet or hail high up in the atmosphere melts into rain when it falls through the layers of warmer air below.
If the rain then passes through a sub-zero layer of air just above the ground, it can remain liquid and instead become “supercooled”. This is the key to freezing rain.
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Supercooled water will freeze on impact – forming a clear layer of ice on cold surfaces such as trees, roads and power lines.
Why is it dangerous?
It’s once it hits the surface and turns to ice that it canpose a real threat.
The ice is very clear, often referred to as black ice, because it is so difficult to see, making it treacherous for pedestrians and drivers.
Sky News meteorologist Kirsty McCabe explains: “The supercooled rain hits the ground and freezes instantly on impact, and that creates a thin layer of ice, also known as glaze, and it’s clear, so you can’t see the ice, which makes it really treacherous.”
If it hits power lines or tree branches, depending on how much rain there has been, the weight of the ice can cause them to break off because they can’t support the weight.
It can also make it difficult to open your car door if there is enough of it.
From 6pm on Saturday to midday on Sunday an amber warning for snow and ice, with the risk of freezing rain, covers most of Wales and central England, including the Midlands and Liverpool and Manchester in the North West.
But McCabe says it’s Wales where people should be particularly wary of freezing rain.
What precautions should people take?
The best thing people can do is take extra care when travelling. As it is so hard to see, it’s difficult to judge just how icy road surfaces are.
The RAC says freezing rain is arguably the most treacherous of all conditions for motorists.
They urge people not to drive unless necessary, but say those who do need to should check they have plenty of fuel and oil and check their tyre treads.
They also encourage drivers to make sure their lights are working and check they have screenwash.
The King is deeply saddened by the death of a British man who was killed in the attack in New Orleans on New Year’s Day – amid reports he was the stepson of an ex-royal nanny.
Sky News understands the King was made aware of Mr Pettifer’s death through official channels, was deeply saddened, and has been in touch with the family to share personal condolences.
The 31-year-old’s family said they were “devastated” by his death.
“He was a wonderful son, brother, grandson, nephew and a friend to so many,” the family said in a statement.
“We will all miss him terribly. Our thoughts are with the other families who have lost their family members due to this terrible attack. We request that we can grieve the loss of Ed as a family in private.”
New Orleans’ coroner said the preliminary cause of death for Mr Pettifer was blunt force injuries.
Fourteen people were killed and dozens injured when 42-year-old army veteran Shamsud-Din Jabbar’s rented truck rammed into people in New Orleans’ famous Bourbon Street in the early hours of New Year’s Day.
Jabbar was killed in a shootout with police.
The Federal Bureau of Investigation (FBI) said the attack was “premeditated” and an “evil” act of terrorism, and added Jabbar was “100% inspired by ISIS”, also known as Islamic State.
The preliminary cause of death for all the victims was blunt force injuries, according to the New Orleans coroner.
The coroner has identified most of those killed in the attack, with efforts continuing to identify the final female victim.
• Edward Pettifer, 31, from Chelsea, west London • Andrew Dauphin, 26, from Montgomery, Alabama • Kareem Badawi, 23, from Baton Rouge, Louisiana • Brandon Taylor, 43, from Harvey, Louisiana • Hubert Gauthreaux, 21, from Gretna, Louisiana • Matthew Tenedorio, 25, from Picayune, Mississippi • Ni’Kyra Dedeaux, 18, from Gulfport, Mississippi • Nicole Perez, 27, from Metairie, Louisiana • Reggie Hunter, 37, from Prairieville, Louisiana • Martin Bech, 27, from New York City, New York • Terrence Kennedy, 63, from New Orleans, Louisiana • Elliot Wilkinson, 40, from Slidell, Louisiana • William DiMaio, 25, from Holmdel, New Jersey
An Islamic State (IS) flag, weapons, and what appeared to be an improvised explosive device (IED) were found in the vehicle used in the attack, the FBI said.
The suspect posted five videos on social media before the rampage in support of IS, the agency added.
In his first clip, Jabbar said he was planning to harm his own family and friends, but was concerned headlines would not focus on the “war between the believers and disbelievers”, said Christopher Raia, deputy assistant director of the FBI’s counter-terrorism division.
Jabbar also joined IS “before this summer”, and provided a will, the FBI chief said.
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The half-brother of the attack suspect said ‘this wasn’t the man I knew’
In an interview with a Texas-based TV station, owned by Sky News’ partner network NBC News, Jabbar’s younger half-brother said he was thinking about all those impacted by the attack.
Abdur-Rahim Jabbar said: “This is a tragedy. We’re all grieving about this.”
The suspect was a Muslim, with his sibling adding: “This wasn’t the man I knew. This wasn’t the father, the son that I knew.
“And that also, this isn’t any representation of Islam or Muslims or the Muslim community.”
On 16 January, there’s a strong chance you’ll be able to see Mars as the red planet will be in “opposition”, meaning Earth will be directly between it and the sun.
Just under a week later, on 21 January, you could see five planets – Saturn, Venus, Uranus, Jupiter and Mars – in the night sky after 9pm, according to the Royal Observatory Greenwich.
Four of the planets should be visible to the naked eye, but seeing Uranus will require a telescope or very dark skies.
Anyone hoping to spot celestial phenomena is advised to find a stargazing spot away from light pollution and to allow at least 15 minutes for your eyes to adjust to the darkness.