Next PLC (LSE:NXT), the high street and online retailer with a long track record of nudging expectations higher and then beating them, has done so again by upgrading profit guidance after a stronger-than-expected Christmas.
It said full-year profit before tax for the year ending January 2026 is now expected to be £1.15 billion, £15 million higher than its previous forecast. That would be 13.7% up on last year, with earnings per share, the profit attributable to each share, rising 16.1%.
The upgrade follows robust trading in the crucial nine weeks to 27 December, when full price sales rose 10.6%, well ahead of the company’s own guidance of 7.0%. Full price sales strip out discounting and clearance activity and are a good measure of underlying demand.
UK sales increased 5.9%, better than expected, helped by improved stock availability after last year’s supply chain disruption.
International online sales were particularly strong, rising 38.3%, far above guidance, as Next spent more on profitable marketing and benefited from improved stock handling across Europe.
The outperformance, combined with a stronger outlook for January, adds £51 million to full price sales for the year. That was enough for management, famously cautious in its forecasts, to push profit guidance higher.
Total group sales for the year are now expected to reach £6.97 billion, up 10.3%. The figures exclude a one-off £16 million gain from a land sale and the extra profit from the 53rd trading week this year, which will add around £22 million of profit before tax on top.
Looking ahead, Next set out initial guidance for the year to January 2027, assuming more modest growth.
Full price sales are forecast to rise 4.5%, with profit before tax increasing by the same rate to £1.2 billion.
Management warned that UK growth will be tougher to come by, given strong comparatives this year and pressure on employment, while overseas growth is expected to cool from exceptional levels.
Even so, the group expects to generate substantial cash. Assuming no further acquisitions, £768 million is expected to be available for dividends and other returns to shareholders next year, equivalent to 4.8% of its current market value.
For now, the focus remains on finishing the current year strongly. With another upgrade delivered, Next has once again reinforced its reputation for cautious guidance and reliable delivery.