FASHION retailer Next has warned that price hikes and staff shortages could impact its delivery operations in the run-up to Christmas.

Some areas of Next's business have begun to come under pressure from a lack of foreign workers, particularly in logistics and warehousing, which may affect its delivery service going into the peak festive season.

The group's chief executive Simon Wolfson is a prominent Brexit supporter and is now calling on the UK Government to ease immigration rules and take a "decisive approach to the looming skills crisis".

“We anticipate that, without some relaxation of immigration rules, we are likely to experience some degradation in our service in the run-up to Christmas,” the group said.

Wolfson said that the next day delivery cut-off may have to be brought forward from its current 11pm time but said deliveries "won't grind to a halt".

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The group also cautioned over price hikes amid supply chain issues, with higher freight costs pushing up prices by about 2% in the first half of the year and further increases set to come.

Next sees prices rising by around 2.5% on average in the first half of 2022, with fashion price tags expected to lift by 1% and homewares by 6% as bigger products take the brunt of the higher freight costs.

Wolfson said the recent move to introduce temporary visas for EU lorry drivers was “late but welcome” and made a plea for the UK Government not to wait until shortages of skills in other areas becomes a crisis.

Next said: “The HGV crisis was foreseen and widely predicted for many months.

“For the sake of the wider UK economy, we hope that the Government will take a more decisive approach to the looming skills crisis in warehouses, restaurants, hotels, care homes and many seasonal industries.

“A demand-led approach to ensuring the country has the skills it needs is now vital.”

Wolfson added: “I hope that going forward the Government looks further into the future and doesn’t wait until the crisis is upon it.”

The comments came as the group hiked its full-year sales and profit forecasts for the fourth time this financial year after a summer sales surge, helping shares lift 3%.

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It reported pre-tax profits of £346.7 million for the six months to July 31, down 16.5% on a year ago but up 5.9% on 2019 levels.

Full-price brand sales jumped 62% year-on-year and were 8.8% higher versus 2019.

Next saw full-price sales soar in June and July, up by a better-than-expected 20% against 2019 levels, while it said the second half had also got off to a strong start.

The group now expects annual sales to rise 10% on 2019 levels and pre-tax profits to reach £800 million for the year to January, up 6.9% on 2019 and above previous guidance of £764 million.