Next maintains guidance as online sales keep growing

Bloomberg

The cost of baby clothes could rise in the UK if the country crashes out of the European Union without an agreement, according to retailer Next Plc.
Few sleep-suits and other newborn items are made in the UK, leaving these clothes exposed to tariffs under a temporary regime unlike some women’s garments, Next Finance Director Amanda James said in an interview.
“If you import a baby grow under the temporary tariff regime, you would still pay duty and that doesn’t seem to make any sense,” James said.
“There doesn’t seem to be any sort of pattern as to why baby grows have their tariffs left on and a lady’s jacket doesn’t.”
Next urged the government to review the list of items that will face temporary tariffs as it reported half-year results. The cost of men’s underpants and jackets may also go up under a list drawn up by the UK department for international trade. Fears of product shortages and supply-chain disruptions were reinforced last week when UK Prime Minister Boris Johnson published the government’s worst-case scenario for a disorderly Brexit.
Concerns about the EU divorce have prompted consumers to slow spending, a change Next has weathered better than rivals by investing in e-commerce. The company’s website sells baby grows from 7 pounds ($8.7).
Discrepancies in tariffs on apparel aren’t the only cause for concern for the Leicester, England-based clothier. Autumn sales got off to a slow start, the company said, clouding near-term prospects at one of the country’s best-performing retailers.
Baby and children’s clothes are a cornerstone of Next’s growth strategy. The retailer struck a new product license agreement with Ted Baker Plc in August with the aim of driving sales in that category.
Overall, Next said even if the UK and the EU are unable to reach a divorce deal, Brexit doesn’t pose a material threat to its operations or profitability. In fact, the tariff regime would reduce the company’s import duty by 25 million pounds.