Next Raises Prices by 8% Outside Europe as Iran War Disrupts Global Supply Chains
Next, the prominent fashion and homeware retailer, has announced price increases of up to 8% in some countries beyond Europe. This measure is a direct response to an estimated £47 million in additional costs projected for the current year, stemming from elevated fuel prices and severe disruptions to global supply chains.
The company attributes these financial pressures to the US-Israel war with Iran, which commenced in late February with wide-ranging strikes. The conflict has led to the effective closure of the Strait of Hormuz, a critical shipping lane through which approximately one-fifth of global oil and gas shipments transit. Iran has maintained its vow to keep the strait closed as long as the US continues its blockade of Iranian ports.
Initially, Next had forecast additional costs of £15 million, covering only the first three months following the initial US and Israeli attacks on Iran. The revised, higher cost projection assumes that fuel prices will remain at their current elevated levels and that supply chain issues will neither improve nor worsen.
Despite these challenges, Next has increased its full-year profit forecast to £1.22 billion, up from £1.21 billion, following a stronger-than-expected 6.2% rise in full-price sales during its first quarter. UK sales saw a 4.4% increase, outperforming expectations. The company stated that cost increases in the UK would be offset by internal cost savings and margin improvements, negating the need for further price hikes beyond the 0.6% initially forecast for the year. Similarly, in Europe, currency gains have absorbed cost increases, precluding price adjustments there.
International sales experienced a decline at the onset of the conflict, though Next noted a significant recovery in recent weeks. Price increases outside Europe will vary by country, with a maximum of 8% in any single territory.
