British fashion and homeware retailer Next has upgraded its annual profit forecast for the fourth time in eight months, reflecting stronger-than-expected trading and continued consumer resilience despite broader economic uncertainty.
Strong Sales and Upbeat Outlook
The FTSE 100 group, led by long-serving chief executive Lord Simon Wolfson, increased its full-year pre-tax profit forecast by £30 million to £1.13 billion after a robust third quarter. The company cited improved stock levels, steady domestic demand, and surging international sales as key drivers.
In the 13 weeks to October 25, Next’s full-price sales rose 10.5% compared with the same period last year, far exceeding expectations. The retailer now anticipates 7% sales growth in the fourth quarter, traditionally its busiest period, supported by stronger product availability and smoother supply chains following last year’s disruptions in Bangladesh and global freight bottlenecks.
Next’s shares jumped 5% in early London trading to a record £140.55, bringing their total rise this year to 45% — a reflection of market confidence in the company’s strategy and financial strength.
Profitability and Shareholder Rewards
Following a year of consistent performance, Next announced it would distribute surplus cash through a special dividend early next year, estimated at £3.10 per share, in addition to share buybacks already underway.
The company has been one of the UK’s most reliable retailers, regularly outperforming its own forecasts. However, management acknowledged that UK sales growth is likely to moderate, slowing from 5.4% in the third quarter to around 4.1% in the coming months as consumers adjust to tighter budgets.
International Growth and Digital Expansion
International operations have become an increasingly important part of Next’s business. Overseas sales surged 38.8% year-on-year in the third quarter, up from 28.1% growth in the first half. The company credited improved logistics and marketing investments for this performance.
Deutsche Bank analyst Adam Cochrane said Next’s cautious outlook on the UK economy was “understandable but has not materialised yet,” adding that the company’s international marketing strategy “delivered better returns than expected.”
Next has also expanded its online marketplace, which includes brands it has acquired or invested in — such as Joules, FatFace, and Reiss — further diversifying its product range and revenue streams.
Economic Headwinds and Policy Concerns
Despite its upbeat results, Next remains wary of the broader economic environment. Inflationary pressures, sluggish growth, and uncertainty surrounding the upcoming Budget announcement by Chancellor Rachel Reeves pose potential challenges for the retail sector.
Wolfson, a Conservative peer, has been vocal about his concerns regarding government policies that have increased employee costs, warning they could strain businesses already facing higher input prices and reduced consumer spending power.
A Steady Performer in Uncertain Times
Even amid cost-of-living pressures and shifting consumer habits, Next continues to demonstrate adaptability and operational strength. Its combination of disciplined management, international expansion, and digital growth has positioned it as one of the UK’s most resilient retail success stories — and one of the few consistently outperforming in a challenging economic climate.
