Fashion retailer Next reported a better-than-expected 5.7 per cent rise in annual profit on Wednesday and said it would not need to increase prices by as much as previously thought.
Next, which is often considered a good barometer of how consumers are faring, said inflationary pressures were expected to ease as freight costs drop and the cost of goods improve.
Higher costs for wages and energy are still expected to reduce profit this year, however. Its shares fell five per cent at the open, after it retained its cautious outlook.
The retailer, which trades from about 500 stores and online, has shown more resilience than most to the cost-of living crisis and is considered by analysts to be one of the best run retailers in the country. Its shares had been up 16 per cent this year, before Wednesday’s update.
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It now expects like-for-like price inflation in spring/summer of seven per cent and three per cent in autumn/winter – down from its previous forecast of eight per cent and six per cent respectively.
That reflected a significant reduction in container freight costs and improving factory gate prices – the price at which it purchases goods – due to increased factory capacity and efforts to move production to more cost effective areas.
Next made a pretax profit of £870.4 million in the year to January 2023 – versus guidance of £860 million and up from £823.1 million in 2021-22.
Sales of items sold at full price rose 6.9 per cent in 2022-23, with total sales up 8.4 per cent to £5.15 billion. For 2023-24, Next kept its guidance for a 1.5 per cent decline in full-price sales and profit of £795 million. In the first eight weeks of its new financial year full-price sales were down two per cent, in line with its expectations. – Reuters