By James Davey
LONDON (Reuters) - British clothing retailer Next's sales growth will likely be moderated if disruption to shipments through the Suez Canal due to attacks by Iran-backed Yemeni Houthi militants in the Red Sea continues through 2024, its boss said on Thursday.
Next CEO Simon Wolfson said the issue, if it persists, will result in a delay of stock arriving in the United Kingdom of around two and a half weeks as shipments are diverted around Africa's southern Cape of Good Hope.
He said Next, which sources the majority of its products from Asia, could mitigate this through earlier ordering or using some air freight.
"It will be a factor if it continues, it will moderate sales growth in that we'll have slightly less stock in the country than we would like," Wolfson told Reuters after the retailer updated on Christmas trading which drove its shares up 5%.
Global shipping firms Maersk and Hapag-Lloyd said on Tuesday their container ships would continue to avoid the Red Sea route following a weekend attack on one of Maersk's vessels.
Next is one of the first major retailers to comment on the disruption after Inter IKEA in December warned of potential product shortages.
Wolfson, however, said the issue needed to be put in the context of Next's supply chains.
"If I look at the amount of stock we've got today, it's probably about 15 to 17 times the amount of stock that we sell in a week," he said. "So if two weeks of that is late, it means your stock levels are not optimal but it's not like you've got nothing on the shelves."
He said consumers would notice in that some of the best selling lines might run out and some sizes they were hoping to find might not be available.
Wolfson said Next has made an allowance in its financial guidance for the 2024/25 year for higher sea freight costs.
Despite that, Next does not expect to raise selling prices for consumers for the spring/summer season.