Next Upgrades Annual Profit Guidance to £1.15 Billion Pounds After Bumper Christmas Trading

Next has emerged as a clear winner from the challenging Christmas trading period, raising its profit forecast following strong online expansion and impressive overseas performance. The FTSE 100 retailer reported a 10.6 per cent increase in full-price sales over the nine weeks to December 27, substantially exceeding City analyst expectations of 7 per cent growth. Share prices responded positively, climbing 675 pence or 5 per cent to close at £142.65 on Tuesday.

The clothing and homeware chain now anticipates delivering full-year profits of £1.15 billion for the year ending January, representing an increase of £15 million on previous guidance and growth of 13.7 per cent year-on-year. This latest upgrade represents the fifth profit revision since the company initially guided to £1.046 billion at the start of 2025. The consistent pattern of raising and beating expectations has driven the share price up 37 per cent over the past twelve months, significantly outperforming the FTSE 350 retail index which has risen 10.5 per cent in the same period.

The retailer, operating approximately 700 shops globally, has demonstrated disciplined financial management under Lord Wolfson of Aspley Guise. The company successfully transitioned from its traditional catalogue business into a dominant online operation that leverages physical stores as critical logistics hubs. Its Total Platform initiative, a retail-as-a-service model hosting third-party brands on its digital infrastructure, has driven high-margin revenue growth. The company is reportedly considering a bid for LK Bennett, the struggling womenswear retailer facing potential collapse.

During the nine-week trading period, United Kingdom sales rose 9.5 per cent, substantially exceeding previous guidance of 4.1 per cent. Management attributed the outperformance to higher stock levels compared with the previous year, when supplier disruptions in Bangladesh and global freight network complications constrained availability. International online sales climbed 38.3 per cent, beating guidance of 24.2 per cent, with particularly strong performance through its main European aggregator Zalando and increased profitable marketing expenditure.

Looking ahead, Next adopted a more measured tone regarding the coming year. The company forecasts full-price sales growth of 4.5 per cent and pre-tax profit of £1.2 billion, representing growth of 4.5 per cent. Management warned that continuing pressures on United Kingdom employment are likely to impact consumer spending as the year progresses. The group expects to generate substantial cash, with £768 million anticipated to be available for dividends and shareholder returns, equivalent to 4.8 per cent of current market capitalisation.

Analyst commentary reflected recognition of the company’s consistent performance. RBC Capital noted that Next continues to offer investors a compelling online growth and cash returns narrative, benefiting from its diverse brand portfolio and strong omnichannel capabilities. Shore Capital maintained its hold rating, with analyst David Hughes acknowledging strong Christmas performance while noting that tougher year-on-year comparatives and cautious consumer conditions justify a measured stance. Industry observers suggested that the strong Next performance, whilst not necessarily indicative of broader retail sector trends, provides confidence in outcomes for premium retail operators.