'Next' signals 'more benign year' for prices

Clothing retailer Next offered some relief to hard-up shoppers today by signalling a "more benign year" for prices during 2012.

The group, which has more than 500 stores in the UK and Ireland, said a sharp reduction in cotton prices and an easing of manufacturing constraints in the Far East would take some of the pressure off its own prices.

Next has already warned of price increases this autumn but said the improved trend meant selling prices were unlikely to rise further next spring.

The reassurance came as the retailer reported a 3.2% increase in total sales in the 26 weeks to July 30, excluding VAT, and confirmed that profit expectations for the full year were in line with previous guidance.

Next previously warned that its ranges could be up to 10% more expensive this autumn and winter as rising commodity prices continued to squeeze the business.

But the retailer said cost-price inflation in the first of half of 2011 was expected to remain at broadly the same rate of 8% in the next six months.

Looking further ahead, the company said 2012 would be a "benign year" for cost inflation.

The company said a 1.7% drop in store sales was more than offset by a 15.1% surge in sales at its online and catalogue division, although this was boosted by an increased allocation of sale stock.

Next expects to earn between £527 million and £577 million in the full year, compared with £551 million the previous year. This excludes the impact of the sale of its contact centre business Ventura.