Next raises profit forecast after strong Christmas sales

Fashion retail chain Next has raised its profit forecast after reporting stronger-than-expected sales during the crucial Christmas period.

But the retailer warned that sales in the UK were unlikely to grow as quickly this year; This was due in part to rising unemployment, which was expected to weigh on consumer spending.

Next said full-price sales rose 10.6% in the nine weeks to December 27 compared to the previous year, a bigger increase than expected.

High festive sales mean the retailer now expects to report annual profits of £1.15bn, slightly above its previous forecast. This is the fifth time Next has raised its profit forecast in the past year.

Next said full-price sales in the UK, which exclude items sold with discounts or discount offers, rose 5.9% over the Christmas period, while international revenues rose 38.3%.

But for next year, the retailer expects sales growth to slow due to a number of factors, including continuing “pressures on employment in the UK”, which it says will “reflect on the consumer economy as the year progresses”.

While it expects UK sales (covering both stores and online) to grow by 6.6% in the current financial year, it forecasts growth of just 1.6% for 2026-27.

Bloomberg Intelligence retail analyst Charles Allen told the BBC’s Today programme: “Next has been constantly warning that there has been a slight increase in unemployment, particularly among young people, and they remain concerned that this is something that could slow sales.”

Next also said it would be difficult to match 2025’s performance due to “very favorable summer weather” and the boost it received after rival chain Marks & Spencer suffered a cyber attack.

Allen said overall Next’s results showed that “when it comes to peak season, people are going out and spending in the UK”.

But he said spending had concentrated in the last few weeks before Christmas, probably because people were waiting to see what would be announced in the Budget.

“I think people wanted to see what their finances would look like,” he said.

Emily Salter, chief retail analyst at GlobalData, said Next had set the bar high for the UK retail industry with its strong performance over Christmas.

He said the company will be one of the best performers among non-food retailers during the festive period, helped by its product range.

“The retailer is known for more durable categories like children’s clothing, allowing shoppers to easily switch to more premium brands as better-off consumers focus on buying fewer, higher-quality items for clothing and home,” he said.

Catherine Shuttleworth, owner of marketing agency Savvy, said Next was achieving good sales “at a time when consumer confidence is quite subdued”.

He told the BBC he expected another “safe” performance from the chain this year, adding: “It’s one of those organizations in the retail sector that knows its customers quite well.”

Looking at the wider picture for retail at Christmas, Shuttleworth said he thought the results would be “stable” rather than “perfect”.

While we expect food retailers to perform well, the clothing sector will be more diverse and there will be rumors of “some retailers leaving the High Street altogether” over the next few weeks.

On Monday, the company behind retail chains Claire’s and The Original Factory Shop He said it would put them into administration and put 2,500 jobs at risk.