Next's Brexit backing boss and a grim assessment of the future

Brexiteers have been busily shooting messengers for not being optimistic about Britain's EU exit. Lord Wolfson, who has to run a business, doesn't have the luxury of looking through rose tinted spectacles

Lord Wolfson: this year may be the toughest since 2008 (PA)

Faced with the growing weight of evidence that Brexit will be a complete disaster, Brexiteers have taken to shooting messengers for not being sufficiently positive about the future.

Most recently this has led to the early departure of Sir Ivan Rodgers, Britain’s ambassador to the EU, a huge loss to the negotiating team given his experience. It also led to an unwarranted attack on the Office for Budgetary Responsibility over the forecasts it issued alongside the Chancellor’s Autumn Statement because they weren't sufficiently sunny.

Brexit political correctness demands that people say it’s great, and presents a marvellous opportunity for the UK regardless of all evidence to the contrary. So you might have expected Brexit backing Next chief executive Lord Wolfson to pen an upbeat assessment of the business's prospects.

Except that he hasn't. Here’s the Next view of what Britain's economy is facing, and the impact it might have on the retailer’s performance: “We may see a further squeeze in general spending as inflation begins to erode real earnings growth.”

If you want that translated, Next expects most of us to get poorer.

Then there’s this: “Following the devaluation of the Pound we expect prices on like-for-like garments to rise, but by no more than 5 per cent. We expect that this will depress sales revenue by around 0.5 per cent.”

Translation: We’re going to put our prices up, but that means we’ll sell less clobber.

And there’s more: “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.”

Translation: We don’t have a clue what’s going to happen, but we’re very worried and it might have an impact on what we can pay to shareholders.

Next thinks that it will generate cash “at the lower end of our guidance” but will use it to pay out a bunch of special dividends so shareholders don’t suffer as much as consumers. There is, however, a caveat: “This plan is subject to the outlook remaining in line with our forecast ranges and no significant changes to market conditions.”

Translation: Don’t rely too heavily on our ability to keep this up.

Part of Next’s problem is that under Lord Wolfson, who is, despite it all, a very skilful CEO, it has grown like a train. Growing businesses always stumble at some point not least because growth gets progressively harder to achieve as you get bigger. Next seems to have reached that point

The final three months of last year weren’t terribly cheerful and the company had expected a rebound. Instead sales fell by 0.4 per cent. They had fallen by 3.5 per cent during the third quarter of the year, and the end of season sale hasn’t gone too well either.

In a normal environment the business could not, however, be said to be facing insurmountable problems. Far from it. The online business has done better than than the stores, and Next gives every impression of being a well run operation.

Unfortunately this is anything but a normal environment. There’s Brexit. And, by the look of Next's statement, it appears that Lord Wolfson isn’t as optimistic about that as some of his Brexiteer mates seem to think people should be.

Perhaps that is because, as the boss of a large business, he has to deal with reality. He is also required by law to give a true and fair picture of how the business is going, not to mention by his shareholders, who would boot him out if he didn’t.

The pity is that the Government charged with running Great Britain plc seems incapable of doing the same, and is instead bent on shooting messengers all over the place. There will be more gloomy updates from Next if that continues. And it won’t just be Next either.