British fashion retailer Next has raised its profit forecast for the year ending January 2026 after reporting stronger-than-expected full-price sales over the key Christmas trading period.
The company has raised its guidance for full-year profit before tax by £15m ($20m) to £1.15bn, representing a year-on-year increase of 13.7%.
In the nine weeks to 27 December, full-price sales increased by 10.6% compared with the previous year, exceeding the retailer’s earlier guidance of 7.0%.
Growth was led by international online sales, which climbed 38.3%, while UK sales rose by 5.9%.
The stronger performance, together with additional expected sales in January, is set to add £51m to full-price sales for the year.
Post-tax earnings per share are now forecast to grow by 16.1%.
Providing its first outlook for the year ending January 2027, Next said it expects full-price sales to grow by 4.5%, with group profit before tax forecast at £1.20bn, also up 4.5%.
Assuming no further acquisitions, cash available for distribution to shareholders, including ordinary dividends, is projected at £768m. This is equivalent to 4.8% of the group’s current market capitalisation.
The company said anticipated shareholder distributions, combined with forecast EPS growth of 4.3%, imply a total shareholder return of 9.1%, assuming a constant price-to-earnings ratio.
So far in the current financial year, the total UK full-price sales have risen by 6.6%, with online channels continuing to outperform physical stores.
International online sales were up 33% year-to-date and 38.3% in the nine weeks to 27 December, ahead of expectations.
Next said international growth benefited from higher-than-anticipated profitable marketing spend and stronger sales through European aggregator Zalando, following the move to ZEOS’ platform in August, which improved stock availability across Europe.
The retailer also reported that the volume of stock in its end-of-season sale was 5% higher than last year.
However, stronger clearance rates offset the impact, adding £30m to group sales guidance while remaining profit neutral.
The financial year ending January 2026 is a 53-week year, with the additional week expected to contribute around £22m to profit before tax and approximately £20m to cash flow.
Looking ahead to 2026/2027, Next said it expects growth to moderate, citing tougher UK comparatives, pressure on domestic employment, easing overseas growth after exceptional marketing-driven gains this year, and the absence of one-off improvements in international stock availability that supported current-year sales.
