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Next suppliers in price talks

Next has kicked off price negotiations with suppliers to help offset the impact of the weak sterling this autumn

The middle-market chain said prices in store would go up by between 3% and 5% this autumn - far less than chief executive Simon Wolfson’s price rise forecast of between 5% and 10% after its Christmas trading statement in January.

Next group product director Christos Angelides said most suppliers had reduced prices as they wanted to retain their levels of business with Next.
Wolfson added: “We’ve been pleasantly surprised by the reaction of our suppliers. They have been able to do something largely because input costs like the price of cotton or energy costs have come down.”

Nevertheless, Wolfson conce-ded there would have to be price increases across the high street this autumn and said the impact of inflation was one of his main longer-term concerns.

Angelides said Next had also rationalised its supply base on some products to help it get better prices by placing larger orders with fewer factories.
He added that there was an opportunity to introduce new entry-level price points on new product lines, but stressed that these would be items with a fashion edge rather than “basics”.

Next will also assess its offer and make decisions on which garments can handle a price rise and which cannot. However, Angelides stressed Next would “work on margin on every line”.

Angelides said autumn 09’s shift towards tailoring trends could play into the retailer’s hands - Next is well known for its tailoring offer. However, he warned: “Tailoring is more expensive than a T-shirt. And the question remains whether shoppers will be prepared to spend that little bit extra.”

Next’s figures

Performance for the year ended January 31:
Like-for-like retail sales -6.5%
Total retail sales -2.5% to £2.19 billion
Next Directory sales +2.1% to £816.4 million
Profits (retail/Directory/international/sourcing) -7% to £446.4m
Wolfson’s outlook for 2009:
Like-for-likes -6% to -9%
Next Directory flat to +2%

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