The British high street giant Next has announced a significant upgrade to its annual profit forecast, now expecting to surpass £1.1 billion, following a bumper Christmas trading period that exceeded expectations. However, the retailer has simultaneously issued a cautionary note, warning that growth in the coming year is set to slow as pressures on the UK job market begin to impact consumer spending.
Festive Sales Surge Beyond Forecasts
In a crucial nine-week period leading up to 27 December, Next's UK sales rose by a robust 5.9%. This performance was notably stronger than the 4.1% growth the market had anticipated. The company attributed part of this success to having higher stock levels compared to the previous year, when deliveries were hampered by disruptions in Bangladesh.
The positive trend continued into the end-of-year sale, where the retailer saw an additional £30 million in sales beyond its predictions. As a result, Next has upgraded its full-year profit guidance by £15 million, marking its fourth such upgrade in just nine months.
Full-Year Performance and International Growth
For the full year to the end of January, Next now expects total sales to increase by 10.7% to approximately £5.6 billion. Pre-tax profits are projected to rise by 13.7% to around £1.15 billion. This is an improvement on its previous forecast, which pointed to a 12.2% profit increase to £1.14 billion.
The FTSE 100 company also reported exceptional performance in its overseas operations. Sales outside the UK soared by 38%, dramatically outpacing the 24% growth it had forecast. This surge was driven by increased marketing expenditure and a successful partnership with the online retail specialist Zalando.
A Brighter Spot in a Challenging Sector
Next's strong results provide a welcome boost for the UK fashion retail sector, which has faced significant headwinds. A warm autumn and early winter, coupled with ongoing pressure on household budgets from high energy and food bills, had led to concerns. Data from Worldpanel by Numerator indicated that UK fashion sales actually fell by 1.4% in the four weeks to 7 December.
The sector's fragility was highlighted on the same day Next reported, as two other retailers owned by Modella Capital—Claire's and The Original Factory Shop—announced they were on the brink of administration, putting 2,550 jobs at risk.
Outlook Cools for the Year Ahead
Despite the current success, Next has tempered expectations for its next financial year. It forecasts sales growth will slow to around 4.5%. The company stated that "continuing pressures on UK employment are likely to filter through into the consumer economy as the year progresses."
Next also acknowledged that its stellar performance in 2025 was aided by several one-off factors. These included an unusually sunny summer and the temporary online shutdown of rival Marks & Spencer for several weeks following a cyber-attack at Easter. Furthermore, the company noted that the explosive growth from its overseas websites is likely to moderate as it does not plan to increase marketing spending at the same rate, and operational changes that boosted product availability for online sellers are now largely complete.
The retailer's update presents a mixed picture for the UK high street: a demonstrable winner in Next, which also holds the UK rights for Gap and Victoria's Secret and stakes in brands like Reiss, but clear signals that consumer resilience will be tested in the months to come.
