Next surges after another profit upgrade as online marketplace thrives

Next PLC (LSE:NXT) shares surged close to a new all-time high on Wednesday after the fashion and homewares retailer upgraded its profit outlook for 2026 on the back of stronger second-quarter sales.

The FTSE 100 fashion and homewares retailer said full-price sales rose 9.2% in the 13 weeks to 1 August, well above its previous prediction of 4% growth in May.

Pre-tax profit guidance for the 2026/27 financial year was hiked by £25 million to £1.2 billion, representing year-on-year growth of 7.3%.

This would not come as a huge surprise to investors or followers of a company that has issued 19 profit upgrades since the beginning of its 2024 financial year, according to one broker, and had already raised its adjusted pre-tax profit guidance twice to £1.218 billion before today.

Sales in the quarter were £70 million ahead of Next’s previous indication, comprising a £19 million beat in the UK and £51 million from overseas markets.

The additional sales contributed £15 million of the profit upgrade, while better-than-expected returns from equity investments added £10 million.

Next attributed the top-line performance to UK weather matching last year’s warm summer, which it said it had not anticipated. The "release of some pent-up demand" in the Middle East and Northern Europe following a weaker first quarter also helped, as did higher marketing spending.

Full-price sales are now expected to rise 6.3% over the year, up from previous guidance of 5%. Next maintained its forecast for 5% growth during the second half.

International online sales surged 36.9% in the second quarter, taking first-half growth to 23.9%. By contrast, total UK sales increased 2.8%, as 0.3% decline in stores was offset by 5% online growth.

Next expects international growth to moderate to 14% in the second half as comparisons become tougher.

The company also increased its planned share buybacks by £14 million to £524 million.

Shares rose almost 7% to just above 15,800p in early trading, which would be a new all-time high were it not for a short spike above 16,000p one day last month.  

Analysts at Peel Hunt said the update "delivers a familiar theme, with another £25m boost to guidance from full-price outperformance in the UK, but particularly strong performance across international markets".

They noted that UK full-price sales increased by 2.8%, driven by 13.2% growth in the Label platform, with Next own-brand online sales down 1% and stores were flat.

The heatwave created a "strong bounce after the weak first quarter", while international growth was driven by higher levels of marketing spend, "with management noting that Next will increase spend where returns justify it".

"Comparatives will likely become more challenging from August when Next laps the anniversary of the ZEOS distribution launch."

  ** UPDATE: Adds share price and broker comments **