Next raises profit forecast after strong Christmas sales

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

However, the retailer warned that UK sales were unlikely to grow as quickly this year, partly due to rising unemployment which is set to weigh on consumer spending.

Next said full price sales in the nine weeks to 27 December were up 10.6% compared with a year earlier, which was a bigger rise than it had predicted.

The bumper festive sales means the retailer now expects to report annual profits of £1.15bn, slightly ahead of its previous estimate. It is the fifth time Next has increased its profit forecast in the past year.

Next said full-price sales – which excludes items sold in sale or clearance offers – in the UK rose by 5.9% over the Christmas period, while international revenues jumped by 38.3%.

But for the coming year, the retailer expects sales growth will slow due to a number of factors, including continuing “pressures on UK employment” which it said were likely to “filter through into the consumer economy as the year progresses”.

While it expects UK sales – covering both stores and online – to have risen by 6.6% in the current financial year, it is only forecasting growth of 1.6% for 2026-27.

Charles Allen, retail analyst at Bloomberg Intelligence, told the BBC’s Today programme: “Next has been consistently warning about the slight edge up in unemployment, particularly among younger people, and they remain concerned about that as something that could slow sales down.”

Next also said it would be tough to match 2025’s performance as it had been helped by “very favourable summer weather” and a boost it received when rival chain Marks & Spencer was hit by a cyber attack.

Allen said that overall, Next’s results showed that “when it came to the peak season, people did go out and spend in the UK”.

But he said spending was bunched in the last few weeks before Christmas, which was probably due to people waiting to see what was announced in the Budget.

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

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

She said the company was likely to be one of the top performers among non-food retailers over the festive period, helped by its range of products.

“The retailer is well-known for more resilient categories such as childrenswear, and the fact that it allows shoppers to easily trade up to more premium brands, as better-off consumers focus on buying fewer, higher quality items in clothing and home,” she said.

Catherine Shuttleworth, owner of marketing agency Savvy, said Next had enjoyed good sales “in a time where consumer confidence has been pretty suppressed”.

She told the BBC she expects another “sure-footed” performance from the chain this year, adding: “Next is one of those organisations in retail that knows its customers pretty well.”

Looking at the wider picture for retail over Christmas, Shuttleworth said she thought results would be “steady” rather than “stellar”.

While she expects food retailers to have done well, the clothing sector will be more varied and talk “about some retailers leaving the High Street for good” will be heard over the next few weeks.

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