Next to increase prices despite Christmas sales boost

People walk past a store of clothing retailer Next in London, Britain, December 2, 2021. Picture taken December 2, 2021.   REUTERS/May James
Next Christmas sales figures far exceed expectations. Photo: May James/Reuters

UK retailer Next (NXT.L) has warned shoppers that it will increase prices for its spring and summer clothes by around 8% as inflation continues to bite,

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

Next said it expected cost price inflation on like-for-like goods to peak at around 8% in the Spring/Summer season, falling to no more than 6% in the second half.

Read more: UK workers at risk as Amazon axes 18,000 jobs globally

It said selling prices would be broadly in line with the increase in cost price inflation.

Meanwhile, the retailer has upped profit forecasts for the year by £20m after better sales than expected in the run-up to Christmas.

The fashion and home retailer said sales of full-price items had risen by 4.8% in the nine weeks to 30 December, well above predictions of a 2% fall, delivering £66m more sales than expected.

As a leading high street retailer, Next is seen as a bellwether for the retail sector.

Shares in the group jumped more than 7% higher as Next said it now expects full-year sales of £4.6bn, up 6.9% on the year before, and for pre-tax profits to rise 4.5% to £860m against the £840m it pencilled in last November.

Still, Next said it remained “cautious” about the year ahead, with CEO Simon Wolfson warning that it was difficult to predict how consumer behaviour might change in the year ahead but the “best guess” was that shoppers would be more cautious.

He said: “Employment has held up very strongly – that’s unusual in a recession.

Read more: Christmas grocery spending hits new high

“That has given people the confidence to spend through the Christmas period.”

He said shoppers were also dipping into savings built up in the pandemic, while also keeping a tight rein on their energy usage to try and keep bills down.

However, he cautioned: “Next year is going to be a difficult year.”

Full price sales for the coming year are forecast to be down 1.5% and profit before tax down 7.6% to £795m, compared to the current year.

Watch: What is a recession and how do we spot one?