Next drops a bombshell on the UK retail sector
While the UK retail sector is at the moment basking in glory with signs of an upturn, the retail giant Next has somewhat spoiled the party with an indication that the improvement in retail sales in the first six months of this year may not follow through into the latter part of 2009. The company expects sales to drop by between 3.5% and 6.5% in the second half of 2009 which has caught the market somewhat by surprise.
Whether this dose of reality will assist the market in the long term, and allow a more balanced approach to the recovery of the UK sector remains to be seen but it appears as though clouds are gathering in the sunny skies. There is the potential for a short-term consolidation period in the sector which should ensure that no severe fall will occur in the future if current "enthusiastic" forecasts are not met. A reining back of expectations in the short to medium term may not be such a bad thing in the long run.
As well as the economic downturn, the UK retail sector also has the growing impact of the Internet to contend with which is making matters more difficult than people may appreciate.
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