Next shares gained on Thursday after, true to form, it raised its full-year profit guidance for a second time in weeks as the retailer reported better-than-expected sales figures.
What’s notable about Next’s update today is that it beat its own expectations at home and abroad, underpinning the increasingly international weighting of its business.
The retailer reported pre-tax profit of £569m for the six months to July, up 10.5%, on group sales up 9% to £3.54bn. Full-price sales rose 7.7%, well ahead of the growth it had guided to in March, with earnings per share up 12% and its net margin edging up to 16.1%.
“Next has done what Next does. A 10.5% first half profit rise, a fourth guidance nudge of the year to £1.255 billion, and shares positive at the open. It is the market nodding at a company that has turned conservative forecasting into a competitive advantage,” said Adam Vettese, market analyst for etoro.
Next shares were up 1.5% at the time of writing.
Online and international growth led the results. UK online sales rose 7.4% and overseas full-price sales jumped 17%, more than offsetting a 1.7% dip in its retail stores.
Next said its portfolio of wholly-owned brands and licences, labels it develops alongside the core Next brand, grew strongly, up 32% online in the UK and 82% overseas, and now accounts for 9% of full-price sales at margins comparable to the Next brand. It acknowledged that some of the strong performance reflected two unusually warm summers.
Its international direct-to-consumer business grew 24%, helped by heavier spending on digital marketing, which it said continued to deliver strong returns. The company also set out progress in using artificial intelligence across its operations, including trials of “agentic” AI tools in its technology teams that it said could sharply cut the time taken to write and review software.
On the strength of the half, Next raised its full-year guidance for pre-tax profit by £12m to £1,255m, citing slightly higher sales expectations and additional cost savings in its warehouses.
“Next delivered its first-half results in style, with sales growth accelerating over the period and breezing past the fashion company’s original guidance,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“In the UK, hotter-than-expected weather and more effective marketing saw customers logging in to refresh their summer wardrobes online, helping offset a small decline in-store. But International markets were the biggest contributor to top-line growth, fuelled by pent-up demand in the Middle East and Northern Europe, which helped push total group sales 9.0% higher to £3.5bn.”