The Middle East price shock hasn’t hit Next – yet | Nils Pratley
In the context of Next, which has just reported full-year pre-tax profits of £1.16bn, an estimated £15m of extra fuel and air freight costs arising from the Middle East conflict is tiny.The sum, which in any case assumes disruption lasts three months, can be lost in the wash, or more precisely “offset by savings elsewhere”.The chief executive, Simon Wolfson, a boss who tends to err on the side of caution when guiding on profits, saw no reason not to add £8m to this year’s number as a mechanical read-through from last year’s outcome.If there wasn’t a war on, one can assume there would have been a proper profit upgrade.
After all, trading seems to have been going like a train up until late-February – “encouraging” in the UK and “strong” overseas.Thus the sole – but enormous – asterisk over these results was the impact if the conflict drags on.Wolfson obviously has no greater insight on duration and long-term implications than anyone else, and said so.“As yet, we have no feel for the medium-term effects on supply chain resilience, freight rates, factory gate prices and consumer demand,” he said.If higher costs persist, Next will put up prices – but that remains “a contingency not a plan”.
Come back in May for the first-quarter update for a clearer view.But there were, perhaps, two nuanced insights amid the uncertainty.First, the idea that consumer confidence has already “collapsed”, which is what the British Retail Consortium said this week, may be overdoing things.Wolfson said he had not yet seen a hit to sentiment.“If energy bills and the [higher costs] feed through to [retail] prices that is when they will respond,” he said.
All retailers are different, but the same point is made privately by others in consumer-facing businesses: UK consumers tend to react to the arrival of higher prices, not the threat of them.The second point is related: there are other lags.For clothing retailers, the spring-summer ranges are already in shops, online and in warehouses.There is no need (yet) for big adjustments.The possible increases in the cost of fabrics, plus any production disruption in Asian factories, would mostly be felt in the autumn-winter ranges.
The crunch-point is still a way off, in other words.This is still the phoney phase, retailing-wise.The stock market took the optimistic view.Next’s shares were the biggest riser in the Footsie, improving 5%.Well, yes, there is perfectly plausible reading that says, if a mere £15m in extra shipping and fuel costs turns out to be worst of it, Next could be upgrading profits in May.
It remains a resilient business.All the same, nobody will be immune if the energy price shock goes on much longer and if the OECD is right that the UK economy will grow by just 0.7% this year.The share price stands at £125.40, versus the £131 at which Next, under Wolfson’s strict formula for economic value, currently judges it worthwhile to buy back its own shares.
One might expect the gap to be wider, as it has been at many points in the past 20 years when the outside weather has been easy to read.May’s update will set the tone for the entire retail sector, one suspects.
The Middle East price shock hasn’t hit Next – yet | Nils Pratley
In the context of Next, which has just reported full-year pre-tax profits of £1.16bn, an estimated £15m of extra fuel and air freight costs arising from the Middle East conflict is tiny. The sum, which in any case assumes disruption lasts three months, can be lost in the wash, or more precisely “offset by savings elsewhere”.The chief executive, Simon Wolfson, a boss who tends to err on the side of caution when guiding on profits, saw no reason not to add £8m to this year’s number as a mechanical read-through from last year’s outcome. If there wasn’t a war on, one can assume there would have been a proper profit upgrade
NS&I chief executive replaced in ‘fresh start’ over missing savings crisis; bad day for markets – as it happened
The boss of National Savings and Investments appears to have been dismissed over the £476m savings scandal at the bank.Pensions minister Torsten Bell has told MPs that he has appointed Sir Jim Harra, a senior civil servant, to take over as the chief executive of NS&I on an interim basis, replacing Dax Harkins.Bell says Harra, a former first permanent secretary at HMRC, will provide “a fresh start for NS&I”, following its failure to trace missing savings belonging to customers who have died.Updating MPs on the crisis over deceased customers’ savings, Bell says he wants to make sure NS&I has “the very best leadership” in place.Bell tells MPs: double quotation markSir Jim will undertake a review over the next three months to spell out in detail the background to this tracing problem and to set out what lessons must be learned for NSI going forward
Human rights groups cheer ‘watershed’ verdict in social media addiction trial
The verdict in a landmark social media trial that Meta and YouTube deliberately designed addictive products has sparked calls for reform across borders. International human rights and tech freedom groups issued statements after the decision, praising jurors for holding social media companies accountable for harms to children and urging tech giants to change their design features to ensure children are safe.Amnesty International said in a statement on Thursday that “this court decision is clear: these platforms are unsafe by design and meaningful change is urgently needed”.The day prior, a Los Angeles jury found both Meta and YouTube liable for intentionally creating platforms that hooked a young user and led to her being harmed. The six-week trial was one of more than 20 “bellwether” trials that are expected to go to court in the next few years
Brussels opens investigation into Snapchat amid concern over children’s safety
Brussels has opened an investigation into Snapchat over concerns the social messaging app is exposing children to grooming, sexual exploitation and other criminality.In a separate decision on Thursday, the European Commission also said four pornographic websites were failing to prevent minors seeing adult content, harming young people’s mental health and fuelling negative gender attitudes.The investigations into five tech companies were brought under the EU’s Digital Services Act (DSA), which has come under fire from Donald Trump since coming into force two years ago. Aiming to protect European society from a wide range of internet harms, the DSA includes child safety provisions to combat cyberbullying, exposure to adult content and illegal products.The announcements came after a landmark ruling in a Los Angeles court found that two social media companies, Meta and YouTube, had deliberately created addictive products that harmed a young user
Human rights experts raise concerns over Olympics transgender women athlete ban
Over 100 human rights, sports and scientific groups, including the United Nations, have criticised the International Olympic Committee’s new gender eligibility guidelines as “a blunt and discriminatory response that is not supported by science and violates international human rights law”.The IOC’s new guidelines, announced on Friday, mandate genetic sex tests for all athletes competing in its women’s categories, as well as blanket bans of people who identify as transgender, intersex or with sex differences.Athletes in these categories have been allowed to compete in Olympic events since the IOC scrapped mandatory sex testing in 1999, which was deemed arbitrary, inaccurate, expensive and discriminatory.New IOC president Kirsty Coventry reversed the organisation’s position and backflipped on its own 2021 Framework on Fairness, Inclusion, and Non-Discrimination, a policy informed by extensive consultation and research which recognised the need for evidence-based, sport-specific and rights-respecting rules.“Mandatory genetic sex testing and rigid biological criteria as a condition for participation in the women’s category violates fundamental and universal human rights … including the right to equality, non-discrimination, dignity, privacy, and bodily autonomy,” said Professor Paula Gerber, an international human rights lawyer at Monash University
AFL scratching its head on decline in Indigenous participation as weight of history takes toll | Sean Gorman
I write this having come from the funeral of the West Perth and Buffaloes great Bill Dempsey. I mention this because Dempsey is the first Northern Territory player to play on the MCG. He was a trailblazer that set the scene so many other Territorians like Long, Rioli, Burgoyne, White and McLeod could follow. Demspey’s legacy came about by chance, as he was the support act for the talented Darwin recruit Jimmy Anderson when they both came down to Melbourne in the late 1950s. Anderson lasted a few weeks
Google warns quantum computers could hack encrypted systems by 2029
Starmer vows to tackle social media’s ‘addictive features’ to protect children
Creator of AI actor Tilly Norwood says she received death threats over project
Charity Commission warns Alan Turing Institute of its legal duties after complaints
Meta and YouTube designed addictive products that harmed young people, jury finds
Record investment in quantum computing talent | Letter