Next posted another limp set of sales this morning and was forced to reduce its guidance for the year ahead.
The retailer's share price plunged six per cent at the open.
Next's total sales fell three per cent for the first quarter, in line with expectations. Sales in Next's retail division dropped 8.1 per cent as compared to the same period last year.
The retailer also brought down its guidance for the year ahead. Previously, the upper end of Next's forecasts stood at 2.5 per cent growth in sales, and £780m in profit (representing a 1.3 per cent fall in profit). Now, however, Next has said its maximum sales growth for the year is 0.5 per cent, and that profit will fall by at least 6.4 per cent, to £740m.
Why it's interesting
In March, Next reported its first drop in profits for eight years, and cautioned that the year ahead would be difficult due to rising prices and weaker wage growth.
The retailer reiterated the same warning in its trading update today, saying the retail trading environment in the UK "remains challenging", especially in fashion and homeware.
Despite rising costs for retailers due to increases in the national living wage and the devaluation of sterling, many have not been able to pass these on to consumers. According to figures from the British Retail Consortium, prices on clothing and furniture fell by 5.4 per cent and 0.7 per cent respectively in April.
What Next said
In a statement today, Next said: "The UK consumer environment remains challenging, particularly in the clothing and homeware markets, and real wage growth in now close to zero.
"In our full year results announcement in March we talked about omissions in some of our product ranges. We said that we expected some improvements from May onwards, but that our ranges would not be where we wanted them to be until the autumn season in September."