Is the recession over on the high street?
Today's news that UK retailer Next has increased its own internal profit forecast for the current year, after announcing interim figures which were ahead of analyst expectations, would appear to suggest that the UK recession is ending on the high street. When you consider that Next is at the higher end of the food chain which is the UK retail sector, this is definitely a good sign for the future and some think which investors will no doubt ponder.
Better-than-expected growth in the company's underlying business took many analysts by surprise after experiencing one of the most destructive recessions of recent times. It will be interesting to see how other retailers on the high street respond and whether in fact their figures are moving in the same direction as Next. However, it has to be said that Next is one of the most proactive and business savvy retailers on the high street and has been very quick to reposition itself in different economic environments in the past.
Whether the forthcoming increase in VAT will impact upon short to medium term sales remains to be seen because ultimately the UK government had reduced VAT to help the high street in the depths of the recession.
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