Iran war: Next reveals £15m cost hit and warns prices may need to rise
High street chain Next has revealed a £15m cost hit from the Iran conflict and warned it may need to hike prices if the war is prolonged.
The firm said it had set aside the cash to cover additional costs for fuel and air freight due to shipping disruption and soaring oil prices, but that the impact so far can be offset by savings elsewhere in the business.
It cautioned the conflict in the Middle East – a region which accounts for around six per cent of its annual sales – was holding back growth in those countries, and is also likely to impact costs, selling prices and consumer demand.
CEO Lord Simon Wolfson said Next was working on the basis that the war will last for three months, but stressed if the conflict is more prolonged “we will begin to pass costs through as higher pricing”.
Next reported better-than-expected annual profits, up 14.5 per cent at £1.16bn, and hiked its earnings outlook for the year ahead to £1.21bn, though this is based on the Iran war being resolved before the summer.
Lord Wolfson said: “We have accounted for £15m of additional costs that are likely to arise from the conflict on the assumption that the disruption lasts for three months. These costs have been offset by savings elsewhere, so do not affect our guidance.”