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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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