Thursday 5 May 2016 6:06 am

What Next for the UK’s struggling high street?

Retailers are having a tough old time of it. After last week’s casualties (BHS and Austin Reed) it seems likely that others could follow, and yesterday’s update from one of the high street’s more reliable traders underscored just how jittery the market has become.

As a rule, Next tends to downplay its confidence about any upcoming trading period, preferring to surprise markets with better-than-expected results rather than suffer the consequences of ill-placed hubris.

It’s perhaps a sign of how well Lord Wolfson managed the damage that Next was top of the FTSE for most of yesterday, closing up 3.46 per cent, despite lowering its full year guidance and issuing a warning that would knock the wind out of most other firms.

Shares across the rest of the sector performed pretty dismally, meanwhile. Debenhams, Marks & Spencer, N Brown and Mothercare all suffered a difficult day. Even Asos – far removed from the plight of the high street – and Primark parent ABF were out of fashion.

One phrase in particular will have made retail investors sit up and take note. Next prophesied “weaker underlying demand for clothing and a potentially wider slow-down in consumer spending” – its second such warning in as many months.

For some years now, retailers have been teetering on the brink. A spate of weather can make or break a set of results, leaving many surviving by the skin of their teeth. The situation is perilous. When building a castle made of sand, businesses need to rely on more than the Great British weather.

Next is not immune. Whether it’s the weather or the delayed effect of long time product director Christos Angelides’ departure two years ago, trading is clearly not where it should be – but it’s better than most.

BHS and Austin Reed had their own particular troubles. Nonetheless, they remind us how easy it is for poorly-run businesses to fail and the current climate could be enough to push more of our well known names over the edge. Next sneezed yesterday, but it’s other retailers who might have caught the flu.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Share: