Next raises profit outlook again

Next plc has raised its full-year 2026-27 pre-tax profit guidance by £12 million to £1,255 million. The upgrade marks the fourth time in the current year that the retailer has increased its annual profit target, signalling continued confidence in its earnings outlook despite mixed trading conditions.

Management linked the latest increase to both operational efficiencies and stronger revenue expectations. The company indicated that its revised guidance reflects recent trading trends and cost actions, rather than any one-off items.

Around £7 million of the £12 million uplift in guidance is attributed to warehousing cost savings. These savings are expected to come from ongoing efficiency improvements in the group’s logistics operations, which are helping to support margins.

The remaining roughly £5 million of the upgrade is linked to higher sales expectations. While the company did not break down these sales by channel in its guidance statement, the revision underscores the contribution of top-line growth to the improved profit outlook.

Next has strengthened its expectations for international performance after reporting robust online demand outside the UK. The company has raised its expected second-half international sales growth to 20.5%, reflecting the momentum it is seeing in overseas markets.

International online sales were reported up about 23.9% in the first half, providing the basis for the upgraded second-half growth target. This performance highlights the increasing importance of the international online business within the group’s overall growth profile.

In contrast to its more optimistic international outlook, Next has trimmed its UK second-half full-price sales growth guidance to 2.0%. The company previously expected a higher rate of growth but now anticipates a more subdued environment for domestic demand.

The revised UK outlook reflects pressures from inflation, higher mortgage costs and a softer jobs market. These factors are expected to weigh on consumer spending in the second half, prompting a more cautious stance on UK sales even as group profit guidance moves higher.

Taken together, the changes to guidance show Next balancing cost efficiencies and international strength against a more challenging UK backdrop. Operational savings in warehousing and strong overseas online demand are key supports for the higher profit target.

At the same time, the reduction in UK sales expectations highlights ongoing economic headwinds in the domestic market. The company’s fourth upgrade to profit guidance this year indicates that, so far, these challenges are being offset by gains elsewhere in the business.