What Next?

Friday, 23 March: After a dire period for retailers, especially prominent high-street names, it was the turn of Next to update us on their latest full year results. Unsurprisingly they echoed many of their peers’ concerns and excuses behind falling sales, diminished profits and last minute turnaround plans. Woes at Next have been long documented, with the retailer realising they were behind the online curve a while back. For a couple of years now Next’s updates have been synonymous with hits to their share price. Two years ago their full year results sent shares over 15% lower. Their prior two year end trading updates have sent shares to double digit losses almost on both occasions. Now hits have been less severe due to the fact investors expect so little, and certainly no traction to the glacial turnaround plan; which in a brief defence is happening at possibly the toughest time for high street retailers. But, as prior examples have shown in many cases the business has been the master of their own downfall, with external pressures just compounding woes. Now, shares rise to the top of the FTSE, to close 6% higher after annual profits dropped 8% in what they said was their most challenging year a quarter of a century. Annual profit declined for a hat-trick and full priced products in store saw sales tumble. Total revenue for the year was 0.5% lower, with online demand offsetting some of this decline, ‘quelle surprise’. Looking forward of course there’s hardly an air of optimism, with week by week yet more high street store closures seemingly being announced. Next have said they will try more concessions in stores though, which could include prosecco bars, barbers, cafes and even children’s activity centres. All likely to do better than Next itself but moving on. Shares closed the day 7.6% higher.

For equities in general today was one that saw the majority of screens shine red. Global equities headed lower as caution gripped investors amid fears of trade wars following Trump’s announced tariffs on Chinese goods, worth a mere $60bn. Having the two biggest economies go head to head about who needs who will likely not be good for anyone, literally anyone. It’s ok though because Europe’s got our backs… oh wait. Well anyway, after quite a downbeat week equities finished the day with steep losses, the FTSE has closed below 7,000 for the second day in a row, the first time this has happened since December 2016. US markets sit around the lows they hit at the beginning of February and other major Euro bourses closed with losses of over 1% today. Asian shares began the day with a horrific session that saw the Nikkei drop 4.55%, the biggest one day drop since August 2015. The FTSE itself closed 0.44% lower, the third consecutive session in the red. Engineering firm Smiths ended the day at the foot of the index after flat revenue during their first half, although shares dropped over 10% they recovered to end the day 4.4% lower.

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