High-street retailer Next has reported a £15 million increase in costs because of the Iran conflict and warned it may be forced to raise prices if the war continues. The company said it set aside the cash for additional fuel and air freight expenses due to shipping disruption and soaring oil prices, though the impact so far can be offset by savings elsewhere.
Next’s chief executive, Lord Simon Wolfson, said the company is currently planning on the conflict lasting three months but emphasised that if it continues longer, “we will start passing costs on through higher prices.” He added that for now, this is a contingency rather than a confirmed plan.
The retailer cautioned that the war in the Middle East, a region accounting for around 6% of its annual sales, is holding back growth in those countries and is likely to impact costs, selling prices and consumer demand across the wider group. It cut its guidance for international turnover to 14.3% for the current financial year, down from 16.5% previously forecast.
Despite the overseas challenges, Next reported better-than-expected annual profits, up 14.5% at £1.16 billion, and raised its guidance for the year ahead to £1.21 billion, based on the conflict being resolved before the summer. UK sales guidance increased from 1.6% to 2.2% thanks to an “encouraging sales performance” in the first eight weeks of the financial year.
The group expects overall sales to rise by 4.5%, in line with previous guidance for 2026-27. Its profit outlook is £8 million more than previously forecast due to better-than-expected full-price sales in January and an improved end-of-season clearance.
