Next raises profit guidance but warns that UK growth will slow
Next has raised its annual profit outlook after sales exceeded expectations in the run-up to Christmas.
The fashion and home retailer said its full price sales were up 6% in the nine weeks to 28 December compared to a guidance of 3.5%, although it explained that the number was “slightly flattered” by the timing of its end-of-season sale. Adjusting for this, underlying full price sales were up 5.7% in the period.
Next said the over achievement added £27 million to full price sales. However, online sales growth increased at the expense of growth in retail stores, where there was a decline of 2.1% in the period.
The performance has led the retailer to forecast that group pre-tax profit for the year to January 2025 will grow by £5 million to £1.010 billion. This means that profit is expected to be up 10% on the previous year.
For the year ending January 2026, full price sales growth is forecast to be 3.5% while pre-tax profit is expected to increase by 3.6% to £1.046 billion. Next said it believes UK growth is likely to slow in the year as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.
The retailer said it faces a £67 million increase in wage costs following the Government’s Budget measures, which means it will need to push through an “unwelcome” 1% increase in prices to help offset this.
