Next to increase prices to help pay for budget tax changes
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Retailer says festive trading was better than expected but forecasts UK sales growth will slow this year. Next has said it will increase prices by 1% this year to help offset a £67m rise in wage costs driven by tax changes announced in the government’s autumn budget.
The fashion and homewares retailer also said UK sales growth was likely to slow as the tax increases for employers and their potential impact on prices and the job market “begin to filter through into the economy”. The group said it planned to use more mechanisation in its warehouses to offset the rising costs from the increase in employers’ national insurance contributions and the rise in the legal minimum wage, while it expected no increase in the factory gate prices of its goods.
The 1% increase comes after Next raised prices by more than 7% in spring 2023 and 2% that autumn. However, it said last year that prices were coming down as product and distribution costs reduced. The group upped its profit forecasts by £5m after better than expected sales in the key festive trading period.
In a detailed report, the Next chief executive, Lord Wolfson, said a trend for shoppers to buy fewer, marginally more expensive items was also expected to continue through 2025, helping offset higher costs. The retailer’s warning on price rises come after it reported a 5.7% rise in sales in the nine weeks to 28 December, excluding the impact of the change in timing of when it launched its end-of-season discounts.
