UK retailer Next has warned that its ranges could be up to 10% more expensive this autumn and winter as rising commodity prices continue to squeeze the business.
Next, which has implemented average price rises of around 6% on its spring and summer products, has seen cotton prices climb to record highs while wage demands in the Far East have also increased.
The warning came as the retailer reported a 9% rise in pre-tax profits to £551m in the year ending January. The increase was largely down to cost savings as the chain saw a 4% decrease in same-store retail sales.
Overall, group sales edged up just 1% to just under £3.5 billion. The pre-tax profit figure was in line with market expectations. The group said its Next Directory online business now accounted for almost a third of sales and 40% of profits. Sales at Next Directory rose by more than 7%.
Next warned that it still faced a tough trading environment, with 2011 likely to be even tougher than 2010, mainly because of higher prices.
'Increases in VAT, cotton prices and labour rates in many of the countries in which we source means the price of our products are rising at a time when our customers are experiencing increased demands on their income,' said chairman John Barton.
