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Subsequent has warned that its gross sales and revenue progress will sluggish this yr as tax will increase within the UK Price range hit one of many nation’s largest retailers and the broader economic system.
The FTSE 100 firm on Tuesday laid out the impression from October’s Price range, when chancellor Rachel Reeves elevated the quantity employers contribute in nationwide insurance coverage and likewise lowered the earnings threshold at which they begin paying it.
The measures, together with a rise within the nationwide residing wage and normal wage inflation, would value it £67mn within the present monetary yr, Subsequent mentioned, because it warned of the possibly chilling impact on the broader economic system.
“Employer tax will increase, and their potential impression on costs and employment” would start to filter by way of into its gross sales progress, in accordance with Subsequent, which has 458 shops within the UK.
It expects UK full-price gross sales progress of 1.4 per cent within the subsequent monetary yr, down from 2.5 per cent within the 12 months to December 28.
The retailer expects revenue progress of three.6 per cent for the yr to January 2026, down from an estimated 10 per cent within the 12 months to January 2025.
Regardless of Subsequent’s warning over the approaching yr, the retailer’s gross sales throughout the important thing Christmas interval exceeded the group’s forecasts.
Subsequent’s full-price gross sales rose 6 per cent within the 9 weeks to December 28, or 5.7 per cent when stripping out the impression of its end-of-season sale being timed otherwise to the earlier yr.
The figures exceeded Subsequent’s earlier steering of a 3.5 per cent enhance on the earlier yr and can push the chain’s pre-tax revenue to only over £1bn for the yr to January.
Subsequent’s shares rose 2.7 per cent in early buying and selling.
Subsequent mentioned the chancellor’s transfer to decrease the earnings threshold at which companies begin to pay NI contributions from £9,000 to £5,000 was probably the most important prices, totalling £20mn.
It mentioned it will attempt to offset these “unusually excessive” prices by way of operational efficiencies and by growing costs by 1 per cent, “which is unwelcome, however nonetheless decrease than UK normal inflation”.
In a survey of 5,000 companies by the British Chambers of Commerce printed this week, about 55 per cent of firms mentioned they have been planning to enhance costs within the coming three months.
Richard Chamberlain, a retail analyst at RBC Capital Markets, mentioned he believed that Subsequent would profit from “additional actual wage progress within the UK, albeit it’s going to stay considerably delicate to the outlook for the price of borrowing for the patron”.
