Next PLC on Tuesday raised its annual profit guidance after better-than-expected Christmas trading, including strong overseas online growth.

The Leicester-based clothing and homewares retailer said full price sales in the nine weeks to December 28 rose 6.0% on-year. Adjusting for the effect of the end-of-season sale, which ‘flattered’ its outturn, full price sales were up 5.7%. It had guided for growth of 3.5%.

‘The over-achievement adds £27 million to full price sales,’ Next said.

It now expects pretax profit for the year to January 25 of £1.01 billion, a rise of 10% on-year. It had previously expected a profit rise of 9.5%. It now predicts total group sales of £6.30 billion, its outlook raised from £6.27 billion.

Shares in Next were 2.5% higher at 9,792.00 pence each in London on Tuesday morning.

UK sales for the financial year increased 2.5%, reflecting online sales growth of 5.2%, which offset a 1.1% drop in retail sales. Online overseas sales jumped just under 24%.

For the following financial year to January 2026, Next expects full price sales growth of 3.5% and pretax profit to rise 3.6% to £1.05 billion. Pre-tax earnings per share are projected to rise 6.7% to 900.2 pence.

‘We have been cautious in our outlook for both the UK and overseas,’ Next added. ‘We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.’

Next said it plans to raise prices to offset roughly £13 million of wage cost hikes.

‘This will require an increase of around 1% in selling prices on like-for-like garments over and above any factory gate price increases. Fortunately, we are seeing 0% inflation in factory gate prices. So although we are increasing our bought-in gross margins, we still expect our prices to rise by less than the Bank of England’s target for inflation of 2%,’ it said.

Next said cash generation in the year remains strong and it expects to generate £670 million of surplus cash, after deducting interest, tax, capital expenditure and funding customer receivables, but before any investments and distributions to shareholders.

Next plans to retain £75 million of surplus cash, reducing net debt, to contribute towards the potential repayment of a £250 million bond in August 2025.

Next is due to announce annual results for the current year on March 27.

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