The Next share price has fallen by 3.8% today despite the fashion retailer increasing its profit forecast for the fifth time in ten months on the back of Christmas period sales that were up 20%. A festive party season that largely went ahead, or saw parties cancelled last minute when would-be attendees had already bought their outfits, helped full-price sales achieve 20% growth on the same period in pre-pandemic 2019.
Next, which also announced a special dividend of 160p-a-share, said it was raising its pre-tax profit guidance for the year by £22 million to £822 million. That would represent a near 10% improvement on the fashion retailer’s pre-pandemic profit figure. It’s also £122 million up from the original guidance issued for the year. The 20% rise in full price sales over the eight weeks to December 25 was achieved despite Next saying its delivery service for ecommerce orders had declined in quality due to a shortage of logistics workers such as warehouse staff and drivers.
Next’s strong ecommerce offering continues to impress with online sales up 45% over the fourth quarter compared to 2019. The company said growth was driven by an 85% leap in sales through its third-party designers business Label. The success of the ecommerce business compensated for a 5.4% drop in shop sales compared to 2019.
The strength of Next’s legacy mail order catalogue business gave it a major logistics infrastructure advantage over high street rivals which has allowed it to take a strong lead in the new online market. As well as its own-brand fashion items, the Next website also sells hundreds of third party brands.
Next also offered forward guidance for the year ahead, predicting a 7% rise and sales and 4.6% improvement in pre-tax profits to £860 million. If that’s achieved it would represent a record year for the company. However, chief executive Lord Wolfson of Aspley Guise cautioned that 2022 sales forecasts were a minefield due to the surprise “buoyancy of recent months” and also the assumption that Covid-19 disruption will no longer be a significant factor.
He highlighted five factors introducing uncertainty:
- How sustainable pent-up demand fuelled by household savings over the pandemic will prove to be.
- How much disposable income will be reallocated to travel and hospitality spending without pandemic restrictions.
- How rising inflation and interest rates increasing on mortgages will impact discretionary spending.
- How its own higher prices, necessitated by inflation, might dent sales.
Lord Wolfson expects the impact of these factors to be consumers buying
“slightly fewer items but at moderately higher price points, perhaps exchanging volume for quality”.
The uncertainty over 2022’s forward guidance is presumably behind today’s significant share price drop, despite Next beating analysts expectations for this year.The post Next share price down 4% despite profits upgrade on 20% Christmas sales growth first appeared on Trading and Investment News. mortgages pandemic covid-19 interest rates
SEC initiates legal action against FTX’s auditor
The SEC alleges that Prager Metis, an accounting firm engaged by bankrupt crypto exchange FTX in 2021, committed hundreds of violations related to auditor…
The SEC alleges that Prager Metis, an accounting firm engaged by bankrupt crypto exchange FTX in 2021, committed hundreds of violations related to auditor independence.
The United States Securities and Exchange Commission (SEC) has commenced legal proceedings against an accounting firm that had provided services to cryptocurrency exchange FTX before its bankruptcy declaration.
According to a Sept. 29 statement, the SEC alleged that accounting firm Prager Metis provided auditing services to its clients without maintaining the necessary independence as it continued to offer accounting services. This practice is prohibited under the auditor independence framework.
To prevent conflicts of interest, accounting and audit tasks must be kept clearly separate. However, the SEC claims that these entwined activities spanned over a period of approximately three years:
“As alleged in our complaint, over a period of nearly three years, Prager’s audits, reviews, and exams fell short of these fundamental principles. Our complaint is an important reminder that auditor independence is crucial to investor protection.”
While the statement doesn't explicitly mention FTX or any other clients, it does emphasize that there were allegedly "hundreds" of auditor independence violations throughout the three-year period.
Furthermore, a previous court filing pointed out that the FTX Group engaged Metis to audit FTX US and FTX at some point in 2021. Subsequently, FTX declared bankruptcy in November 2022.
The filing alleged that since former FTX CEO Sam Bankman-Fried publicly announced previous FTX audit results, Metis should have recognized that its work would be used by FTX to bolster public trust.
Concerns were previously reported about the material presented in FTX audit reports.
On Jan. 25, current FTX CEO John J. Ray III told a bankruptcy court that he had “substantial concerns as to the information presented in these audited financial statements.”
Furthermore, Senators Elizabeth Warren and Ron Wyden raised concerns about Prager Metis' impartiality. They argued that it functioned as an advocate for the crypto industry.
Meanwhile, a law firm that provided services to FTX has come under scrutiny in recent times.
In a Sept. 21 court filing, plaintiffs allege that U.S. based law firm, Fenwick & West, should be held partially liable for FTX's collapse because it reportedly exceeded the norm when it came to its service offerings to the exchange.
However, Fenwick & West asserts that it cannot be held accountable for a client's misconduct as long as its actions remain within the bounds of the client's representation.cryptocurrency blockchain crypto crypto
DOJ readies witnesses in Bankman-Fried trial, highlights FTX asset management
The DOJ intends to highlight the experiences of retail and institutional clients who entrusted substantial assets to FTX.
The DOJ intends to highlight the experiences of retail and institutional clients who entrusted substantial assets to FTX.
The Department of Justice (DOJ) has confirmed its intention to summon former FTX clients, investors and staff as witnesses in the upcoming trial involving Sam Bankman-Fried, the former FTX CEO.
The DOJ submitted a letter motion in limine on Sept. 30 describing the witnesses it intends to call concerning FTX’s treatment of customer assets.
The testimonies intend to provide perspectives on the interactions between the accused and the witnesses. It also aims to get the witnesses’ understanding of Bankman-Fried’s remarks and conduct, particularly regarding FTX’s asset management. The DOJ intends to highlight the experiences of retail and institutional clients who entrusted substantial assets to FTX, believing that the platform would safeguard them securely.
Furthermore, a situation has emerged concerning one of the DOJ’s witnesses, “FTX Customer-1,” who resides in Ukraine. Given the ongoing conflict in Ukraine, traveling to the U.S. to provide testimony is associated with difficulties. The DOJ has suggested using video conferencing as a viable alternative. However, Bankman-Fried’s defense has not yet approved this proposal.
Nonetheless, the legal team representing Bankman-Fried, led by lawyer Mark Cohen, has voiced concerns about the jury questions put forth by the DOJ. According to Bankman-Fried’s defense, these interrogations insinuate guilt on Bankman-Fried’s part, potentially undermining the principle of “innocent until proven guilty.“
Additionally, the defense contends that these inquiries may not effectively uncover the jurors’ inherent biases, especially related to their encounters with cryptocurrencies. Moreover, specific questions could inadvertently guide the jury’s perspective instead of eliciting authentic insights, possibly compromising the trial’s impartiality.
With the jury selection scheduled to start on Oct. 3, closely followed by the trial, the spotlight is firmly on this high-stakes legal confrontation. This case underscores not only its immediate consequences but also underscores the vital importance of transparent communication and unbiased questioning in upholding the principles of justice.crypto crypto
Vitalik Buterin voices concerns over DAOs approving ETH staking pool operators
The Ethereum co-founder proposes a solution that could lower the likelihood of any individual liquid staking provider growing to a point where it poses…
The Ethereum co-founder proposes a solution that could lower the likelihood of any individual liquid staking provider growing to a point where it poses a systemic risk.
Vitalik Buterin, the co-founder of Ethereum, has expressed worries regarding decentralized autonomous organizations (DAOs) exerting a monopoly over the selection of node operators in liquidity staking pools.
In a September 30 blog post, Buterin issues a warning that as staking pools adopt the DAO approach for governance over node operators—who are ultimately responsible for the pool's funds—it can expose them to potential risks from malicious actors.
“With the DAO approach, if a single such staking token dominates, that leads to a single, potentially attackable governance gadget controlling a very large portion of all Ethereum validators.”
Buterin highlights the liquid staking provider Lido (LDO) as an example with a DAO that validates node operators. However, he emphasizes that relying on just one layer of protection may prove insufficient:
“To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defense may not be enough,” he noted.
Meanwhile, he explains that Rocket Pool offers the opportunity for anyone to become a node operator by placing an 8 Ether (ETH) deposit, which, at the time of this publication, is equivalent to approximately $13,406.
However, he notes this comes with its risks. "The Rocket Pool approach allows attackers to 51% attack the network, and force users to pay most of the costs," he stated.
On the other hand, Buterin highlights that having a mechanism to ascertain who can act as the underlying node operators is an inevitable necessity:
"It can't be unrestricted, because then attackers would join and amplify their attacks with users' funds."
Buterin further outlines that a possible approach to address this issue involves encouraging ecosystem participants to utilize a variety of liquid staking providers.
He clarifies this would decrease the likelihood of any one provider becoming excessively large and posing a systemic risk.
“In the longer term, however, this is an unstable equilibrium, and there is peril in relying too much on moralistic pressure to solve problems," he stated.ethereum
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