Next PLC (LON:NXT) has warned that the biggest threat to its business over the next few years is the possibility for long delays at UK and EU ports should the government not reach a post-Brexit deal with its European counterparts.
The high street retailer believes there is no reason its clothes should not flow relatively freely between borders once the UK departs from the European Union, as they did when the UK was part of the EU.
READ: Next valuation hostage to Brexit uncertainty, says Jefferies
Instead, the issue is likely to be the readiness of UK companies, and Next called on the government to provide more details on its future plans to allow businesses to prepare ahead of time.
The FTSE 100 company said: “We believe that the indirect risk of interruption to the smooth operation of our ports represents the biggest risk to our business from Brexit.”
“The more information that can be provided by the government on how they plan to manage and mitigate the increased workload would be helpful.”
Pound also a worry
The plunging pound post-Brexit has caused havoc for a lot of UK firms of late, dramatically increasing their cost base.
That is Next’s other big worry, but it has taken steps to hedge its exposure to sterling, meaning it doesn’t expect any cost price inflation over the next 18 months.
“The flip side of this reduction in currency risk is that our pricing will not improve until January 2020 if the pound strengthens against the dollar in the coming months,” read a line in the company’s lengthy half-year report.
READ: Next ups full-year profit guidance
In its interim results, Next upped its full-year profit forecast by £10mln to £727mln as the warm weather boosted trading.
In the six months to July, pre-tax profit increased 0.5% on the year to £311.1mln and total sales, including markdowns, rose 3.9% to £1.9bn from £1.8bn.
Full price sales in the first half grew 4.5%, ahead of the 1.0% guidance issued at Next’s last trading update in August.
After rising on Tuesday, Next shares were up again on Wednesday, climbing another 0.6% to 5,551p.