Next, one of the UK's largest retailers of furniture and furnishings, has announced plans to raise prices by approximately 1% on like-for-like items. This decision comes in response to expected increases in employment costs driven by the Government's autumn Budget.
Photo: Next.
The retail giant, which operates its own sofa factory, revealed that its wage bill, currently standing at around £900 million, will rise by £67 million. This increase is attributed to a combination of general wage inflation, a hike in the National Living Wage, a reduction in the Employer National Insurance (ENI) threshold, and an increase in the ENI headline rate.
In its Christmas Trading statement, Next also reported that full-price sales rose by 5.7% during the nine-week period leading to December 28, 2024. The retailer did not disclose a category-wise breakdown but noted that the growth was driven by stronger performances in its online and international markets. This uptick in sales led to an upward revision of its profit forecast for the year ending January 2025, with a £5 million increase, bringing the total to £1.01 billion. Additionally, the company projects sales growth of 3.5% and earnings growth of 3.6% for the year ending January 2026.
Next's decision to implement a price increase reflects broader economic pressures faced by the company, which is striving to balance rising operational costs while maintaining profitability. The expected increase in employment costs is one of several factors contributing to the retailer's decision, alongside the challenges posed by the Government's fiscal policies.
The retailer's price adjustments are part of a wider trend among UK businesses, many of which are facing similar pressures due to the tax and wage policies outlined in the Government's Budget. Other companies in various sectors, including food and beverage, logistics, and consumer goods, are also anticipated to increase their prices in response to rising operational costs.
Despite these challenges, Next has remained optimistic about its future performance. The retailer's robust sales figures and revised profit expectations signal a positive outlook for the business, even in the face of broader economic uncertainties. However, the planned price rise highlights the ongoing strain on UK retailers as they adjust to the financial implications of government policies and navigate evolving market conditions.
Source: www.thefurnishingreport.com