Next Raises Profit Forecast to £1.15bn After Bumper Christmas Sales
Fashion retail giant Next has increased its profit forecast following impressive sales during the crucial Christmas season. However, the retailer cautioned that growth in UK sales may slow this year, primarily due to rising unemployment that could affect consumer spending.
Key Highlights from Next’s Report
– Sales Growth: Full-price sales over the nine weeks leading up to December 27 rose by 10.6% compared to the previous year, surpassing expectations.
– Annual Profit Expectation: Thanks to the robust festive sales, Next now anticipates annual profits of £1.15 billion, slightly exceeding earlier estimates.
– Profit Forecasts: This marks the fifth adjustment to Next’s profit forecast this year.
– UK Sales Performance: UK full-price sales increased by 5.9% over the Christmas period, while international revenues soared by 38.3%.
– Future Sales Outlook: For the upcoming year, Next projects a sales growth slowdown, with UK sales expected to rise by just 1.6% for 2026-27, down from a predicted 6.6% for the current financial year.
Insights from Market Analysts
Charles Allen, a retail analyst at Bloomberg Intelligence, highlighted the impact of rising unemployment, particularly among younger demographics. He noted, Next has been consistently warning about the slight uptick in unemployment, which could hamper sales growth.
Next also indicated that replicating the stellar performance of 2025 will be challenging due to exceptionally favorable weather conditions last summer and disruptions faced by competitors like Marks & Spencer during a cyber attack.
Emily Salter, lead retail analyst at GlobalData, emphasized that Next has set a high benchmark for the UK retail sector with its Christmas performance. She pointed out that Next excels in resilient product categories, particularly childrenswear, and caters to consumers willing to invest in higher-quality items.
Catherine Shuttleworth, owner of the marketing agency Savvy, stated, Next is one of those organizations in retail that knows its customers pretty well, predicting another sure-footed year for the chain amid suppressed consumer confidence.
Broader Retail Landscape
While Next’s results showcased a peak spending spree in the last weeks before Christmas, other retailers may face a mixed landscape moving forward. Observations indicate that food retailers likely performed well, but the clothing sector’s fortunes may vary widely, with discussions about some retailers potentially exiting the High Street becoming more frequent.
As competition persists, Next’s ability to adapt to consumer trends will be vital as it navigates the challenges ahead in 2023.