Next Plc said it could be hit by higher prices and staff shortages in the run-up to Christmas despite strong post-lockdown sales.
The fashion retailer said positive sales had continued despite “ significant stock shortages ” caused by Covid disruption to international supply chains.
It said sales had been brisk thanks to things such as pent-up demand and people having more to spend because they had not been on overseas holidays.
But it warned: “The impact of these factors must inevitably diminish as time goes on.
“It also seems likely that increases in the cost of living, along with the potential effect of seasonal labour shortages on our delivery service, may moderate demand in the months ahead.”
The Leicestershire-headquartered retailer said supply chain issues had seen higher freight costs push prices up by about 2 per cent in the first half of 2021 and expected prices to rise around 2.5 per cent in the first half of 2022.
Stock levels, it said, were 12 per cent down on two years ago – but it said it still had enough choice to satisfy customer demand.
Areas of the business coming under pressure from staff shortages included logistics and warehousing, which it said could affect its delivery service going into Christmas.
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It said: “Without the contribution of overseas workers to assist with these peaks, we suspect customer deliveries may take longer to arrive as we go into the peak trading season.”
Next also called on the Government to take action on the lorry driver crisis and wider skills shortages.
It said: “We anticipate that, without some relaxation of immigration rules, we are likely to experience some degradation in our service in the run-up to Christmas.
“The cost of living, along with the potential effect of seasonal labour shortages on our delivery service, may moderate demand in the months ahead.
“The HGV crisis was foreseen and widely predicted for many months.
“For the sake of the wider 海角视频 economy, we hope that the Government will take a more decisive approach to the looming skills crisis in warehouses, restaurants, hotels, care homes and many seasonal industries.
“A demand-led approach to ensuring the country has the skills it needs is now vital.”
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The comments came as the group reported pre-tax profits of £346.7 million for the six months to July 31, down 16.5 per cent on a year ago, but up 5.9 per cent on 2019 levels.
Total sales for the half year were up 7.6 per cent on the first half of 2019 at £2.2 billion. They were up more than 63 per cent on the first six months of 2020, when the first lockdown had a huge impact on trading.
Next increased its full-year sales and profit forecasts for the fourth time this financial year after a “materially” better-than-expected performance over June and July.
Full-price sales were up 20 per cent against 2019 levels in the last eight weeks of the first half, while it said the second half had also got off to a strong start.
But it cautioned the performance may be hindered by rising costs in the wider economy, the supply woes and a potential hit to its delivery service from staff shortages.
Shares in Next were up 2.75 per cent at £83 this morning.
Russ Mould, investment director at online stockbroker AJ Bell, said the trading update was a good indication of the headwinds the retail sector is facing at present.
He said: “Next is a best-in-class 海角视频 retailer so if even it is struggling to navigate staffing and supply chain issues then you know its peers will be really under the pump.
“The company is also very upfront with its guidance, so you know you are getting an unfiltered version of events.
“Trading may have been better than expected in recent months, supporting an increase in full year guidance, but the company is clear on the risks it faces heading into the key Christmas trading period.
“While Lord Wolfson and the rest of the senior management at Next do have a useful habit of painting a pretty dark picture for investors only for the reality to be a lot sunnier, the view that sales are being artificially inflated by pent-up spending and people not being able to use their money for overseas holidays seems a reasonable one.
“Next was quick to repay the Government support it benefited from during the pandemic. It is no stranger to self-reliance, so its call for a relaxation of immigration rules to address a shortage of workers and HGV drivers carries weight.
“Regardless of the immediate challenges, Next’s exceptional retail skills are likely to see it emerge from potentially a difficult few months’ trading in an even stronger market position.”