Next boss warns of 5% price rise thanks to pound’s fall

Next chief executive Lord Wolfson today warned shoppers that the fashion chain would pass on price rises of “up to 5%” to them next year after the fall in the value of the pound.

“It won’t affect prices until the next spring and summer season,” said Wolfson. “The devaluation of the pound is not going to hurt as much as some thought, partly because it was already falling this year, and because the dollar has fallen less against most of the currencies in the countries from which we source. Prices will go up by 5% at most. For many years our cost prices have fallen and we have passed those on to our customers.”

He said, using the example of the spike in cotton prices in 2010, a 5% rise in prices should lead to an actual fall in same-store sales of only between 0.5% and 1%.

Next said first-half profits had fallen by 1.5% — High Street profits dropped 17%, a sharp contrast with the 11% rise at Next Directory, its online business.

Wolfson warned that July sales had only really been good because of a big increase in the amount of stock put into the sale and that, since then, it had been “challenging and volatile”.

The half-year dividend is held at 53p but Wolfson added “that doesn’t mean we won’t increase the final”.

The shares fell 200p, or 4%, 5010p.