Next hikes full year outlook but warns over staff shortages, rising prices

Chief executive calls on UK government to take action to head off ‘looming skills crisis’

Next said  supply chain woes had seen higher freight costs push up prices by about 2% in the first half and cautioned this would continue into next year. Photograph: Ian West/PA Wire

Next said supply chain woes had seen higher freight costs push up prices by about 2% in the first half and cautioned this would continue into next year. Photograph: Ian West/PA Wire

 

Fashion giant Next has hiked its full-year outlook once more after surging sales but warned over rising prices and staff shortages in the run-up to Christmas.

It said supply chain woes had seen higher freight costs push up prices by about 2 per cent in the first half and cautioned this would continue into next year, with prices set to rise around 2.5 per cent in the first half of 2022.

Next, which has hundreds of stores across Britain and 17 outlets in Ireland, added that it was also seeing some areas of the business come under pressure from staff shortages, particularly in logistics and warehousing, which may affect its delivery service going into the peak festive season.

Chief executive Lord Simon Wolfson, a prominent Brexit supporter, called on the British government to take action to head off a “looming skills crisis”.

“We anticipate that, without some relaxation of immigration rules, we are likely to experience some degradation in our service in the run-up to Christmas,” the group said.

Lord Wolfson told the PA news agency the group may have to bring forward the next day delivery cut-off from 11pm, but stressed deliveries “won’t grind to a halt”.

He said the recent move to introduce temporary visas for EU lorry drivers was “late but welcome” and made a plea for the government not to wait until shortages of skills in other areas becomes a crisis.

Next said: “The HGV crisis was foreseen and widely predicted for many months.

“For the sake of the wider UK economy, we hope that the government will take a more decisive approach to the looming skills crisis in warehouses, restaurants, hotels, care homes and many seasonal industries.

“A demand-led approach to ensuring the country has the skills it needs is now vital.”

Lord Wolfson added: “I hope that going forward the government looks further into the future and doesn’t wait until the crisis is upon it.”

Pre-tax profits

The comments came as the group reported pre-tax profits of £346.7 million (€401.54 m) for the six months to July 31st, down 16.5 per cent on a year ago but up 5.9 per cent on 2019 levels.

Full-price brand sales jumped 62 per cent year-on-year and were 8.8 per cent higher versus 2019.

Shares lifted 3 per cent as it increased its full-year sales and profit forecasts for the fourth time this financial year after a “materially” better-than-expected performance over June and July.

Next saw full-price sales soar 20 per cent against 2019 levels in the last eight weeks of the first half, while it said the second half had also got off to a strong start.

The group now expects sales to rise 10 per cent on 2019 levels and pre-tax profits to reach £800 million for the year to January, up 6.9 per cent on 2019 and above previous guidance of £764 million.

But it cautioned the performance may be hindered by rising costs in the wider economy, the supply woes and a potential hit to its delivery service from staff shortages.

“The cost of living, along with the potential effect of seasonal labour shortages on our delivery service, may moderate demand in the months ahead,” it said. – PA