Hard times are on the way say top UK fashion retailers
French Connection and Next, two of the country’s top fashion retailers, have warned of tough trading conditions ahead as the impact of interest rate rises filters down to consumers.
Next recorded profits up 11% at £198.2m in the past six months, but noted in its results statement that there is “economic pressure on consumers to reduce their spending on credit”. It also confirmed that it had tightened up its own credit criteria and withdrawn facilities from certain sections of its customer base.
French Connection trimmed its losses from £3.6m to £2.5m in the six months to the end of July. A spokesperson said: “We are acutely aware that the full effect of recent interest rate rises has not yet filtered through to our customers.”
These concerns reflect the worsening consumer debt situation (see story and comment below) and French Connection chairman Stephen Marks said: “The first few weeks of the second half of the financial year have seen continued challenging trading conditions.”
Fashion retailers are often sensitive indicators of the sense of economic wellbeing (or otherwise) of the nation and the recent results announcements from French Connection and Next can be seen as forecasts of the financial outlook for the medium term. As they stand this looks as promising as the great washout summer of 2007, with both groups nervously awaiting the full fall-out from recent interest rate rises. Given the truly dire state of consumer debt in the UK, as graphically detailed by the Citizens Advice Bureau in its latest report, many retailers are awaiting the next 12 months with trepidation.