Clothing prices will stop rising as pressure eases, next boss declares
The price of clothing looks set to stop rising next year as the costs of doing business fall, Next’s boss has said.
While raising the High Street retailer’s profit forecast for the third time in four months, sending Share to a maximum of 20 months: Lord Wolfson said the cost of everything from shipping to fabric is falling “faster than we expected”.
He said that while last fall and winter costs were 8 percent higher than the previous year, this time they will increase only 2 percent.
By spring and summer, the cost of doing business could even be going down.
Profit rise: Next, which sells celebrity clothing lines including Myleene Klass (pictured), said revenue rose 5.4% to £2.6bn in the first six months of the year.
As such, Wolfson said the price of his clothing is likely to be “broadly” the same as it was in the spring and summer of this year.
The update fueled hopes that the squeeze on family finances is coming to an end.
It came as the Bank of England froze interest rates at 5.25 per cent after 14 consecutive rises and Chancellor Jeremy Hunt said “we are starting to see the tide turn against high inflation”.
Announcing Next’s better-than-expected results, Wolfson said: ‘We don’t think prices will fall much, but we do think inflation will decline dramatically.
“Prices will never go back to the way they were, but wages have increased probably 10 to 15 percent in recent years, so you wouldn’t expect them to come back.”
Next, which has long been seen as a fixture on the High Street and sells celebrity clothing lines such as Myleene Klass, said revenue rose 5.4 per cent to £2.6 billion in the first six months of the year, while profits were 4.8 percent higher. to £420 million.
The retailer expects full-year profits of £875m, an increase of £30m on its previous forecast of £845m. Last year he earned £870.4 million.
The shares rose 3.4 per cent to 7,350 pence, their highest level since February last year.
In a cheery update to investors, Wolfson said the company had “underestimated” the impact of wage increases and “a strong labor market” on consumer purchasing power.
He added: “We also believe that the exceptionally warm weather in late May and June served to significantly boost sales of our summer clothing at a critical time.”