UK stock markets tumble as cost of living crisis sees Next cut sales and profit guidance
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.
Profit before tax of £401m was 16% higher.
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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%.
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.
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.
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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.”
England star Jess Carter says she has been the victim of racist abuse online during the UEFA Women’s Euros in Switzerland.
The Lionesses defender, who has 49 England caps, said she will be “taking a step back from social media and leaving it to a team to deal with”.
In an Instagram post, the 27-year-old player said: “From the start of the tournament, I have experienced a lot of racial abuse. Whilst I feel every fan is entitled to their opinion on performance and result, I don’t agree or think it’s ok to target someone’s appearance or race.”
Jess Carter. Pic: PA
Carter said she was stepping back from social media to “protect myself in a bid to keep my focus on helping the team anyway I can”.
She added: “Hopefully speaking out will make the people writing this abuse think twice so that others won’t have to deal with it.”
Carter also said that England have made some “historic changes with the Lionesses squad” that she was “so proud” of, and she hopes that by speaking out about racial abuse “it will make another positive change for all”.
‘Abhorrent abuse’
The Football Association leadership has condemned the “abhorrent abuse” against Carter and has contacted UK police about it.
FA chief executive Mark Bullingham said in a statement: “Our priority is Jess and giving her all the support she needs. We strongly condemn those responsible for this disgusting racism.
“As soon as we were made aware of the racist abuse Jess received, we immediately contacted UK police. They are in touch with the relevant social media platform, and we are working with police to ensure those responsible for this hate crime are brought to justice.”
Carter during a training session in Switzerland. Pic: PA
The Lionesses said in a statement: “We stand with Jess and all Lionesses players past and present who have suffered racism.
“No one should have to endure such vile abuse, be that in football or any walk of life.”
They added: “Those behind this online poison must be held accountable.”
Anger and sadness
England teammate Lucy Bronze said there was “anger” and “sadness” among the squad following the abuse.
Bronze said: “I think we all know that any player of colour that’s played for England has probably gone through racist abuse. That’s a sad fact.”
She told Sky News’ sports correspondent Rob Harris that social media platforms need to be held more accountable.
Bronze added: “People need to be held accountable for their actions, whether it’s in-person or online. The abuse is not okay. Racism is not okay.”
Read more from Sky News:
Lionesses ‘very optimistic’ Williamson will be fit for semi-final
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The prime minister said on X that there was “no place for racism in football or anywhere in society”.
Sir Keir Starmer added: “I stand with Jess, the Lionesses, and any players who have suffered racism, on and off the pitch.”
Carter has started all four of England’s games at the tournament.
The defending champions face Italy on Tuesday night in Geneva in the Euros semi-finals. If they win and reach the final, they will play either Germany or Spain, who face each other on Wednesday.
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The Lionesses also said that until now, they have chosen to take the knee before matches.
“It is clear we and football need to find another way to tackle racism,” they said.
England won’t be taking the knee before semi-final
The Lionesses said they have agreed as a squad to remain standing before kick-off in the match against Italy.
“We hope the game can come together to see what more can be done.”
Kneeling, a symbolic anti-racism gesture, came to prominence in 2016 when NFL player Colin Kaepernick knelt in protest during the United States national anthem and became more widespread during the Black Lives Matter movement.
As head of football’s anti-racism body, there was dread for Sanjay Bhandari watching England’s Women’s Euros quarter-final with Sweden.
But that’s, grimly, how it always is. Concerned that black players will be singled out for blame. Not with a legitimate critique of their performances, but with toxicity and racism.
And now Kick It Out is working with the Football Association to support Jess Carter after the England defender spoke out over the abuse she has been targeted with throughout the Women’s European Championship.
The players want social media firms to do more, but Mr Bhandari, the Kick It Out chairman, is concerned by their limited approach to the scourge of online hate.
Jess Carter says she has been the target of racist abuse. Pic: PA
“The social media companies need to do far more,” he told Sky News. “They’ve actually gone backwards over the last four or five years, not forwards. It’s got worse on social media, not better.
“And they need to provide us with the tools to help keep us safe and to remove some of this toxicity from the platforms. They’re just not doing enough.
“I would say that X is the worst. It has become no-holds-barred.
“And with Instagram, it is much more in the direct messaging, and I think there needs to be much more done there to protect people from those messages.”
Meta, which owns Instagram, did not reply to a request for comment.
There was no response from an email sent to X’s press email address.
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‘People need to be held accountable’ after Euros racism
LinkedIn indicated that X’s UK managing director Jonathan Lewis’s account had seen a request for comment, but there was no response.
On Friday, Mr Lewis and Premier League club Burnley were celebrating a new partnership in an announcement that made no mention of the abuse that many players across the world face on X.
The hope is that the Online Safety Act will lead to social media firms implementing the safety tools required of them.
Mr Bhandari said: “They have to be enforced by law enforcement against individual perpetrators, and also the regulatory parts need to be forced against the social media companies to force them to do the things that they need to do.”
Grimly familiar situation
The FA reported the abuse suffered by Carter to police, and the hope is for speedy action because this is a grimly familiar situation.
After the men’s Euros final in 2021, Marcus Rashford, Jadon Sancho and Bukayo Saka were racially abused after missing penalties in the shootout defeat to Italy.
Bukayo Saka was among the England players targeted after missing penalties in the Euros final. Pic: Reuters
While players have been taking a knee against racism in men’s and women’s games, the Lionesses feel that is no longer enough at these Euros.
They will stand instead before the semi-final with Italy because they say a new approach is needed to tackle racism.
Read more from Sky News:
Lionesses ‘very optimistic’ Williamson will be fit for semi-final
Team went from sloppy to celebratory in nerve-shredding quarters
Carter didn’t just face racism around the quarter-final that England won on penalties after fighting back from 2-0 down against Sweden here in Zurich.
She has been subjected to abuse throughout the Euros.
“I’m really feeling for Jess and what’s sad is that this is shocking, but not surprising,” Mr Bhandari said.
“I watch every England game, at every tournament, with the fear that after the match, there’s going to be abuse of a black player using the spurious basis of performance as an excuse to justify unjustifiable racism. All racism is unjustifiable.
“The fact that someone’s had a good or bad game in your opinion does not justify that kind of racist abuse.”
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