Next ‘in a good place’ but UK outlook ‘not favourable’ – Daily Business

Fashion and furnishings group Next said it is in “a good place” despite warning that the medium to long term outlook for the UK economy “does not look favourable” with years of “anaemic growth”.

The company posted a 10.9% rise in full price sales in the first six months but said growth will slow to 4.5% in the second half of the year.

The full year figure will be 7.5% up on 2024, unchanged from its 31 July trading statement, it said.

Pre-tax profit for the period to the end of July came in 13.8% higher at £515m and is expected to be up 9.3% for the year at £1.1 billion, in line with guidance.

The board has declared an interim ordinary dividend of 87 pence per share.

The company said: “With the worst of the structural shift from store to online trading long behind us, the opportunities for change and growth now present themselves in virtually every area of the business.”

However, it added that there is “reason to be cautious” and outlined a number of challenges being faced by businesses.

“The medium to long-term outlook for the UK economy does not look favourable,” it said.

“To be clear, we do not believe the UK economy is approaching a cliff edge. 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.

“We first raised concerns about a potential weakening in UK employment in our report two years ago.

“Since then, vacancies have continued to fall, and PAYE payroll numbers are now moving backwards.

The problem appears to be that employment, particularly at the entry level, faces the triple pressure of rising costs, increasing regulation, and displacement through mechanisation and AI.

“In spite of the challenges presented by the UK economy, NEXT is in a good place, with multiple
opportunities for growth, both in the UK and overseas.

“Our enthusiasm is tempered by the knowledge that the first half was boosted by factors that are unlikely to continue, and the belief that the UK economy is likely to weaken going forward.

“However, on balance we believe the positives for Next materially outweigh the negatives. We
remain optimistic about the prospects for the group and are very clear about what we have to do.”