Shoppers may face increased clothing costs in the upcoming autumn if the ongoing Middle East crisis persists, according to the chief executive of renowned fashion retailer Next.
Simon Wolfson expressed concerns about the potential impact of the war on oil prices, which could lead to price hikes as early as summer. However, the more significant impact is expected later in the year due to escalating energy expenses for manufacturers in Asia and other global regions.
Lord Wolfson, a Conservative party member, suggested that Next might need to raise prices by approximately 1% to 2% by June to offset rising transportation and energy costs. He emphasized that if manufacturing costs rise due to the prolonged conflict, consumers could witness notable price increases when new goods hit stores in September and October, estimating the hike to be between 4% and 10%.
Next is currently planning based on a three-month duration for the conflict. The company has already incurred a £15 million cost due to the crisis, allocating funds for increased fuel and air freight expenses resulting from shipping disruptions and surging oil prices. Despite this impact, Next aims to balance the costs with savings from other operational areas.
The Middle East conflict, which contributes around 6% of Next’s annual sales, is hindering growth in those markets and is expected to affect costs, prices, and consumer demand across the company.
While reporting a 14.5% rise in annual profits to £1.16 billion, Next has raised its profit forecast for the upcoming year to £1.21 billion, assuming a resolution to the Iran war before summer.
Lord Wolfson also suggested that the government should avoid profiting excessively from the soaring fuel prices, requesting that it only collects the originally anticipated amount in taxes despite the price increases. This approach, he believes, would be fair to the industry and consumers alike.
