Next has warned that it may have to increase prices 6% by 2020 to offset the cost of implementing the government’s national living wage.
The retailer, which currently pays staff £7.04 per hour, has estimated that the cost of implementing the £7.20 living wage next year will be £2m.
Next outlined its views in a trading update this morning, in which it revealed pre-tax profit rose 7.1% to £347.1m in the half year to July.
Full-price Next brand sales for the first half of the year were marginally ahead of expectations, up 3.5%. Lower markdown sales meant total Next brand sales were up 3.3% to £1.9bn.
Next Directory sales were up 8.2% to £767m. Retail sales edged up 0.2% to £1.1bn.
There is no change to the full-year sales and profit guidance.