Next says the outlook is deteriorating. That's the price of Brexit, Lord Wolfson

In March Next said it planned to increase prices. It could hardly have picked a worse time

Next boss Lord Wolfson backed leaving the EU (PA)

When former High Street darling Next put out a deeply pessimistic statement a couple of months ago, I wasn’t sure that the City should buy it.

Boss Lord Wolfson is a Premier League performer when it comes to the sport of expectations management, and while the company had reported its first profit fall for eight years, I wondered whether the outlook for the clothes retailer would be quite as grim as he painted it.

I might have been wrong. Next met expectations with its latest update, covering the last three months, but only in a bad way. Total sales shrunk by 3 per cent, with a nasty 8.1 per cent fall at Next Retail (the physical stores), a chasm even the still growing Next Directory arm (3.3 per cent ahead) couldn’t fill.

The top has been cut from the full year profit forecast I was so sceptical of as a result. Full year earnings are now expected to come in between £680m and £740m. The previous range was £680m to £780m.

“We said that we expected some improvements from May onwards, but that our ranges would not be where we wanted them to be until the Autumn season in September,” the company said. “We still believe this to be the case.”

The problem for Next is that consumer confidence is falling. That’d be down to Brexit, among other things. Lord Wolfson was a rarity among respectable business leaders in that he backed it. Go on, indulge in some schadenfreude at his expense. It’s what I’m doing.

After that, consider whether it mightn’t get worse for Next before it gets better. Because of the Brexit driven fall in the pound, it is paying more to buy in the clothes it sells. The retailer warned, when it issued the first grim forecast back in March, that price rises were on the way.

Trouble is, cutting prices at a time when consumer confidence is falling, and when Lord Wolfson himself admits that young people, in particular, are prioritising spending on experiences rather than things, is a dangerous thing to be doing.

Next admitted that it had got an attempt to move into higher fashion wrong. Its strength has always been basics and it wants to get back to that. A sensible thing to do.

But Lord Wolfson has chosen to try and keep his shareholders, rather than his customers, sweet(ish) with his decision on prices.

The problem he faces is that his customers don’t have to rely on Next to get their basics, as I have written before. There are alternatives out there, and some of them charge less.

Primark, for example, which recently said it would absorb the higher input costs it is facing. Some people, Next customers perhaps, might get sniffy about shopping at Primark.

They might find themselves swallowing some pride if a faltering economy keeps their wages flat at a time when inflation is on the march.

By the way, have you seen the price of the basic t-shirts Lidl is advertising? Again, some people, Next customers perhaps, might get sniffy about shopping at Lidl. You know the next part.

Maybe things will pick up when Next has got its range to where it wants it to be. Maybe Next's clothes will look so good people won't worry too much about paying a bit more for them. Maybe.

But if they don't, maybe the time will come when Next and Lord Wolfson will have to do something more radical, like telling shareholders they’ll have to accept less.

If that happens, someone might like to suggest Lord Wolfson has only himself to blame for the situation Next finds itself in. The next AGM would be the perfect time for that.