Rachel Reeves’ Budget will impact Next’s profits and growth, the retailer says. (Image: Getty)
The highstreet staple Next has warned sales and profit will slow down in 2025 due to the tax-hungry Budget. The High Street retailer also warned it will raise prices on some clothing to offset “an usually high” £73m increase in staff wages and taxes.
On Tuesday, the shop loved by Brits explained the harrowing impact that the October Budget will have on not just them, but to many retailers across the country. It comes after Chancellor Rachel Reeves announced the increase of the amount employers contribute in national insurance, alongside lowering the earning threshold at which they start paying it.
As well as an increase in the national living wage coupled with a general wage increase, the measures will cost Next £67 million in the current financial year, the retailer warned.
Next said the price rise was “unwelcome” but would offset around £13million in wage and tax costs.
:
Next warns of the chilling effects the Budget will have on the wider economy. (Image: Getty)
The business has 458 stores across the UK which could be heavily affected. The FTSE 100 said “employer tax increases, and their potential impact on prices and employment” would start to filter through into the sales growth of the company.
Next’s forecast for the current financial year sees both sales and profit growth plummet drastically compared to the previous year. It expects UK full-price sales growth of 1.4% in the next financial year, this is down from 2.5% in the year to December 28.
Profit growth will see an even larger stark difference between figures as the retailer predicts just 3.6% for the year to January 2026. This is down from an estimated 10% in the year to January 2025.
:
Next said the chancellor’s choice to lower the earnings threshold, where businesses pay national insurance contributions, from £9,000 to £5,000 was one of the most impactful costs – this totalled £20 million.
However, even though Next has predicted a negative year ahead, the retailer saw their number of sales exceed the group’s forecast over the Christmas period. Their full-price sales rose by a much-needed 6% in the nine weeks to December 28. This figure surpassed the guidance of 3.5% on the previous year.
This means Next will see a pre-tax profit of over £1 billion for the year to January.