Next boss says no more rises in clothing prices from next year

The chief executive of Next offered a boost to embattled UK consumers yesterday, predicting that there would be no further increases in its clothing prices for spring 2012, as cotton inflation and manufacturing capacity constraints in the Far East ease.

Lord Wolfson of Aspley Guise also said he thought the recent doom and gloom in the retail sector had been"exaggerated", as the fashion and homewares giant posted a resilient set of first-half results.

Total sales at Next rose by 3.2 per cent over the 26 weeks to 30 July, which was towards the upper end of Cityexpectations, although the retailer's performance was boosted by new stores and a surge in revenues at its home-shopping Directory business.

Asked if Next had outperformed the market, Lord Wolfson said: "I would have thought so because the whole market would not be growing at 3 per cent."

Next said it expected the 8 per cent rise in the average selling price of its clothing over the 26 weeks to continue into the second half of its financial year. But Lord Wolfson said he thought those price rises would "disappear", on a like-for-like basis in the first quarter of 2012 due to a sharp reduction in cotton prices, fewer capacity constraints on factories in the Far East, and the annualising of the VAT increase.

He said: "It is primarily cotton but we are not experiencing the samecapacity constraints that we were at the back end of last year and early this year when the factories were full."

His comments offer some hope to consumers who have been hit bystubbornly high inflation, notably from soaring petrol and food prices, at a time of Government spending cuts.

Citing these factors and "stagnant employment", Lord Wolfson said that while "consumers have less to spend on discretionary purchases, the thing that has been holding back the clothing sector has been the recent cost-price inflation".

Over the half-year, Next's retail sales in its physical stores slipped by 1.7 per cent. However, on a like-for-like basis, Next's sales were lower by 3.4 per cent once the positive impact of new space is excluded.

Next's star performer was its home shopping Directory business – of which online accounts for about 80 per cent. Sales at Next's home-shopping unit surged by 15.1 per cent over the half year, although the retailer said this figure was "somewhat flattered" by an increased allocation of stock on sale. Full-price Directory sales rose by 13.3 per cent.

Sam Hart, an analyst at Charles Stanley, said: "We think Next can continue to make steady progress. Years ofexperience in home shopping through the Directory means the group already has the infrastructure in place to benefit from structural growth in online shopping. Cash generation is strong, the balance sheet solid and management best in class."

Next has said that it expects pre-tax profits to be between £527m and £577m this financial year.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn