Next has warned that customers can expect prices to rise by 5 per cent in the coming year as Sterling continues to lose its value against world currencies. The business has posted its first fall in profits (3.8 per cent to £790.2 million) since the recession, and even its Directory business saw own brand sales fall by 1.8 per cent, but this was offset by 18.9 per cent growth in Directory sales of other brands via its Label offering. The Directory – catalogue and online trading unit – achieved overall sales of £1.7 billion. Total sales including stores had, however, fallen by 2.9 per cent to £2.3 billion. The business had reorganised its buying operations in order to bring new trends to the market more speedily but at the expense of “some of our best selling heartland product from our ranges.” It also cited an increase in costs including £22 million to implement the National Living Wage. It stated too that in the coming year a further £36 million has been budgeted to absorb wage increases, the apprenticeship levy, and energy taxes. Lord Simon Wolfson, chief executive, commented that the trend of consumers being drawn to spend on “experiences”, rather than things, has resulted in overall high street clothing sales falling by 0.3 per cent, against restaurant spending which rose by 11 per cent during the year. He also said that he expected “a continuing squeeze on real incomes in the year ahead.”
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