The price of clothes looks set to stop rising next year as the cost of doing business eases, the boss of Next has said.
As he upgraded profit forecasts at the High Street retailer for the third time in four months – sending shares to a 20-month high – Lord Wolfson said the cost of everything, from shipping to fabric, is falling ‘faster than we expected’.
He said that while costs last autumn and winter were 8 per cent higher than a year earlier, they are set to be up just 2 per cent this time around.
By the spring and summer, the cost of doing business could even be falling.
Profits up: Next, which sells clothing lines from celebrities such as Myleene Klass (pictured), said revenues rose 5.4% to £2.6bn in the first six months of the year
As such, Wolfson said the price of its clothes are likely to be ‘broadly’ the same as they were in the spring and summer of this year.
The update fuelled hopes that the squeeze on family finances is coming to an end.
It came as the Bank of England froze interest rates at 5.25 per cent following 14 consecutive hikes and Chancellor Jeremy Hunt said ‘we are starting to see the tide turn against high inflation’.
Announcing Next’s better-than-expected results, Wolfson said: ‘We don’t think prices will come down by much but we think inflation will ease dramatically.
‘Prices will never go back to where they were, but then again wages have moved up by probably 10 per cent to 15 per cent over the past few years so you wouldn’t expect them to go back.’
Next, which has long been seen as a bellwether on the High Street and sells clothing lines from celebrities such as Myleene Klass, said revenues rose 5.4 per cent to £2.6billion in the first six months of the year while profits were 4.8 per cent higher at £420million.
The retailer expects profits of £875million for the full year, a £30million increase from its prior forecast of £845million. It made £870.4million last year.
Shares rose 3.4 per cent to 7350p, their highest since February last year.
In a cheery update to investors, Wolfson said the company had ‘underestimated’ the impact of wage increases and ‘a robust employment market’ on consumers’ spending power.
He added: ‘We also believe the exceptionally warm weather in late May and June served to significantly boost sales of our summer clothing at a critical time.’
#fiveDealsWidget .dealItemTitle#mobile {display:none} #fiveDealsWidget {display:block; float:left; clear:both; max-width:636px; margin:0; padding:0; line-height:120%; font-size:12px} #fiveDealsWidget div, #fiveDealsWidget a {margin:0; padding:0; line-height:120%; text-decoration: none; font-family:Arial, Helvetica ,sans-serif} #fiveDealsWidget .widgetTitleBox {display:block; float:left; width:100%; background-color:#af1e1e; } #fiveDealsWidget .widgetTitle {color:#fff; text-transform: uppercase; font-size:18px; font-weight:bold; margin:6px 10px 4px 10px; } #fiveDealsWidget a.dealItem {float:left; display:block; width:124px; margin-right:4px; margin-top:5px; background-color: #e3e3e3; min-height:200px;} #fiveDealsWidget a.dealItem#last {margin-right:0} #fiveDealsWidget .dealItemTitle {display:block; margin:10px 5px; color:#000; font-weight:bold} #fiveDealsWidget .dealItemImage, #fiveDealsWidget .dealItemImage img {float:left; display:block; margin:0; padding:0} #fiveDealsWidget .dealItemImage {border:1px solid #ccc} #fiveDealsWidget .dealItemImage img {width:100%; height:auto} #fiveDealsWidget .dealItemdesc {float:left; display:block; color:#004db3; font-weight:bold; margin:5px;} #fiveDealsWidget .dealItemRate {float:left; display:block; color:#000; margin:5px} #fiveDealsWidget .dealFooter {display:block; float:left; width:100%; margin-top:5px; background-color:#e3e3e3 } #fiveDealsWidget .footerText {font-size:10px; margin:10px 10px 10px 10px;} @media (max-width: 635px) { #fiveDealsWidget a.dealItem {width:19%; margin-right:1%} #fiveDealsWidget a.dealItem#last {width:20%} } @media (max-width: 560px) { #fiveDealsWidget #desktop {display:none;} #fiveDealsWidget #mobile {display:block!important} #fiveDealsWidget a.dealItem {background-color: #fff; height:auto; min-height:auto} #fiveDealsWidget a.dealItem {border-bottom:1px solid #ececec; margin-bottom:5px; padding-bottom:10px} #fiveDealsWidget a.dealItem#last {border-bottom:0px solid #ececec; margin-bottom:5px; padding-bottom:0px} #fiveDealsWidget a.dealItem, #fiveDealsWidget a.dealItem#last {width:100%} #fiveDealsWidget .dealItemContent, #fiveDealsWidget .dealItemImage {float:left; display:inline-block} #fiveDealsWidget .dealItemImage {width:35%; margin-right:1%} #fiveDealsWidget .dealItemContent {width:63%} #fiveDealsWidget .dealItemTitle {margin: 0px 5px 5px; font-size:16px} #fiveDealsWidget .dealItemContent .dealItemdesc, #fiveDealsWidget .dealItemContent .dealItemRate {clear:both} }
