The boss of Next today issued a stark warning to Rachel Reeves about “anaemic” economic growth and a slump in employment.
Lord Wolfson made the comments as Next half-year profits rose 13.8% to £515 million. Sales were boosted by warm weather and the cyber attack that crippled rival M&S.
Meanwhile, interest rates will be kept at 4% later today as the Bank of England holds back from easing borrowing costs while inflation remains elevated.
FTSE 100 Live Thursday
- Next issues economy warning
- Interest rates seen on hold
- US rates set for more cuts in 2025
Market update: Next leads retail stocks lower, Pets at Home off 16%
10:10 , Graeme EvansA warning by Next on the "anaemic" UK economy and another profit downgrade by Pets at Home today sent a chill through stocks in the FTSE 100 retail sector.
Next shares fell 5% or 545p to 11,455p, despite the chain’s latest strong results and message that positives for the group “materially outweigh” the negatives.
It added: “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.”
Next half-year profits rose 13.8% to £515 million, while group sales lifted 10.3% after benefiting from warm weather and the cyber attack that crippled rival M&S.
The shares are still 18% higher year-to-date, reflecting a series of upgrades to guidance following strong international growth and continued UK expansion.
UBS, which today lifted its price target to 14,500p, said: “Next’s half-year results highlighted that it is in rude health as it laid out the growth opportunities it is pursuing with vigour.”
Alongside Next at the bottom of the FTSE 100, Marks & Spencer gave up some of this week’s gains with a fall of 2% or 7p to 350.8p and JD Sports Fashion eased 2.3p to 90p.
In the grocery sector, Tesco dropped 7.7p to 432p and Sainsbury’s fell 6.8p to 317p.
The mood wasn’t helped by the latest profit warning of Pets at Home, which downgraded guidance for the second time since late July.
Amid continued tough conditions in the pet retail market, the group now sees full-year underlying profits in the range of £90-100 million.
It recorded a profit of £133 million in May’s annual results, when it steered the City to £115- £125 million for this year.
Store sales in particular have been “challenging”, falling by 5% in the year to date. However online sales have seen double digit growth.
Alongside the warning, the group said chief executive Lyssa McGowan had left “with immediate effect” with no successor lined up. The shares fell 16% or 35.6p to 192.8p, leaving them 36% lower in the past year.
Elsewhere in the FTSE 250 index, Jupiter Fund Management shares jumped 13% or 15.8p to 140.8p after Peel Hunt highlighted a “bumper” 10% dividend yield and forecast attractive earnings growth in the coming years.
The broker backed the stock with a new target of 156p, up from 90p previously.
Precision technology firm Renishaw also rallied 7%, continuing its recent strong run with a rise of 225p to 3420p after annual profits lifted 3.8% to the top end of August’s guidance at £127.2 million.
Amid calm market conditions following last night’s Federal Reserve interest rate cut, the FTSE 250 index rose 51.64 points to 21,671.45 and the FTSE 100 index improved 30.85 points to 9239.23.
Pets at Home shares slide on profit warning and CEO exit
08:57 , Graeme EvansPets at Home shares today slumped 22% after the retailer issued a profit warning and said boss Lyssa McGowan had left the business with immediate effect.
The group said the performance of its Retail division has been below expectations, including a 5% decline in store sales in the financial year-to-date.
The FTSE 250-listed company now expects an underlying profit of £90 million-£100 million. This compares with guidance of £115-125 million in May’s annual results and a cut to £110-120 million in a trading update on 31 July.
McGowan, who became chief executive in 2022, has left the business with immediate effect. Board chair Ian Burke will run the business until a permanent chief executive has been recruited.
The company said: “Through the second quarter, the underlying pet retail market has remained subdued, declining slightly year to date.
“Against this, we have seen the performance of the Retail business improve sequentially, narrowing the gap to the market, but the rate of improvement has been below expectations.”
Shares fell 51.3p to 177.1p.
Next shares fall 6% amid results caution, FTSE 100 steady
08:22 , Graeme EvansNext shares have fallen 6% or 750p to 11,250p after the retailer issued cautious guidance on the UK economy in half-year results.
The shares are still 16% higher year-to-date, boosted by a series of upgrades to guidance.
Richard Hunter, head of markets at Interactive Investor, said: “There has been limited change since a detailed July update, with Next reiterating its traditionally cautious outlook for the months ahead.
“Ironically, the lack of an almost assumed profit upgrade as is usually the case may have taken some of the shine from what has nonetheless been another striking period of growth, with the share price taking a rare beating in opening trades.”
The FTSE 100 index has risen 7.64 points to 9216.01, with Next the worst performing stock.
Next boss issues warning on “anaemic” economic outlook
08:15 , Graeme EvansThe boss of Next today issued a stark warning to Rachel Reeves about “anaemic” economic growth and a slump in employment.
Lord Wolfson the long serving and respected chief executive of the high street fashion retailer, said he remained cautious about prospects because “the medium to long-term outlook for the UK economy does not look favourable”.
He said Britain was not approaching a recessionary cliff edge but that economic progress was being held back by several factors.
He referred to “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”,
The life peer, who sits on the Conservative benches in the Lords said that employment, “particularly at the entry level, faces the triple pressure of rising costs, increasing regulation, and displacement through mechanisation and AI.”
Interest rates seen on hold for rest of year
07:49 , Graeme EvansThe Bank of England is set to leave interest rates on hold after CPI inflation yesterday stayed at its highest level since the beginning of 2024.
Policymakers cut the base rate to 4% in August but many in the City believe that they won’t lower again until February, This month’s decision is announced at noon.
Investec economist Sandra Horsfield said August’s inflation data “revealed price rises being stuck at uncomfortably high rates” with the overall CPI rate of 3.8% “considerably above” the Bank’s target level.
She said: “The likelihood of a rate cut this week seemed in any case remote; but beyond that too, we judge that it will take evidence of falling inflation to persuade a majority on the monetary policy committee (MPC) that further rate cuts are appropriate.
“Therefore, we expect the MPC to sit out the November and December meetings too and only resume rate cuts early next year.”
US rate cut hopes tempered by Fed's inflation message
07:35 , Graeme EvansUS stock market futures are trading higher after the Federal Reserve delivered its first rate cut of 2025, lowering the fed funds rate by a quarter point to 4-4.25%.
The central bank’s dot plot implied quarter point cuts at each of the remaining two meetings of the year, but with inflation projections for 2026 higher compared to June.
Chair Jerome Powell said the balance of risks was still slightly tilted towards inflation concerns, reiterating that the Federal Reserve was in a meeting-by-meeting situation.
US markets stuttered and bond yields rose in the aftermath of those comments but S&P 500 and Nasdaq futures have since rallied in Asia trading hours.
Deutsche Bank economists have maintained their forecast of two more quarter point cuts in October and December, but see risks of a skip if labour market and inflation data both surprise to the upside.
Blackstone leads £150bn of US investment
07:13 , Graeme EvansAmerican investment worth £150 billion has been unveiled as part of US President Donald Trump’s second state visit.
Some 7600 “high quality” jobs will be created across the country as a result of the influx of cash from big US firms, according to the Government.
Among the firms pledging investment in the UK are asset management company Blackstone, which will invest £90 billion on top of £10 billion previously announced to develop data centres.
Others include investment firm Prologis, pledging £3.9 billion, and software company Palantir with £1.5 billion.
Next in “good place” despite UK economy challenges
07:10 , Graeme EvansHigh street retailer Next today left annual profit guidance unchanged after reporting a 13.8% rise in the half-year surplus to £515 million.
The chain continues to expect full-year sales growth of 7.5% and a pre-tax profit of £1.105 billion, up 9.3% on the previous year.
Today’s figures for the six months to July follow a series of upgrades to City guidance, driven by very strong international growth and continued UK expansion.
The company said: “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.”
FTSE 100 steady ahead of interest rates call, Dow Jones up 0.6%
06:59 , Graeme EvansThe Dow Jones Industrial Average last night rose 0.6% after the Federal Reserve cut interest rates by a quarter point and signalled two more reductions this year.
The S&P 500 index and Nasdaq Composite, which have been trading at record highs, fell 0.1% and 0.3% respectively.
The focus turns to the Bank of England, which is widely expected to leave interest rates on hold at 4% later today. In August, policymakers voted by a narrow margin to cut by 0.25% to the lowest level since February 2023.
The FTSE 100 index is seen 0.1% higher, having steadied after Tuesday’s big fall with a rise of 0.15% in yesterday’s session. The pound is 0.2% lower at $1.3604.
In Asia, the Federal Reserve rates decision helped the Nikkei 225 to rise by 1.3%. The Hang Seng index is 0.9% lower.
