NEXT predicts an easing of price rises as it posts increased sales and profits

NEXT has said it expects to raise its prices more slowly over the year ahead as it revealed better-than-expected annual profits for the year ending January 2023.

The retail giant reported a 5.7% rise in pre-tax profits to £870.4 million for the year to January, which was higher than the £860 million it had previously pencilled in. Full-price sales rose 6.9% year-on-year.

The group, which has been increasing prices to offset surging cost pressures, said price inflation is set to be “more benign” than previously thought, forecasting increases across its ranges of 7% this spring/summer, easing back to 3% in the autumn/winter.

It had previously expected to ramp up its prices by 8% for spring/summer and 6% for autumn/winter, but said it was seeing supply chain woes ease off, with sharply lower shipping costs, and as it costs less to buy stock from overseas.

The outlook for prices gives further hope to cash-strapped households that sky high inflation will start to ease back during 2023.

But NEXT remains more cautious in its outlook over the year ahead, sticking by guidance in January that predicts a drop in profits to £795 million due to soaring wage and utility bills, with sales expected to be 1.5% lower.

It said sales in the first eight weeks of the new financial year are 2% down and forecasts a drop overall in the first half of 3% as it compares with a boom in trading a year ago, when there was a release of pent-up demand for summer events after Covid restrictions were lifted.

NEXT believes sales declines in the second half will pare back to around 0.2%.

Yesterday the group boosted its third party brand portfolio further adding fashion and lifestyle brand Cath Kidston to its empire having bought the business out of administration for £8.5 million.

This latest addition follows the recent acquisitions of Joules and furniture retailer Made.com. NEXT has also purchased a majority stake in premium fashion brand Reiss and runs the UK operations of US giants GAP and Victoria's Secret via joint ventures.

Once brands enter the NEXT empire their operations are transferred onto NEXT's 'Total' retail platform. It is expected Cath Kidston will do the same. Its current website will be run by administrators for a 12-week period to clear stock, while its four stores will soon close, ahead of a planned relaunch of the brand.