Ask Onix
Next announces price hikes outside Europe
The UK-based fashion and homeware retailer Next will increase prices by up to 8% in select international markets starting May, citing escalating costs tied to the US-Israel conflict with Iran.
Rising costs and supply chain disruptions
Next expects an additional £47 million in expenses this year due to surging fuel prices and logistical challenges stemming from the Middle East crisis. The company initially projected £15 million in extra costs for the first three months following the outbreak of hostilities in late February.
The Strait of Hormuz, a critical global shipping route, remains effectively closed, disrupting nearly 20% of the world's oil and gas shipments. Iran has pledged to maintain the blockade as long as the US continues its restrictions on Iranian ports.
UK and Europe spared from price increases
Despite the financial strain, Next will not raise prices in the UK or Europe. The company plans to offset the £47 million in additional costs through savings and margin improvements, including better factory-gate pricing. UK price adjustments will remain within the previously forecasted 0.6% increase.
In Europe, currency gains have balanced out rising costs, eliminating the need for price hikes. However, international markets outside Europe will see varying increases, capped at 8%.
Sales performance and recovery
Next reported a 6.2% rise in full-price sales during its first quarter, outperforming expectations. UK sales grew by 4.4%, contributing to an upgraded full-year profit forecast of £1.22 billion, up from £1.21 billion.
International sales dipped when the conflict began but have shown signs of recovery in recent weeks, though growth remains slower than earlier in the year. The retailer noted that trade in the region faced "considerable disruption" but started to stabilize toward the end of the quarter.
Broader retail challenges
Next's relative resilience contrasts with warnings from other European retailers. H&M has cautioned that a prolonged Middle East conflict could further inflate prices and dampen consumer demand. Pandora's CEO, Berta de Pablos-Barbier, told the BBC that high inflation and interest rates have reduced disposable income, weighing on consumer confidence.
"Consumer confidence is not that high today," de Pablos-Barbier said on Radio 4's Today programme.
Berta de Pablos-Barbier, CEO of Pandora
Strategic moves and outlook
Next operates around 700 stores globally, with approximately 500 in the UK. The group also owns brands like FatFace and Cath Kidston and holds stakes in Gap, Victoria's Secret, and Reiss.
Earlier this year, Next acquired shoe retailer Russell & Bromley in a £2.5 million deal to prevent its collapse. In 2025, it also rescued maternity wear label Seraphine from administration. The company forecasts full-price sales growth of 5% for the year.
Despite its strong performance, Next's shares have declined by 5% year-to-date.
