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The British fashion brand known for its shopping site, Next, has announced that it will continue to raise prices this year as well, although at a slower rate than last year, following the apparent weakening of inflation.
The clothing and homewares retailer reported record annual profits of £870m; the company grew profits by 5.7% year-on-year, while total trading sales rose 8.4% compared to the previous year to £5.1bn.
However, Next warned that 2023 will be “very challenging” as its shoppers struggle with the cost of living, with sales forecast to fall 1.5% this year, while profits are also down. In general, retailers and consumers are struggling with price increases that are the front waves of the Corona epidemic and the war in Ukraine.
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Next estimates that the prices of its products will increase by 7% during the spring and summer, and by another 3% during the fall and winter – a decrease from the rates of 8% and 6% that they previously expected.
Simon Wolfson, CEO of Next, said: “Virtually every element of the supply chain looks more benign. We hope this is a sign of the economy’s recovery and the easing of inflation.”
Signs of lower-than-expected inflation from one of Britain’s biggest retailers may be watched by the Bank of England, which last week raised interest rates by a quarter of a percentage point. The central bank and its global counterparts are raising interest rates to try to slow down inflationary price increases.
Next beat its full-year profit forecast by £10m, helped by stronger-than-expected sales of more profitable goods and a strong post-Christmas sales performance. However, Wolfson said cost inflation in the coming year will result in discretionary spending, stressing the difficulty of predicting how big the hit will be.
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