Next boss cautions over stock delays from Red Sea attacks
Chief executive Lord Simon Wolfson said an extra two and a half weeks must be added to stock delivery times for goods and garments from the Far East.
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Your support makes all the difference.The boss of retail giant Next has said attacks on container ships in the Red Sea are set to delay stock deliveries and impact sales if they continue to disrupt the vital Suez Canal shipping route.
Lord Simon Wolfson, chief executive of Next, told the PA news agency that it could take another two to two and a half weeks for its stock to reach the UK if ships are forced to continue bypassing the Red Sea.
Attacks by Houthi rebels on ships in the Suez Canal have seen the world’s largest shipping firms halt shipments through the Red Sea, with the diversions adding thousands of miles to journeys, which is driving up costs and leading to delays.
Next cautioned in its latest trading update that “some delays to stock deliveries” would be likely in the early part of this year if disruption to the all-important Suez Canal shipping route remains ongoing.
Lord Wolfson told PA: “It could add another two to two and a half weeks to lead times in terms of getting stock to the UK.
“Because the ships have to travel further, there will be some level of surcharges.
“It will impact on sales if this persists for a long time, but not dramatic levels.”
He added that the delays would impact all clothes and goods from the Far East, but stressed these would be “manageable”.
Concerns are mounting across the retail sector over the impact of the Red Sea shipping woes on costs, with fears it could push up prices for UK shoppers.
Next forecast that its prices would remain flat over the year to January 2025 as it said its own costs were set to be stable for the first time in three years.
But Lord Wolfson said cost pressures, such as higher wage bills due to the increased National Living Wage, meant it would not be able to lower price tags.
He said prices “would’ve been moving down, but we’re having to hold them flat” due to an extra £60 million wage bill expected over the year ahead.
The comments came as Next hiked its profit outlook for the fifth time in less than a year after better-than-expected festive sales.
The retail giant saw full-price sales jump 5.7% higher over the nine weeks to December 30, with growth of 10% in both of the final two weeks before Christmas Day.
It is now forecasting full-year sales to rise by 4% as it said January trading is also set to be better than expected.
Shares in the group lifted 5% as it upped its profit forecast to £905 million for the year to January 27, which would be a 4% rise on 2022-23 and compares with guidance for £885 million given in November.
The group is also predicting a 5% rise in underlying group pre-tax profits to £960 million for the year ahead on full-price sales up 2.5%, or 6% including recent acquisitions.
On the face of it, the consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties
Next said trading in the run-up to Christmas was better than expected for across its stores and online, with sales up 0.6% and 9.1% respectively in its Christmas quarter to December 30.
The firm said consumers are set to be boosted in 2025 as wages finally outstrip inflation.
Next said: “The consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties.”
It cautioned there may be increased unemployment over the coming year, while many homeowners still face higher mortgage rates as they come off fixed deals.
“The one thing we’re nervous about next year is employment and whether it will be able to remain as strong as it has been,” said Lord Wolfson.