British clothing retailer Next cut its profit and sales forecasts on Thursday, saying August trading was below expectations and cost of living pressures were set to rise in the coming months.

Next, which trades from about 500 stores and online, said it now expected full price sales in its second half of its financial year to fall 1.5 percent, and a full year pretax profit of £840 million ($905 million), up 2.1 percent versus 2021-22.

It previously forecast second-half full price sales growth of 1 percent and a full year pretax profit of £860 million.

Next said cutting its guidance was a difficult call, given sales in September had improved and the company may see benefits from recent government measures.

The group reported a pretax profit of £401 million for the six months to July, up 16 percent, with full price sales up 12.4 percent.

Confidence levels among Britain’s consumers sank to a record low this month as they struggle with the accelerating cost of living, even before the government’s mini-budget on Friday sowed turmoil in the mortgage market, leading to warnings of a sharp drop in house prices.

Wages are failing to keep pace with inflation that was 9.9 percent in August and Next’s rivals Primark, Asos and Boohoo have all warned on profit this month.

The government also announced a raft of tax cuts and help on energy costs for both consumers and businesses, but the pound/US dollar exchange rate has fallen to almost parity, raising the price of imports.

By James Davey; Editors: Jason Neely and Mark Potter

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Next Maintains Full-Year Guidance

Next said its full price sales rose 21.3 percent in the 13 weeks to April 30, its fiscal first quarter, driven by a very weak comparative in 2021 when most of its stores were closed in a Covid-19 lockdown.