Next would have had to increase retail prices by up to 18% if the company had not consolidated its supply chain, according to chief executive Lord Simon Wolfson.
The high street giant increased prices by 8% for spring 11 in the face of rising production costs, but said prices would have escalated further if it had not moved more of its production to Bangladesh, western and northern China and southern India.
Wolfson said: “Wages and commodities continue to rise so we’ve pushed into cheaper territories. We’re placing bigger orders earlier to get better prices.”
He said Next would contain price rises for autumn 11 product to between 8% and 10%, and added that customers had been trading down. The average price of garments sold this season was 6% up on last year, despite an 8% rise in retail prices.
Next posted a 9% rise in pre-tax profits to £551m on sales of £3.45bn in the year to January 29, 2011.