Next delivers latest profit outlook hike after festive trading boost

Next has increased its full-year profit outlook once again after a better-than-expected festive performance, but remains cautious over the outlook amid a worsening UK jobs market.

The high street retail giant, which has about 900 stores, reported a 5.9% rise in UK full-price sales for the nine weeks to December 27, while overseas sales surged by 38.3%.

It now expects pre-tax profits to rise by 13.7% to £1.15 billion for the year to the end of January on full-price sales up 10.7%.

The group had previously guided for profits to increase by 12.2% to £1.14 billion and sales to rise 9.7%.

But Next forecast a slowdown in growth for the following 2026-27 financial year as it sees jobs market woes weighing on consumer spending, while it is also set to come up against tough trading comparatives and more moderate overseas sales.

The FTSE 100 firm, which is led by chief executive Lord Simon Wolfson, is predicting pre-tax profits will rise by 4.5% to £1.2 billion on sales up 4.5% at £5.9 billion.

On recent Christmas trading, it said: “Growth in the UK slowed but not by as much as we expected.

“We believe that sales benefited from higher stock levels than last year, when supplier deliveries were delayed by disruption in Bangladesh and global freight networks.”

It had previously forecast UK sales to ease back to 4.1% in the Christmas period, but saw its performance beat expectations as online growth lifted to 9.1%, offsetting a more muted 1.4% sales rise in its store estate.

The company – widely seen as a bellwether for the UK high street – has now increased its profit guidance by five times in its past financial year as trading has consistently smashed forecasts and after it benefitted from disruption at close rival Marks & Spencer following its crippling cyber attack in the spring.

However, Next remains cautious over the outlook and warned once again over the impact of rising unemployment, predicting that UK online and store sales growth will pull back sharply to 1.6% in 2026-27.

It said: “Continuing pressures on UK employment are likely to filter through into the consumer economy as the year progresses.”

The firm is also expecting overseas sales to grow by a more moderate 16.5% as it reins in recent high spending on marketing.

Shares in the group lifted 2% in morning trading on Tuesday.

Retail expert David Hughes, at Shore Capital, said Next was continuing to trade well, though he noted the chain’s caution over the outlook.

He said: “Equally important to the recent figures is Lord Wolfson’s view on the outlook for Next and the mood music in the UK.

“This caution is understandable. Following what were virtually perfect trading conditions last spring the apparel sector will be facing into tough comparisons in the first half of 2026.

“Meanwhile the 4.1% increase in the national living wage will see labour costs rise again, consumer confidence remains subdued and unemployment is on the rise.

“While we expect the excellent Next to continue do better than most, this tough backdrop may make future upgrades harder to come by.”