- Q2 sales up 10.5%
- Profit outlook hiked again
- But lower UK growth expected
Best-in-class British retailer Next (NXT) delivered its third upgrade to full-year 2026 profit guidance in 2025-to-date after warm weather boosted sales of seasonal ranges in the second quarter and the company benefited from disruption at arch-rival Marks & Spencer (MKS).
The FTSE 100 fashion-to-homewares seller delivered a 10.5% rise in full-price sales in the 13 weeks to 26 July, £49 million ahead of the previously-guided 6.5%, and bumped up its year-to-January 2026 pre-tax profit outlook by £25 million to a shade above £1.1 billion as a result.
However, Leicester-based Next said it remains cautious for the second half due to tough comparatives and with the effects of April’s National Insurance changes likely to dampen consumer spending, a comment which dragged the shares 1% lower to £121.60 in early dealings.
SUN SHINES ON NEXT
Guided by CEO Simon Wolfson, Next’s sales outperformed on home turf and overseas in the quarter.
‘In the UK, we believe that the overperformance was largely due to better than expected weather and trading disruption at a major competitor’, explained Next, a reference to the recent crippling cyber-attack on Marks & Spencer.
‘International sales grew faster than expected, mainly because our digital marketing proved more effective than anticipated, enabling us to increase profitable marketing expenditure’, added the retail titan, which has just snapped up the Seraphine maternity brand out of administration for £600,000.
STAYING CAUTIOUS
Next remains cautious for the second half, though it did upgrade its second-half sales forecast from 3.5% to 4.5% owning to the rapid growth it is generating overseas. Nevertheless, the company maintained guidance for meagre UK sales growth of 1.9% for the second half, a slowdown on the 7.6% growth seen in the first half, on the basis of weaker consumer confidence, the impact of National Insurance changes and the tougher comparatives ahead.
‘In the UK, we believe we exceeded expectations in Q2 as a result of better summer weather and trading disruption at a major competitor,’ added Next. ‘We do not expect either of these factors to have a material effect in the second half, and so we are not increasing our guidance for UK sales in H2.’
EXPERT VIEWS
Shore Capital’s David Hughes, who has a ‘buy rating on Next, said: ‘While the company strikes a cautious tone on the UK economic outlook, Next’s proven ability to gain market share and trade well through macro-economic uncertainty gives us confidence in the medium term performance.’
Begbies Traynor’s (BEG:AIM) Julie Palmer noted that the warm start to the summer and the disruption at Marks & Spencer gave Next ‘a timely lift, but this performance also highlights how it is one of the most consistent operators in the sector.’
That said, Palmer observed ‘a degree of caution as Next heads into the second half which suggests there could be some trickier times ahead, with lingering cost-of-living pressures and signs of slowing employment growth due to April’s National Insurance changes likely to weigh on spending. While its international operations offer some insulation, UK trading could come under pressure as consumer confidence softens.’
Palmer added: ‘The retailer remains a high street bellwether, but with stormier conditions on the horizon, the coming months will test whether Next can maintain its momentum as we head towards the all-important golden quarter.’
