Next
has said it will raise its prices this year to offset increased wages as well
as higher shipping and manufacturing costs.
It said
prices for its spring and summer ranges would rise by 3.7% from a year earlier,
while it expects a 6% increase for autumn and winter goods.
Its forecast
came as it said sales for the three months to 25 December were up 20% compared
with pre-pandemic 2019.
Next also
upped its profit forecast for the year.
It now
expects to make an extra £22m, taking annual profits to £822m, which would be
nearly 10% higher than in 2019 many business listings.
The retailer
said sales in the final quarter of 2021 had been boosted by a strong revival in
"formal and occasion wear".
Next's
online business saw sales soar by 45% from two years ago, whereas sales at its
High Street stores were down 5.4%.
Household
pressures
The company
is forecasting sales of full-price goods to rise by 7% overall in 2022, but it
warned that this year could see a tougher trading environment, given the
financial pressures facing households, such as higher energy bills.
Next also
said it was facing higher costs itself, hence the need to increase its prices
by more than previously expected business listings.
The company
said it had faced higher shipping and manufacturing costs. Wage costs were also
climbing as a result of the increase in the National Living Wage and because of
staff shortages in some areas, "most notably in warehousing and
technology".
Analysts
praised next for its performance, with the retailer also announcing a special
dividend of 160p a share.
"For
all the tales of woe on the High Street, there is one shining jewel to be found
in the form of Next," said Sophie Lund-Yates, equity analyst at Hargreaves
Lansdown.
"There
aren't many bricks-and-mortar retailers dishing out special dividends or
upgrading guidance multiple times over."
She added
that next had managed its business "very well - stock levels have reduced,
and labour shortages didn't derail performance".
Richard Lim,
chief executive of Retail Economics, said: "These are mightily impressive
results and demonstrate the growing strength of the brand and its agility to
operate through the ongoing challenges posed by the pandemic free business listings.
However, he
added: "The outlook for 2022 looks more challenging. For many households,
this year will be a 'pinch point' as the combination of tax hikes and a rise in
the cost of living erodes incomes."
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