Retailer Next expects less inflationary pressure on prices

CLOTHING retailer Next offered some relief to hard-up shoppers yesterday 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. Cost-price inflation in the first of half of 2011 was expected to remain at broadly the same rate of eight per cent and 2012 would be a “benign year” for cost inflation.

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Next previously warned that its ranges could be up to 10 per cent more expensive this autumn and winter as commodity prices rose.

The reassurance came as the retailer reported a 3.2 per cent 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.

A 1.7 per cent drop in store sales was more than offset by a 15.1 per cent 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 £527m and £577m in the full year, compared with £551m the previous year.

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