Next warns of staff shortages and price rises before Christmas

Shares hit record as fashion chain raises profit outlook on back of soaring sales

The fashion chain Next has raised its full-year outlook once more after soaring sales but warned of rising prices and staff shortages in the run-up to Christmas.

Its shares went up 4% in early trading to hit a record of £84.08 after the group reported pre-tax profits of £346.7m for the six months to 31 July, with full-price brand sales jumping 62% year on year and 8.8% higher compared with 2019.

However, Next said supply chain woes had led to higher freight costs pushing up prices by about 2% in the first half and cautioned this would continue into next year, with prices set to rise by about 2.5% in the first half of 2022.

Next added that some areas of the business had come under pressure from staff shortages, particularly in logistics and warehousing, which may affect its delivery service going into the peak festive season.

The firm called on the government to take action on the lorry driver crisis and wider skills shortages.

It said: “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.”

Next’s full-year sales and profit forecasts were up for the fourth time this financial year after a “materially” better-than-expected performance over June and July.

Full-price sales soared 20% against 2019 levels in the last eight weeks of the first half and Next said the second half had also got off to a strong start.

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

However, it cautioned the performance may be hindered by rising costs in the wider economy, the supply problems 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,” 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.”

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