A shopper carries a bag advertising clothing retailer Next in London, Britain December 28, 2021. REUTERS/Toby Melville

LONDON, Aug 4 (Reuters) – Retailer Next (NXT.L), a gauge of British consumer spending, expects the country’s high level of employment to shield the economy from a 1990s-style recession and said he didn’t see any signs of customers yet. financial distress.

Britain is heading for double-digit inflation later this year and food retailers say customers are cutting back on spending, but Next boss Simon Wolfson said warm weather has encouraged people to spend on clothing in the three months ending at the end of July.

This generated better-than-expected quarterly sales growth of 5%, which is expected to slow to 1% growth in the second half of the year. The strong second quarter helped it raise its outlook for full-year sales and earnings.

Next, a stalwart of Britain’s high street, offers clothing and homewares in around 500 stores and online and is often a reliable indicator of how well UK consumers are doing.

Wolfson – with Next since 1991 and CEO since 2001 – said while the wage differential lagging behind inflation would hurt, he expected consumers to be encouraged that jobs remain available, building confidence, unlike the 1990s when millions of people were out of work and homes were repossessed. .

He said the proportion of customers in credit default was also lower than historical levels.

“While that doesn’t mean all is rosy, it does mean that right now we don’t see any signs of consumer distress that one would expect at this point in the cycle,” he told Reuters. .

Retailers across Europe are bracing for tougher times ahead, with some still citing pent-up customer demand due to the pandemic and others seeing sales start to fall.

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Next now expects full-price sales to grow by around 6.2% in 2022/23, compared to an earlier forecast of 5%. It raised its pre-tax forecast by 10 million pounds, to 860 million pounds ($1.04 billion).

Next also said its stores outperformed its online business as pandemic trends reversed, and supply chain disruptions and transportation costs began to decline.

Its shares rose 2%, giving it a market valuation of 8.9 billion pounds.

($1 = 0.8232 pounds)

Reporting by Kate Holton; Editing by Sachin Ravikumar, Kim Coghill and Edmund Klamann

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