Clothing retailer Next raised its annual profit outlook for the third time in five months as it reported better-than-expected second-quarter sales, benefiting from warm weather and disruption at cyberattack-hit rival Marks & Spencer.
Next has around 460 stores in the UK and Ireland and an online presence in over 70 countries selling the Next brand and more than 700 other brands. With the United Kingdom accounting for around 80 per cent of its sales, it is often considered a useful gauge of how British consumers are faring.
It said on Thursday full-price sales in the 13 weeks to July 26 rose 10.5 per cent versus last year – ahead of guidance of 6.5 per cent and compared to growth of 11.4 per cent in the first quarter.
Sales overperformed against Next’s expectations in both the UK and overseas, it said.
The retailer said UK sales growth of 7.8 per cent was largely due to better than expected weather and “trading disruption at a major competitor”, which it did not name.
However, Next’s second quarter overlapped a period where M&S stopped taking online clothing orders following a cyberattack which has cost it £300 million (€347 million) in profit.
Industry data has shown Next to be a beneficiary of M&S’ woes, along with Zara and H&M.
Next said international sales grew a faster than expected 26.4 per cent mainly because its digital marketing proved more effective than anticipated.
Though Next raised its guidance for second half full price sales growth to 4.5 per cent from 3.5 per cent previously, it remained cautious for the period.
It expects UK employment opportunities to continue to diminish, with the effects of April’s employer tax increases continuing to filter through into the economy.
“We believe that this will increasingly dampen consumer spending as the year progresses,” it said.
Reflecting that caution, Next shares were flat on Thursday, having risen 29 per cent in 2025 so far.
“Next is cautious about the second half of the year, but the company has a good track record of under-promising and over-delivering,” Zoe Gillespie, wealth manager at RBC Brewin Dolphin, said.
Next raised its forecast for year to January 2026 pretax profit by £25 million to £1.105 billion. Profit topped £1 billion for the first time in 2024/25. --Reuters
