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.
Truss gives first interviews since pound dived – economy latest
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.
Please use Chrome browser for a more accessible video player
‘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.
Financial crisis promo
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.”
A teenage girl who was killed after getting out of a police car on the M5 in Somerset has been named.
Tamzin Hall, 17 and from Wellington, was hit by a vehicle that was travelling southbound between junction 24 for Bridgwater and junction 25 for Taunton shortly after 11pm on Monday.
She had exited a police vehicle that had stopped on the northbound side of the motorway while transporting her.
A mandatory referral was made to the Independent Office for Police Conduct, which is now carrying out its own investigation into what happened.
Read more from Sky News:
Who could replace Gary Lineker on Match Of The Day?
How do Labour avoid the Democrats’ fate?
Avon and Somerset Police said: “Our thoughts and sympathies go out to Tamzin’s family for their devastating loss.
“A specially-trained family liaison officer remains in contact with them to keep them updated and to provide support.
“The family have asked for privacy at this difficult time.”
Keep up with all the latest news from the UK and around the world by following Sky News
The police watchdog, the IOPC, has been asked to investigate.
In a statement, director David Ford, said: “This was a truly tragic incident and my thoughts are with Tamzin’s family and friends and everyone affected by the events of that evening.
“We are contacting her family to express our sympathies, explain our role, and set out how our investigation will progress. We will keep them fully updated as our investigation continues.”
Paramedics attended the motorway within minutes of the girl being hit but she was pronounced dead at the scene.
The motorway was closed in both directions while investigations took place. It was fully reopened shortly after 11am on Tuesday, Nationals Highways said.
A survivors group advocating for women allegedly assaulted by Mohamed al Fayed has said it is “grateful another abuser has been unmasked”, after allegations his brother Salah also participated in the abuse.
Justice for Harrods Survivors says it has “credible evidence” suggesting the sexual abuse allegedly perpetrated at Harrods and the billionaire’s properties “was not limited to Mr al Fayed himself”.
The group’s statement comes after three women told BBC News they were sexually assaulted by al Fayed’s brother, Salah.
One woman said she was raped by Mohamed al Fayed while working at Harrods.
Helen, who has waived her right to anonymity, said she then took a job working for his brother as an escape. She alleges she was drugged and sexually assaulted while working at Salah’s home on Park Lane, London.
Two other women have told the BBC they were taken to Monaco and the South of France, where Salah sexually abused them.
Mohamed al Fayed. Pic: AP
The Justice for Harrod Survivors representatives said: “We are proud to support the survivors of Salah Fayed’s abuse and are committed to achieving justice for them, no matter what it takes.”
The group added it “looks forward to the others on whom we have credible evidence – whether abusers themselves or enablers facilitating that abuse – being exposed in due course”.
More from Sky News:
Ex-Fulham captain makes Al Fayed allegation
Timeline of accusations against ex-Harrods boss
Keep up with all the latest news from the UK and around the world by following Sky News
Salah was one of the three Fayed brothers who co-owned Harrods.
The business, which was sold to Qatar Holdings when Mohamed al Fayed retired in 2010, has said it “supports the bravery of these women in coming forward”.
A statement issued by the famous store on Thursday evening continued: “We encourage these survivors to come forward and make their claims to the Harrods scheme, where they can apply for compensation, as well as support from a counselling perspective and through an independent survivor advocate.
“We also hope that they are looking at every appropriate avenue to them in their pursuit of justice, whether that be Harrods, the police or the Fayed family and estate.”
Please use Chrome browser for a more accessible video player
Bianca Gascoigne speaks about Al Fayed abuse
The Justice for Harrods Survivors group previously said more than 400 people had contacted them regarding accusations about Mohamed al Fayed, who died last year.
One of those alleged to have been abused is Bianca Gascoigne, the daughter of former England player Paul.
Speaking to Sky News in October, Gascoigne said she was groomed and sexually assaulted by al Fayed when she worked at Harrods as a teenager.
UK
Wes Streeting ‘crossed the line’ by opposing assisted dying in public, says Labour peer Harriet Harman
Wes Streeting “crossed the line” by opposing assisted dying in public and the argument shouldn’t “come down to resources”, a Labour peer has said.
Speaking on Sky News’ Electoral Dysfunction podcast, Baroness Harriet Harman criticised the health secretary for revealing how he is going to vote on the matter when it comes before parliament later this month.
MPs are being given a free vote, meaning they can side with their conscience and not party lines, so the government is supposed to be staying neutral.
But Mr Streeting has made clear he will vote against legalising assisted dying, citing concerns end-of-life care is not good enough for people to make an informed choice, and that some could feel pressured into the decision to save the NHS money.
He has also ordered a review into the potential costs of changing the law, warning it could come at the expense of other NHS services if implemented.
Baroness Harman said Mr Streeting has “crossed the line in two ways”.
👉 Click here to listen to Electoral Dysfunction on your podcast app 👈
“He should not have said how he was going to vote, because that breaches neutrality and sends a signal,” she said.
“And secondly… he’s said the problem is that it will cost money to bring in an assisted dying measure, and therefore he will have to cut other services.
“But paradoxically, he also said it would be a slippery slope because people will be forced to bring about their own death in order to save the NHS money. Well, it can’t be doing both things.
“It can’t be both costing the NHS money and saving the NHS money.”
Please use Chrome browser for a more accessible video player
Review into assisted dying costs
Baroness Harman said the argument “should not come down to resources” as it is a “huge moral issue” affecting “only a tiny number of people”.
She added that people should not mistake Mr Streeting for being “a kind of proxy for Keir Starmer”.
“The government is genuinely neutral and all of those backbenchers, they can vote whichever way they want,” she added.
Read more on this story:
‘Fix care before assisted dying legislation’
Why assisted dying is controversial – and where it’s already legal
Prime Minister Sir Keir Starmer has previously expressed support for assisted dying, but it is not clear how he intends to vote on the issue or if he will make his decision public ahead of time.
The cabinet has varying views on the topic, with the likes of Justice Secretary Shabana Mahmood siding with Mr Streeting in her opposition but Energy Secretary Ed Miliband being for it.
Energy Security and Net Zero Secretary Ed Miliband is said to support the bill. Pic: Reuters
Justice Secretary Shabana Mahmood has concerns. Pic: Reuters
Keep up with all the latest news from the UK and around the world by following Sky News
The Terminally Ill Adults (End of Life) Bill is being championed by Labour backbencher Kim Leadbeater, who wants to give people with six months left to live the choice to end their lives.
Under her proposals, two independent doctors must confirm a patient is eligible for assisted dying and a High Court judge must give their approval.
Please use Chrome browser for a more accessible video player
Labour MP Kim Leadbeater discusses End of Life Bill
The bill will also include punishments of up to 14 years in prison for those who break the law, including coercing someone into ending their own life.
MPs will debate and vote on the legislation on 29 November, in what will be the first Commons vote on assisted dying since 2015, when the proposal was defeated.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway