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Next Warns Of Price Rises For Spring And Summer

Image source, Alamy

By Lora Jones

Business reporter, BBC News

Retail giant Next has warned that it will increase prices for its spring and summer clothes and home goods by 8% as rising costs bite.

Shoppers will also see price rises extend into the autumn and winter, the retailer said, but the increase will not be as sharp.

While Next reported strong sales for the Christmas period, it gave a “cautious” outlook for the year ahead.

It said high energy bills and mortgage costs would dampen customer demand.

Next said it expects price increases across its business will ease back to “no more than” 6% in the second half of the year as issues such as shipping costs settle down and the cost of key items like cotton and polyester decline.

The High Street giant reported a 4.8% rise in sales for the nine weeks to December 30 following a “dramatic boost” from a cold snap last month.

“We believe that the strength of demand for cold weather products in December was partly a result of pent-up demand from an unusually warm October and November,” it said.

With about 500 stores across the UK, the group said sales in brick-and-mortar sites were strong.

Next also said in an update that sales had been helped by better stock levels after being hit by supply chain disruptions previously.

Profits for the 12 months to January are expected to be 4.5% higher at £860m with total sales up 6.9% compared to the previous year.

Next is one of the first major retailers to report on key Christmas trading, and some experts have described the performance as “a pleasant surprise”.

Next has a bit of a reputation for under promising and over delivering. These figures are impressive. With all the disruption this Christmas, it is retailers with a well-run multi-channel operation – including online, store shopping and click and collect – who are likely to have navigated all the challenges of this festive period the best.

Next also has a lot of modern out-of-town stores which has seen the biggest footfall as shoppers returned to the shops in search of the best deals. It’s often described as a bellwether for the high street but it’s one of retail’s strongest performers.

Next is warning about tougher times ahead, with a drop in sales and profits for the next financial year. But this retailer, at least, is well placed to handle the likely recession.

Mark Crouch, analyst at social investing network eToro, said: “At a time when real incomes are coming under pressure, Next has managed to beat expectations.”

But he pointed out Next now anticipates a drop in both sales and profits for the coming year. “The retailer expects the real pain to come in 2023”, he said.

Next reckons profits will fall by as much as 7.6% to £795m in the year to January.

Mr Crouch said: “Next is often seen as a bellwether of the High Street… you can guarantee many retailers will be in much worse positions.”