Next has upgraded its full-year profit guidance yet again after sales significantly outperformed expectations in the third quarter.
The fashion retailer reported full-price sales growth of 10.5% in the 13 weeks to 25 October, beating its own forecast by £76m.
Investors will be pleased to see that the strong performance has prompted the company to increase its fourth-quarter sales guidance from 4.5% to 7.0%.
“Next seems to have missed the memo on Britain’s slowdown,” said Mark Crouch, market analyst for eToro.
“The British retail giant has nudged up profit guidance for the fourth time in eight months, after third-quarter full-price sales rose an impressive 10.5%. While rivals have spent the year tripping over rising costs and cautious consumers, Next has managed to glide serenely through it all.”
Next shares were 5% higher at the time of writing as the stock continued its meteoric rise.
International sales proved the standout performer, surging 38.8% against last year. This far exceeded the 28.1% growth achieved in the first half and smashed the company’s guidance of 19.4%.
The company attributed its overseas success to two key factors. Next was able to spend 50% more on digital marketing than planned and achieved improved stock availability by consolidating its European warehousing operations with Zalando.
UK sales rose 5.4%, ahead of the 1.9% guidance but slower than the first half’s 7.6%. Management said they had underestimated the benefit of improved stock levels this year, after deliveries were delayed by disruptions in Bangladesh and global freight constraints last year.
“A double-digit rise in Q3 full-price sales and another profit upgrade show the group’s mix of disciplined inventory control and digital marketing is still working nicely,” said Chris Beauchamp, Chief Market Analyst UK at IG.
“Overseas growth was striking, with online sales up nearly 40%, suggesting its platform strategy has real international traction. The only worry is weakness in the UK as the domestic consumer cools, but even that looks well managed given Next’s track record of navigating downturns.”
Looking ahead, Next expects growth to ease – something it has warned of before, only to produce strong figures.
UK sales are forecast to slow to 4.1% in the fourth quarter as the exceptional first-half conditions normalise. Those earlier months benefited from favourable weather and competitor disruption.
Overseas growth is also expected to moderate to 24.3% in Q4 as the company cycles last year’s dramatic step-up. However, on a two-year basis, the momentum remains strong.
Next anticipates generating around £425m in surplus cash this year. It has already returned £131m through share buybacks but won’t purchase more shares at current prices, as those prices exceed its £121-per-share limit.
Instead, the retailer plans a special dividend of approximately £3.10 per share in January 2026, assuming no acquisitions materialise. The interim dividend of 87p per share will be paid on 5 January.
Total group sales guidance for the full year now stands at £6.87bn, up 8.7% on last year.