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Next he warned that its sales and profit growth will slow this year as tax increases in the UK Budget hit one of the country's biggest retailers and the wider economy.
FTSE 100 companies on Tuesday set the tone for the October Budget, when chancellor Rachel Reeves increased the amount employers contribute to national insurance and cut the minimum wage they start paying.
The measures, along with increases in the national living wage and general wage inflation, will cost £67mn in the current financial year, Next said, as he warned of the potential impact on the wider economy.
“Increases in employer tax, and their potential impact on prices and employment” will begin to filter into its sales growth, according to Next, which has 458 stores in the UK.
It expects UK GDP growth of 1.4 per cent next financial year, up from 2.5 per cent in the 12 months to 28 December.
The retailer expects profit growth of 3.6 percent in the year to January 2026, down from 10 percent in the 12 months to January 2025.
Despite Next's warning next year, the retailer's sales during the main Christmas period exceeded the group's forecasts.
Total retail sales rose 6 percent in the nine weeks to December 28, or 5.7 percent when excluding the impact of sales at the end of the period compared to last year.
The figures beat Next's previous guidance of a 3.5 per cent increase last year and will push the chain's pre-tax profits to just over £1bn in the year to January.
Shares of the latter rose 2.7 percent in early trade.
Next he said the chancellor's move to lower the salary threshold at which businesses start paying NI contributions from £9,000 to £5,000 was one of the most significant costs, totaling £20mn.
It said it would try to address these “abnormally high” costs by streamlining operations and raising prices by 1 per cent, which was “unacceptable, but below overall UK inflation”.
In a survey of 5,000 businesses by the British Chambers of Commerce published this week, around 55 percent of companies say they plan. increase prices in the next three months.
Richard Chamberlain, market analyst at RBC Capital Markets, said he believed Next would benefit from “real income growth in the UK although it will remain sensitive to the outlook for consumer borrowing costs”.