Simon Wolfson of Next has issued a warning about clothing prices – they are going up. With the challenging economic climate before us, the high street clothier sees no way around the upcoming price increases. The reason behind the increase is simple – government spending cuts, the hike in the VAT, and increasing cotton prices. All this spells one thing – an increase of at least 8 per cent on clothing prices, Lord Wolfson cautioned.
Next has more than 500 stores scattered throughout the UK and has experienced successful revenue and profit through the first half of the year. Sales amounted to 1.5 billion pounds and profit rose 15 per cent over this time last year. Sales were at the low end of forecasts but were balanced out by the success of the Next Directory home shopping arm.
Lord Wolfson mentioned it had been a good first half, but that sales would certainly start to slow. He commented on how this is a new environment that Next is selling in, saying: “We are entering a different type of consumer environment. The glory days of inexorably growing consumer credit and inexorably growing government spending has come to an end.”
He feels that the UK economy will not experience a double dip recession, but the next five years could be sluggish.
He commented on the new sales opportunities which will have to be created, saying: “We will have to adapt to a new type of consumer environment, one in which like-for-like sales growth is likely to be low for some time and top line growth will need to come from other opportunities. We believe it is sensible to view this environment as the new normal.”