Clothing retailer Next warned today that the US-Israeli war on Iran would likely impact costs, selling prices and consumer demand, and it could restrain its growth in the Middle East.
Next said it had accounted for £15m of additional costs likely to arise from the conflict, such as fuel and air freight, on the assumption that the disruption lasts for three months.
The Middle East accounts for about 6% of its turnover.
It said these costs have been offset by savings elsewhere, so do not affect its guidance for its new financial year.
"Beyond the next three months, if we see these costs persist, then we will begin to pass costs through as higher pricing - but for today that remains a contingency not a plan," Next said.
Shares in Next are up 26% year-on-year but have fallen 8% over the last month on fears the Iran war will raise the group's costs and dent consumer demand for discretionary items.
For the year to January 31, Next reported a slightly better-than-expected 14.5% rise in pretax profit to £1.158 billion, on full price sales up 10.9%.
It edged up its guidance for 2026/27 profit to £1.210 billion, but kept its forecast for full price sales growth to slow to 4.5%.
It said sales in the first eight weeks of the year were encouraging in the UK and were also strong overseas up to the point the Middle East conflict began.
UK retail sales tumbled this month by the most since April 2020, a survey by the Confederation of British Industry showed earlier this week.
A survey from the British Retail Consortium, published on today, showed UK consumer confidence collapsed in March.
