Next boss in price pledge as chain posts profits rise
The boss of high street clothing chain Next offered reassurance that prices will not rise further in 2012 after a "perfect storm" of surging costs and rising VAT increased price tags this year.
The retailer, which has more than 500 stores in the UK and Ireland, hiked average selling prices by 7% in the six months to July 31 as soaring cotton and oil costs added to the VAT hike to 20% in January.
It has 19 stores in Northern Ireland including three Next Home stores. The firm also announced yesterday it is to open a 7,459 sq ft unit at The Outlet in Banbridge.
Next expects selling prices to increase 8% in the second half of the year but chief executive Lord Simon Wolfson said there will not be further rises in the first half of 2012 as the cotton cost bubble has burst, with prices falling 50% below their March peak.
The reassurance came as Next reported a 1.8% drop in store sales, which was offset by a 15.1% increase at its online business Next Directory. The company posted an 8.5% increase in half-year pre-tax profits to £228m after revenues grew 3.6% to £1.6bn.
Next said it did not expect an easing in headwinds in 2012, although with little or no inflation in its prices, consumer sentiment should benefit.
David Keens, group finance director, said it "takes time" for drops in raw material costs to filter through to the customer and it was too early to say if selling prices would actually drop.