Next has warned it is facing a cost hit of nearly £50 million from the Iran war and is set to raise prices in some overseas countries by as much as 8% to offset the impact.
The fashion and homewares chain increased its estimated cost of the Middle East conflict to £47 million from the £15 million guidance given in March as it now expects disruption for the remainder of its financial year to next January.
It said it would look to hike prices in international countries from May, but said efforts to make cost savings would mean it does not need to push through extra price increases in the UK and Europe.
Next said: “We plan to mitigate the ongoing cost increases caused by the conflict in the Middle East with a combination of moderate price increases in some international territories and operational cost savings.”
“Based on our current estimates, we do not anticipate increasing our UK prices over and above the 0.6% we had forecast at the beginning of the year.”
But the group cautioned it may need to change pricing if the war disruption and cost hit worsens.
It came as Next nudged up its full-year profit guidance to £1.22 billion, up from the £1.21 billion previously guided for in March, thanks to a better-than-expected 6.2% rise in full price sales over its first quarter to May 2.
UK sales rose 4.4% in the three months, but growth pared back to 1.7% by the end of the quarter and is set to slow to 1% in the second quarter as it comes up against tough comparisons from a year earlier.
The group said the Iran war was leading to higher transport costs for its goods, in terms of international shipping and also distribution within the UK due to soaring fuel prices, while it is also seeing rising energy prices.
In the UK, it is able to offset these costs thanks to better-than-forecast factory prices.
