Next says warm September more harmful than Brexit heat | Business News

By September 19, 2019 No Comments

The Brexit-supporting boss of Next says a warm start to September has done more to hinder sales than political uncertainty among shoppers.

Lord Wolfson made his remarks as the retailer reported a 3.7% rise in sales in the first of its financial year, running to the end of July, resulting in a 4% rise in pre-tax profits to £327.4m.

While store sales continued to stutter, by more than 5% amid the continuing crisis for the wider high street, online business was up by almost 13% with over £1bn in revenue.

Lord Wolfson, the chief executive of Next, has been among few top business people to argue a case for Brexit publicly

The company maintained its outlook for a slight rise in annual profits to £725m.

As the clock ticks down to the Brexit deadline of 31 October Lord Wolfson admitted the start of the Autumn season had been “disappointing” despite strong fundamentals for the economy as household spending power surges at a time of record employment.

He wrote: “It is very hard to determine whether the uncertainty over Brexit is having any effect on consumer spending and we can find no evidence that it is affecting spending on small ticket price items.

“Some suggest that the fact of Brexit, of itself, might undermine consumer confidence.

“Certainly, the first few weeks of the Autumn season have been disappointing. However, we believe that the warm start to September has done much more to hinder sales than the political temperature.

“Our experience is that political storms, of themselves, rarely affect sales and consumers only change their behaviour when those events directly impair their income or increase their non-discretionary expenditure.”

He added: “Our view is that Brexit will only materially affect consumer spending in the event that it triggers inflationary pressure on prices or logistical problems at our ports.”

Next said that it did not expect any no-deal Brexit to raise its prices – pointing to work on currency hedging, falling commodity costs and “continued development of our sourcing base”.

Lord Wolfson concluded: “A no-deal Brexit is not our preferred outcome.

“That said, as long as our ports continue to operate effectively, we do not believe that the risks of a no-deal Brexit pose a material threat to the ongoing operations and profitability of Next’s business, here in the UK or to our £233m turnover business into the EU.”

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