High street giant Next warned that it may have to increase prices in the face of soaring costs after the pound plunged in value after the Brexit vote.
Lord Wolfson, chief executive of Next, said the group may be forced to put up price tags next year, but said any rise was likely to be “less than 5 per cent”.
Next estimated that importing clothes from overseas suppliers will push up costs in the year to the end of January 2018 by up to 5 per cent. The comments came as Next posted another fall in full-price sales at its high street stores - down 3.3 per cent for its retail shops in the second quarter to the end of July, while its Next Directory arm saw sales rise 5.7 per cent
But the drop was not as bad as feared, while a robust end-of-season sale performance also helped limit the fall in total store sales, including markdowns, to 0.7 per cent.
Lord Wolfson - who backed the Brexit campaign - said there was no clear evidence of a hit to consumer confidence since the vote to leave the EU, although he cautioned trading conditions will remain tough for the rest of the year.
“The Brexit vote hasn’t really altered consumer confidence one way or the other - the consumer environment was tough before the vote and remains tough,” he added.
The group is expecting sales falls to worsen in a “particularly challenging” third quarter as it also comes up against tough comparisons from a year earlier, although the all-important Christmas season may see some improvement after mild weather hit the end of 2015/2016. A spokesman said that Next wouldn’t comment on future expansion plans, and it does not provide a regional breakdown on trading. The spokesman said Next had a significant presence in West Yorkshire, at its South Elmsall distribution hub.