Retailer Next has warned it expects its prices to shoot up at a faster pace than anticipated as retailers grapple with the effects of surging inflation, exacerbated by the Russian invasion of Ukraine.

The fashion to homeware chain, which trades from 500 stores and online, also used the publication of its full year results to January to say it was expecting an £85m hit to sales in its current financial year as a result of its decision to halt sales in both Russia and Ukraine.

It said that a weaker outlook globally was a factor too behind the new guidance – offsetting strength in its core UK market.

Next forecast full price sales growth of 5% and a pre-tax profit of £850m for 2022/23 – the latter down by £10m on a January estimate.

Please use Chrome browser for a more accessible video player

It reported profits of £823m for the last financial year – a 10% rise on the pre-pandemic year of 2019/20.

The company’s improved UK outlook was based, Next said, on a low jobless rate and strong consumer earnings despite the Office for Budget Responsibility warning on Wednesday that the country faced the largest drop in living standards since the 1950s as a result of surging inflation.

Next revealed in its statement that it was not immune from the rising cost pressures, which have accelerated in the wake of war in Europe and are only expected to intensify as the year progresses.

Spring Statement: As Sunak chooses to pocket £10bn amid the worst cost of living crisis for years, will he have to return in the autumn with more money?

Rishi Sunak defends spring statement after criticism it fails to help the poorest

P&O Ferries chief executive to face questions from MPs

“Inflation in Next’s selling prices in the first half is forecast to be +3.7%”, the company said, adding: “In the second half this figure is now forecast to be 8% (6.5% fashion and 13% on home); this is 2% higher than our January estimate.”

But it admitted: “It would be wrong for Next to imply that it had any special insight into how all these uncertainties will translate into sales growth for the group.

Please use Chrome browser for a more accessible video player

“Our central guidance represents our best guess, based partly on our assessment of the economy but also on our instinct and the evidence we have from our sales so far this year.”

Its outlook for the UK was aided by a better than expected start to the current year for store sales with a sharp reversal of lockdown fashion trends seeing a return to more formal dresswear and a reduction in spending on home and very casual clothing.

Shares rose by 2.6% at the market open.

Related posts:

World Rugby picks bankers ahead of scrum with private investors Tell investors about bid approaches, top fund manager demands The rich revenues and huge debts behind the super league dozen Franchises scrapped and changes to season tickets as part of major revamp to British rail network Used-car marketplace Cinch secures £1bn in expansion race Morrisons hit with fresh £7bn takeover bid by US private equity firm Energy price crisis: What can I do to shield my family from surging bills? ‘Keep your fingers crossed’ strategy leaving smaller energy suppliers out in the cold Poultry, pork and bakery products could disappear from supermarkets ‘within days’ due to CO2 shortage City veteran Gilbert closes in on deal to buy River and Mercantile Royal Mail to cut 700 jobs after Christmas deliveries hit by Omicron disruption Amazon ‘shuts down’ scheme that paid warehouse workers for positive tweets