Shares in British high street retailer Next are crashing after the company’s CEO warned that in 2016 it faces its toughest year since the financial crisis, and that 2016 “may well feel like walking up the down escalator, with a great deal of effort required to stand still.”
Next reported its annual results on Thursday, and things looked pretty good. Performance was in line with expectations, with overall sales growing by 3%, and pre-tax profits jumping 5% to £821.3 million.
However, the comments of chief executive Lord Wolfson — who became the youngest FTSE 100 CEO when he took charge of the company in 2001, aged just 33 — and chairman John Barton, seem to have spooked investors in the company.
At 8:25 a.m. GMT (4:25 a.m. ET), Next’s shares are off by more than 10%, having dived off a cliff as trading began. Here’s how that looks:
Here’s what Lord Wolfson had to say (emphasis ours):
The year ahead may well be the toughest we have faced since 2008. We are very clear on our priorities going forward and whatever challenges we may face, it is important that we remain focused on ensuring that the Company’s product, marketing, services and cost controls all improve in the year ahead.
Next’s CEO added:
In many ways we have more to do than ever before with complex challenges to our working practices across product, marketing and systems. It may well feel like walking up the down escalator, with a great deal of effort required to stand still. It will not be the first time we have felt this way, and our experience is that the effort put into improving the business in tough times can pay handsome rewards when conditions improve.