Next PLC (LSE:NXT) attracted more investors last week when it nudged up its profit outlook, but analysts warn that rising geopolitical risks are clouding the near-term picture.
The retailer finished the 2026 financial year ahead of expectations and has nudged guidance higher (to about £1.21 billion of pre-tax profit), prompting Shore Capital to retain its 'buy' rating.
However, the broker struck a cautious tone, highlighting lower visibility as the key issue.
The group faces tougher comparisons in the UK over the spring and summer, while the FTSE 100 group is anticipating that disruption from the Middle East conflict will weigh on both demand and costs, with £15 million set aside to cover likely additional costs over the next three months but with savings elsewhere meaning profit guidance was unaffected.
Shore Cap analyst David Hughes noted that sales in the region have already deteriorated sharply, with growth swinging from about 15% to a decline of around 20%, though additional costs such as freight have been factored into guidance.
Despite this, he said the longer-term case remains intact. International online and the LABEL platform are seen as the main growth drivers, supported by low market share overseas and expansion of higher-margin owned brands.
The group is also stepping up investment in warehouse capacity to support online growth, while maintaining plans to return around £500 million to shareholders.