Next lifts profit forecast on M&S disruption, overseas growth
The British fashion and homewares company said Thursday it now expects £1.1 billion (€1.27 billion) of pretax profit this fiscal year, slightly up from its previous forecast of £1.08 billion.
Next stands out from its UK retail peers for regular outperformance, although during the period sales at the retailer have been boosted by a significant cyberattack on M&S. In May, M&S said it was facing a £300 million hit to operating profit this fiscal year after the cyber incident that disrupted sales and online operations. Warmer weather has also helped drive demand for Next's summer fashion ranges.
Overseas sales at Next also grew faster than anticipated because of highly effective digital marketing efforts, the retailer said.
Next, headed by chief executive Simon Wolfson, expects consumer spending and employment opportunities in the UK to diminish in the second half, as the impact of higher taxes and payroll costs — which mostly took effect in April — filter through the economy. - Bloomberg
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Irish Times
8 hours ago
- Irish Times
Inheritance, relatives and blended families: what does it mean for tax-free thresholds?
Could you clarify a passing comment that you made in your article last week. You used the phrase 'by blood'. Are you drawing a distinction with uncle or aunt by marriage versus an uncle or aunt 'by blood'? In other words, are you saying that a child can inherit under Class B from their parent's sibling, but not the spouse of that sibling? Are you sure that is correct as I do not see any such distinction in Revenue guidance ? It also raises the question of who is 'the parent' in the case of a divorce and remarriage. Does the birth parent for Class A purposes cease to be a parent on remarriage or can the step-parent become one? Mr DL READ MORE I always wonder when I write 'by blood' whether it is clearly understood. As with many recurring items, I have set out clearly what that means at one point or another but often revert to the shorthand. And yes, it can be counterintuitive if, like me, you grew up in a family where aunts were regarded as aunts regardless of whether they were my parents' siblings or had married into the family – and similarly for uncles. But Revenue does make a distinction when it comes to inheritance. The three inheritance tax thresholds are very specifically delineated according to blood relationship between the person making the gift or leaving the inheritance in their will and the person receiving it. Category A, which offers the highest tax-free threshold – currently €400,000 – is generally referred to as covering gifts and inheritances from a parent to a child, but it is slightly wider than that. [ Inheritance tax: How to avoid leaving your loved ones with a hefty bill Opens in new window ] For instance, if it is the child that dies – as an adult or otherwise – and the parent who inherits from them, the parent will also benefit from the Category A threshold as long as they are inheriting outright – rather than, say, getting a life interest in a property. The threshold will also apply to a child – anyone under the age of 18 – where they are inheriting from their grandparent when their parent is dead. We'll come back to that Category A in a minute in relation to the second part of your query. Category B covers close blood relatives other than parents – or other scenarios covered by Category A. It is sometimes described as lineal relations – i.e. those in a direct line of descent or ancestry. Most commonly, that is seen as covering gifts and inheritance from a brother or sister, a grandparent and an uncle or aunt. And yes, it is only aunts or uncles related by blood – i.e. siblings of one or other parent. You're certainly right to query it. I used to think it covered everyone with that title but I did check with the Revenue commissioners and they did confirm that there had to be a blood relationship with the aunt or uncle for them to be covered under Category B. Category B will also cover life interest inheritance from a child to a parent or any inheritance from a child to an aunt, uncle or grandparent in the unfortunate circumstance of the child predeceasing the older relative. [ Will inheritance tax be cut again in the budget? Opens in new window ] Many people worry about what other people will pay in tax on an unexpected windfall (inheritance) after they are gone. Photograph: Getty Images There is a growing clamour – particularly from people who do not have children – for reform of this Category B. As it stands, the tax-free threshold under Category B is €40,000, just 10 per cent of the Category A threshold. An awful lot of people worry about what other people will pay in tax on an unexpected windfall (inheritance) after they are gone. Personally, I always find that odd but that's not to say it is not a thing. There is pressure either to raise this significantly or to find some other device to allow people without children nominate one or two beneficiaries who can avail of a higher threshold. It is something that has been examined in the Tax Strategy Papers published recently by the Department of Finance . These papers examine issues that might be addressed in the budget later this year or a budget further down the line. As is their wont, this review merely sets out options and, to the degree possible, their likely cost or benefit to the exchequer. Whether one approach should be favoured over another or whether any policy change should be pursued remains a political matter for decision by the Government . Finally, we have Category C which covers all other people benefiting from a gift or inheritance – sometimes called 'strangers in blood' where the current tax-free threshold is €20,000. [ I am due to inherit €30,000, is it worth my while to gift my husband half to avoid tax? Opens in new window ] The three inheritance tax thresholds are delineated according to blood relationship between the person leaving the inheritance in their will and the person receiving it. Photograph: Getty Images And you can see here why Revenue specifies that aunts and uncles in Category B must be blood relations, not relations by marriage. Apart from friends, neighbours, carers, gardeners etc, Category C also includes cousins who are, by definition, blood relatives of some sort and also in-laws, whom in many cases can be closer to the disponer (the person making the gift or inheritance) than even a niece or nephew by blood. But so it is. As regular readers will know, the other key thing to note is that these are lifetime limits on all gifts and inheritances dating back under each category to December 5th, 1991. So, under Category B, you need to tot up all large gifts and inheritances you have received from any grandparent, sibling, aunt or uncle to see if your latest windfall is tax-free or otherwise. And when we say gifts, we mean gifts valued at more than €3,000, as anything below that in any year is covered by the small gift exemption and is also tax free. Finally, once to hit 80 per cent of the relevant threshold – benefits of €320,000, €32,000 and €16,000 for each category respectively, you need to file an inheritance tax return to Revenue even though no tax is owing until you exceed the full threshold. Getting back to your second query – the position with blended families after divorce, remarriage and separation – you're quite correct to say that this is increasingly relevant in our modern society. We need to return to the question of the Category A threshold. When it states that a child can receive up to €400,000 tax-free from parents, the definition of child also refers to stepchildren and to adopted children. In fact, it even applies to foster children as long as those foster children spent at least five years with the family before the age of 18 at the family's expense. So does that mean that a child who is adopted or whose parents have divorced and remarried can receive category A benefits from more than two parents? Yes, it does. A stepchild qualifies for Category A on inheritance or gift from their birth parents and from any step-parent. The same is true for a child formally adopted. But birth parents are not removed from the Category A equation. A child can still avail of Category A in relation to a birth parent, even after divorce and remarriage, or where the child has been adopted elsewhere, as can a child who has been fostered under the criteria mentioned above. The one difference between the three categories of child is that if an adopted child's birth parent dies without making a will, they are not entitled to anything under intestacy where a stepchild and a fostered child would be. Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to , with a contact phone number. This column is a reader service and is not intended to replace professional advice
Irish Times
8 hours ago
- Irish Times
European bank shares hit highest levels since 2008
Shares in Europe's biggest banks climbed to their highest levels since the global financial crisis this week, as a sharp rise in long-term interest rates fuels bumper earnings. Big banks have enjoyed a renaissance, with London-listed shares in HSBC hitting a record high ahead of results this week while Barclays and Santander also reached their highest levels since 2008. Italy's UniCredit touched its highest since 2011. The rally marks a turnaround for one of Europe's most unloved sectors, which has struggled to recover from past crises and compete with US peers. 'Europe's banks have shifted from pariah status to market darlings,' said Justin Bisseker, European banks analyst at fund manager Schroders. A combination of the 'transformative impact on revenues of higher interest rates', a benign economic environment and measures to improve efficiency had lifted the lenders, Bisseker added. READ MORE While HSBC's shares receded to their highest level since 2001 after the bank failed to meet analyst expectations in its second-quarter results on Wednesday, and bank stocks dropped sharply on Friday after US president Donald Trump hit dozens of countries with tariffs, banks on Europe's benchmark Stoxx 600 index are still up 34 per cent so far this year. That is ahead of their US peers, narrowly ahead of their 2021 return and on track for the strongest showing since 2009. Investors have been encouraged to pile into European banking stocks by growing economic optimism in the region, improving prospects for their loan books, as well as valuations that are below US stalwarts such as JPMorgan Chase and Goldman Sachs. Many European banks have only recently seen their valuations return to book value, compared with 2.4 times book value for JPMorgan and twice book value for Goldman, according to data from FactSet. Banks 'are cheap and uniquely positioned for a pick-up in domestic demand,' said Luca Paolini, chief strategist at Pictet Asset Management. European banks, which were undercapitalised in the run-up to the financial crisis, spent the years after it building up capital buffers imposed by regulators, which restrained shareholder payouts. Meanwhile, a decade of near or below zero interest rates made it difficult for lenders to make money. That changed after the Covid pandemic as central banks began to increase interest rates to tackle inflation, and reversed their vast bond-buying programmes. Long-term interest rates have risen quickly, with 30-year German bond yields now 1.3 percentage points above two-year yields, where just two years ago they were lower. In the UK, the gap is above 1.5 percentage points. This has led to a substantial rise in banks' net interest income — the difference between what they earn from loans and other assets and what they pay for deposits — which has been a key driver of profitability. Those with trading operations have benefited this year from a surge in market volatility from Donald Trump's economic policies. Whether European banks can continue their run without the benefit of rising long-term rates is untested. Lenders have bulked up businesses such as wealth management to help insulate them from movement in interest rates, but political resistance to mergers such BBVA's bid for Sabadell and UniCredit's tilt at BPM are viewed as limiting the sector's growth potential. Francesco Sandrini, global head of multi-asset strategies at Amundi, said 'banks appear the cleanest shirt in the basket' but that there was 'a growing feeling the best may be past'. 'Long-awaited sector consolidation is far from the catalyst that many analysts have hoped for,' he added. Investors are quick to point out that European banks are still trading at 10 times forward earnings, compared with more than 13 times for their US peers, according to Bloomberg data. Return on tangible equity, a key measure of profitability for banks, is now comfortably more than 10 per cent for many of them. 'The good news is that European bank valuations remain discounted compared with banking sectors elsewhere in the world,' said Schroders' Bisseker. 'Further convergence is likely.' — Copyright The Financial Times Limited
Irish Times
11 hours ago
- Irish Times
Ending of electricity credits will bite hard this winter
It is the August bank holiday weekend – the height of meteorological summer, and of political summer. The Dáil is not sitting, Cabinet is not meeting, and aside from committees reporting on Government legislation on the triple lock and Occupied Territories Bill last week, the agenda was deathly quiet. In the midst of that August haze, it can be hard to believe that the weather will ever turn again. Inevitably, however, it will – this is as true of politics as it is of climate. And there are signs that as the days shorten and the weather turns, the old truism will be borne out – winter will be much trickier for the Government. Earlier this week, figures released to Sinn Féin MEP Lynn Boylan showed that 301,000 households are now in arrears on their electricity bills. One of the significant things about this is that the arrears figures appear to be creeping up even when the weather is mild – and doing so as the last of the previous government's electricity credits wash out of the system. It seems likely that the credits suppressed a rate of electricity arrears that would otherwise have emerged given the still-elevated cost of power. The electricity credits were a blunt, expensive – and politically expedient – tool to address a genuine crisis. In September 2022, as the country faced its first post-Ukraine invasion winter (and budget), a senior government figure texted me to say that modelling suggested energy bills over the winter would be more like mortgage payments. Cabinet had been warned earlier that week that household bills could hit €6,000 annually. That was both economically and politically unsustainable, and the Coalition applied €600 worth of electricity credits to household bills between November that year and March 2023, costing a little over €1.2 billion. From April 2022 until February this year, households got nine payments worth a total of €1,500 – costing almost €3 billion. It was a stark summation of two things: the scale of the crisis and the political willingness to cure – or at least ameliorate – it with exchequer spending. READ MORE Both those things have changed in important but different ways. Firstly, the cost of electricity has come down in line with reductions in wholesale gas prices – the main input into Irish electricity prices. However, it has not returned to pre-crisis levels, and energy boffins who understand these things expect that utility bills this winter will be about the same as last winter (or maybe even a little higher). The second important change is that while the situation has improved, the Coalition has resolved to turn off the tap completely on electricity credits. From a policy point of view, given the economic backdrop and the constant refrain over State spending, there is a strong case to be made for this – and it is one that has been made early and often by Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers . Both have been backed up by their respective party leaders. But the politics of this has a hard edge: the simple fact is that voters up and down the country are likely to be exposed to a more expensive winter in real terms than they have been for many years. As universal once-off payments are rolled up, they will get a delayed – but real – shock. This also comes against the backdrop of ever-higher grocery costs. More expensive turkey and electricity bills (or colder homes) beckon for the festive period. That does not sound like a recipe for a happy electorate. It is often said that inflation kills governments, but the last coalition was returned to power at least in part because it insulated households to an extraordinary degree as the election beckoned – not just the electricity credits, but recall two double payments of child benefit, either side of polling day. Against this backdrop, there is a compelling logic to intervene to protect lower-income households – and this is something I would expect the Government to do in the budget. Ditto extending the lower VAT rate on electricity bills. Meanwhile, Minister for Energy Darragh O'Brien has convened an energy affordability task force, which is to sketch out support measures for Budget 2026 some time soon. The Government's actions suggest it knows it has an issue – but all the steps the Coalition is minded to take – targeted measures, structural reforms, investment in the grid – are either partial or much more long-term in nature. They lack the raw retail politics of the once-off payments. Meanwhile, the Opposition's actions are equally as instructive. Before the Dáil rose for summer, the cost of living seemed to be the issue they most routinely raised in the Dáil. During his meeting with UK prime minister Keir Starmer this week, US president Donald Trump riffed on how politics is pretty simple, at the end of the day. The politician who wins out, he opined, is generally the one that cuts taxes the most, who keeps you out of wars – and 'the one who gives you the lowest energy prices'. Say what you like about him, he is an operator with extraordinary instincts for the prevailing politics of the day. It is possible that higher energy costs – and the price of the low-carbon transition – will become baked into economies in the time ahead. That suggests that energy politics may become a feature of the system here and elsewhere, not a passing storm.
