Next's (NXGPY) profit warning for 2017 Wednesday came not only as a blow to shareholders but also to its pro-Brexit CEO, who now is now contending with the fallout from the contentious referendum.
More than six months after Britons voted to leave the European Union, the government has yet to trigger the Article 50 exit clause and negotiation plans remain unclear. Throwing a spanner in the works yesterday, the U.K.'s ambassador to the EU, and Brexit negotiator, resigned dramatically and warned staff about "muddled thinking" in the government.
Next stock plunged in the first hour of trading Wednesday and were down 11.2% to 4,229 pence at 13:00 GMT after it said that 2017 would be challenging. The FTSE 350 General Retailers Index was down 2.26% at 2,482.72.
Next sales from November to Christmas Eve were down 0.4%. Sales in the end-of-season sales were down 7% compared with last year, while for the year to Christmas sales were down 1.1%.
The company did not overtly blame Brexit for its woes, instead saying they are seeing "a further squeeze in general spending as inflation begins to erode real earnings growth" but noted the devaluation of the pound since the referendum will drive up prices of like-for-like garments, "but by no more than 5%."
However Next did say, "In the light of the exceptional levels of uncertainty in the clothing sector and with little visibility of the approach the UK government will be taking to Brexit, we have reviewed our approach to the distribution of surplus cash. We believe that in these circumstances it makes sense to give some additional certainty to shareholders over cash distributions."
The retailer will distribute a fourth-quarter special dividend of 45 pence a share, which will be distributed at the beginning of May 2017.
Next's CEO Simon Wolfson, who is also a member of the House of Lords, campaigned to leave the European Union before the June 23 referendum.
Wolfson was described as the business leader most in favor of Brexit, calling for radical change to prevent a long period of period of low growth. Before the vote he said the British economy was "yoked to a failing euro" and said the EU's "record for securing trade deals outside its borders is poor."
However, in November Wolfson said he was concerned about the government's hard-line direction, calling on it to maintain Britain's tradition of openness. He said it would be an "enormous mistake" to cut Britain off from the rest of the world.
He isn't the first pro-Leave campaigner Wetherspoon's (JDWPY) Chairman Tim Martin warned in November the pub chain's supplier deals have become harder to negotiate due to uncertainty over tariff-free trade with Europe.
Wetherspoon's Martin said at the time that British companies were being "bullied" by the EU and threatened to stop using European brands.
EU officials have been tough in their stance that the U.K. would not have access to the single market if free movement of people is prohibited.
Growth at the pub chain has slowed since the start of 2015 and it expects higher costs.
Wetherspoon's stock was marginally higher at 881.96 pence. Shares have lost 7.51% in the last three months.