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| Version 3 | Version 4 |
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| Next warns on low-growth future | Next warns on low-growth future |
| (about 3 hours later) | |
| High Street retailer Next has warned that it is expecting at least three to five years of low sales growth - as customers remain reluctant to spend. | High Street retailer Next has warned that it is expecting at least three to five years of low sales growth - as customers remain reluctant to spend. |
| In a statement to the City, the firm said this muted retail environment should be seen as "the new normal". | In a statement to the City, the firm said this muted retail environment should be seen as "the new normal". |
| Its comments came as it reported a 15% rise in half-year profits to £213m, with sales up 5% to £1.59bn. | Its comments came as it reported a 15% rise in half-year profits to £213m, with sales up 5% to £1.59bn. |
| Next also reiterated that higher cotton prices may lead to customers having to pay more for clothes. | Next also reiterated that higher cotton prices may lead to customers having to pay more for clothes. |
| The fashion retailer did, however, make significant gains in the FTSE 100 after announcing the substantial rise in pre-tax profit, which saw its share price rise by 4.9%. | The fashion retailer did, however, make significant gains in the FTSE 100 after announcing the substantial rise in pre-tax profit, which saw its share price rise by 4.9%. |
| The news appeared to lift sentiment in other major retailers, with Kingfisher and Marks and Spencer also rising by more than 2%. | The news appeared to lift sentiment in other major retailers, with Kingfisher and Marks and Spencer also rising by more than 2%. |
| 'Sober assessment' | 'Sober assessment' |
| The retailer said it did not anticipate a double-dip recession in the UK nor a meltdown in consumer spending. | The retailer said it did not anticipate a double-dip recession in the UK nor a meltdown in consumer spending. |
| But it said the impact of public spending cuts and fall in the credit availability would be felt. | But it said the impact of public spending cuts and fall in the credit availability would be felt. |
| "Very little by way of growth in total consumer spending for the foreseeable future" was expected, Next said. | "Very little by way of growth in total consumer spending for the foreseeable future" was expected, Next said. |
| BBC business editor Robert Peston said that Next's "sober assessment" would be taken notice of by the government, "partly because it is a respected business and partly because Next's chief executive [Simon Wolfson] is a Tory peer and close to the prime minister and chancellor". | BBC business editor Robert Peston said that Next's "sober assessment" would be taken notice of by the government, "partly because it is a respected business and partly because Next's chief executive [Simon Wolfson] is a Tory peer and close to the prime minister and chancellor". |
| Cotton impact | Cotton impact |
| For the six months to the end of July, Next's High Street sales were towards the lower end of previous guidance, but the Next Directory home shopping business produced a better-than-expected performance, with a 7.8% rise in first-half sales. | For the six months to the end of July, Next's High Street sales were towards the lower end of previous guidance, but the Next Directory home shopping business produced a better-than-expected performance, with a 7.8% rise in first-half sales. |
| The firm said that the real opportunities it saw for growth were through its website and catalogue and by opening new shops focussing on homeware and furniture. | The firm said that the real opportunities it saw for growth were through its website and catalogue and by opening new shops focussing on homeware and furniture. |
| In its statement, Next reiterated that higher cotton prices will mean that clothes will become more expensive. | In its statement, Next reiterated that higher cotton prices will mean that clothes will become more expensive. |
| Devastating floods in Pakistan - one of the world's largest cotton producers - and fears over this year's crop in China have sent cotton prices surging to 15-year highs in recent weeks. | Devastating floods in Pakistan - one of the world's largest cotton producers - and fears over this year's crop in China have sent cotton prices surging to 15-year highs in recent weeks. |
| Next said cotton prices were 45% higher than this time last year, and that this, along with the planned VAT rise, meant price rises were "inevitable" in the spring of next year - predicting increases of between 5% and 8%. | Next said cotton prices were 45% higher than this time last year, and that this, along with the planned VAT rise, meant price rises were "inevitable" in the spring of next year - predicting increases of between 5% and 8%. |
| On Tuesday, department store Debenhams warned that the entire UK clothes retail industry faced higher prices, because of the rising cost of cotton and the weak pound. | On Tuesday, department store Debenhams warned that the entire UK clothes retail industry faced higher prices, because of the rising cost of cotton and the weak pound. |
| Primark has also said that rising costs may eat into its profit margins over the coming year. | Primark has also said that rising costs may eat into its profit margins over the coming year. |