Next hikes profit outlook again as UK sales rebound

High street giant Next has upped its annual profit outlook for the second time in less than two months, thanks to surging sales overseas and a rebound in UK trading over recent weeks.

The group, which is led by chief executive Lord Wolfson, reported a 7.1% jump in underlying pre-tax profits to £452 million for the six months to July 27 as total group sales lifted 8%.

It said UK sales rose by just 1%, dragged lower by its Next brand ranges, which saw sales fall as much as 7.4% in June because of poor demand for seasonal collections amid the cooler early summer weather.

But overseas sales surged 23% in the first half, and the firm also said UK trading since the half-year was “materially” better than expected as the weather improved over August.

Next reported a 6.9% rise in full price sales over the first six weeks of the second half so far and it now expects sales over the year to rise 4% overall, with UK retail growth of 5% in the third quarter.

The firm upped its full-year profit guidance by £15 million to £995 million, which would mark an 8.4% rise on 2023-24.

The group also offered some cheer for under-pressure consumers as it said prices were being cut further for its autumn and winter ranges, down 0.3% after a 1% fall in the first six months.

Next said it was entering a new phase thanks to its burgeoning overseas sales and strength in combining online with bricks and mortar shops.

The firm saw like-for-like full-price sales across its high street stores fall 2.2% in the first half, but its online sales jumped 8.4%.

This comes despite cost pressures from a soaring wage bill after big increases in the national living wage, with staff salaries costing it an extra £57 million for the year.

“We enter this new era in a more positive frame of mind with new avenues of growth and a more stable business,” it said.

“Retail sales have stabilised and, though the shift to online may not have run its course, its effects are much diminished, not least because retail is a much smaller part of our business.”

Next said it expects its store numbers to remain largely stable at 455 by next January, down from 458 at the start of this year as it is closes eight sites and opens five.

It said the UK consumer was being boosted by higher wages, which are growing faster than inflation and helping improve spending confidence.