Tough selling clothes in the United Kingdom.
Next plc (NXGPY) shares sank to near-bottom of the FTSE 100 Wednesday, after the U.K.'s second largest retailer reported a worse-than-expected third quarter as the sector bears the brunt of the Brexit uncertainty.
The British retailing stalwart saw full-price sales in the third quarter up 1.3%, however reported a 7.7% decline in sales at its bricks-and-mortar stores. Sales online and through its catalogue were up 13.2% compared with the same time period last year.
Next also narrowed its guidance for full-year sales and profit, and now expects to report full-year profits of between £692 million and £742 million, compared to earlier estimates of £687 million to £747 million.
Next's shares were down 6.22%, changing hands at 4,623 pence, extending at one-month loss of 12%.
The company's results don't point to a rosy picture for British retailing, which is dealing with increased inflation due to the fall in the pound since the vote to leave the European Union. Inflation hit 3% in September, according to data from the Office for National Statistics, its highest level in five years and well beyond the Bank of England's target of 2%.
Next Wednesday fall, dragged down the FTSE 350 General Retailers Index, which was down 1.43% on the day.
Indeed, it looks to be retailers that are bearing the brunt of Brexit uncertainty, the retail index has lost 5.35% since August 2016, compared with a 27.3% gain in the same time period for the FTSE 350 Banks Index and a 45.9% gain for the FTSE 350 Mining Index.
Not only are consumers real wages being hit, they are also losing confidence. GfK's closely watched U.K. consumer confidence index slipped slightly in October, down to -10 from -9 in September. hovering at a three-year low.
"It's no surprise that the Overall Index Score continues to bump along in negative territory this month. As concerns about the wider economic prospects for the UK economy dampen our outlook, consumers are showing no real 'get-up-and-go'," GfK Head of Market Dynamics Joe Staton said in a statement.
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