Next has warned that its growth in the UK is “likely to slow” in the coming months as the impact of upcoming tax rises filter through the economy.
The fashion and home giant raised its full-year pre-tax profit guidance by £5m to £1.01bn following a better-than-expected Golden Quarter.
However, it cautioned that its wider UK growth will be hampered “as employer tax increases, and their potential impact on prices and employment” starts to affect the overall economy, referring to the changes announced in October’s Budget.
Next calculates the rise in employers’ National Insurance and national minimum wage will add £67m to its tax bill.
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It hopes to mitigate the “unusually high” increase through raising prices on like-for-like goods by 1%, alongside operational efficiencies and other cost savings.
The retailer reported a strong finish to its current financial year as full price sales rose 6% in the nine weeks to 28 December, beating the previous guidance for the fourth quarter of 3.5%.
Next stated its online performance had outperformed its retail stores, with revenue via its website increasing 6.1%, driven by a 9.2% jump in its Label third-party platform. Brick-and-mortar sales fell 2.1% over the quarter.
The retailer’s overseas division saw sales “accelerate in the run up to the holiday period”, rocketing 31.4% in the nine weeks.
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