Next Plans Price Increases Outside Europe Due to Iran Conflict
Fashion and homeware retailer Next announced it will increase prices by up to 8% in certain countries outside Europe as it anticipates millions of pounds in additional costs stemming from the US-Israel war with Iran.
The company reported facing an extra £47 million in expenses this year, attributed to elevated fuel prices and disruptions to global supply chains caused by the Middle East conflict.
Next indicated it intends to implement price hikes in select international markets starting in May. However, it emphasized that cost-saving measures will prevent the need for further price increases within the UK and Europe.
The retailer's forecast assumes that fuel prices will remain near current levels and that supply chain conditions will neither deteriorate nor improve.
Initially, Next had projected additional costs of £15 million related to the war, which accounted only for the first three months following the US and Israel's initial attacks on Iran.
Financial Performance and Sales Growth
Next raised its full-year profit forecast to £1.22 billion from £1.21 billion after reporting a 6.2% increase in full-price sales during the first quarter.
UK sales grew by 4.4%, surpassing expectations.
The company stated that increased costs in the UK will be balanced by
"cost savings and margin gains"achieved through improved factory-gate pricing.
It does not anticipate raising UK prices by more than the 0.6% initially forecast at the start of the year.
In Europe,
"cost increases have been offset by currency gains, so there is no need for price increases", according to Next.
"Price increases outside Europe will vary by country, but will be no more than +8% in any territory,"the company added.
Outlook and Market Response
The group projects full-price sales growth of 5.0% for the entire year.
Shares in Next have declined by 5% so far in the current year.
