Next - Retailer raises profit forecast for third time as it sees end to cost inflation

Next has raised its full-year profit expectations for the third time in four months and signalled that prices could start to fall next spring for the first time in three years.

- Sarah Butler

The fashion and homewares retailer increased its annual profit guidance by £30m to £875m as it said better ranges, the sunny spring earlier this year, and pay rises for many of its customers had helped to lift sales.

Full-price sales rose by 3.2% in the six months to July - a far better performance than the expected 3% drop in sales. The retailer said its cost inflation was easing, and that prices could fall next year.

In the spring it had predicted that cost prices - the amount the company pays for goods - could fall by up to 1%, although it did not rule out an increase of up to 0.5%.

Inflation will also ease this autumn with Next now expecting full-year cost prices to rise by 2% this autumn compared with 3% pencilled in previously. Cost price rises have led to retail price increases since spring 2021.

Simon Wolfson, the chief executive of Next, said if costs did come down as expected, the business would "continue to do what we have done for the last 15 to 20 years and reduce prices [for shoppers]".