NEXT expects 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, which was higher than the £860 million it had previously pencilled in. Full-price sales rose 6.9% year-on-year.

By category, NEXT's full-price sales included:

• Beauty sales flat at £46 million.
• Clothing sales up 25% to £601 million.
• Sports sales down 13% to £138 million.
• Home sales down 8% to £84 million.

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.

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-19 restrictions were lifted. NEXT also 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, beauty 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 Reiss and runs the UK operations of US giants Victoria's Secret and GAP via joint ventures.