High-street retailer Next has warned that the ongoing conflict in the Middle East has already cost the company £15 million, and shoppers could face higher prices if the war continues. The group cited additional costs for fuel and air freight due to shipping disruption and soaring oil prices, though it said the impact so far can be offset by savings elsewhere in the business.
Chief executive Lord Simon Wolfson stated that Next is currently working on the assumption that the war lasts for three months. However, he stressed that if the conflict drags on, "we will begin to pass costs through as higher pricing." He added, "But for today that remains a contingency, not a plan."
The warning comes as Next reported better-than-expected annual profits, up 14.5% at £1.16 billion on a pro forma 52-week basis, and hiked its guidance for the year ahead to £1.21 billion. This forecast is based on the Iran conflict being resolved before the summer.
Businesses are bracing for a ripple effect from the war, with surging fuel prices and air freight costs jumping more than 6.2% in a week, raising fresh fears of rising prices across the board. Morrisons has also warned it is closely monitoring the situation, while the Institute of Grocery Distribution said food inflation could more than double by the summer if disruption continues.
US President Donald Trump claimed Iran wants "to make a deal so badly" but said its leaders are "afraid to say it, because they figure they'll be killed by their own people." Iran has denied any negotiations are taking place, having publicly rejected a White House peace plan as "excessive."
