Next maintains full year profit guidance as international sales drive third quarter growth

UK fashion and homeware retailer Next plc (Next) reported an 8.1 percent rise in full price sales for the thirteen weeks to October 31, 2026, outperforming internal forecasts by 33 million pounds. The growth was driven entirely by its overseas division, enabling the group to elevate its full year sales outlook while maintaining its annual pre-tax profit target.

Total full price sales across the year to date expanded by 7.9 percent compared to the prior financial period. Despite the stronger revenue momentum, Next kept its full year pre-tax profit forecast unchanged at 1.26 billion pounds, representing an 8.4 percent increase year-over-year. Management noted that an additional 5 million pounds in profit generated by the international sales beat was offset by higher overseas operating costs linked to newly introduced European Union tariffs.

Overseas demand offsets slower home market

International online performance served as the primary growth engine during the third quarter, with sales surging 32.2 percent against an initial projection of 20.5 percent. The group’s direct-to-consumer platform, Next Direct, posted a 32.7 percent increase, supported by marketing returns that exceeded forecasts and allowed the company to raise marketing spend by 67 percent. Sales via third-party digital aggregators abroad rose 31.3 percent.

In contrast, domestic trading moderated. Full price sales in the UK increased by 2 percent during the quarter, aligning with guidance. Unseasonably warm autumn weather adversely affected consumer demand in September, resulting in weekly sales dips of up to 5.2 percent before trends normalised in October.

Domestic online channels generated a 4.4 percent increase in the period, bolstered by a 18.9 percent lift across wholly-owned brands and licences and a 4 percent rise in third-party label sales. Meanwhile, brick and mortar store revenue contracted by 1.7 percent, matching declines registered in the first half.

Updated guidance and European operational headwinds

For the 2026/27 financial year, Next raised its full year full price sales expectation to 6.03 billion pounds, up from an earlier estimate of 6 billion pounds. Total group sales, which include markdown events and subsidiary contributions, are now projected to reach 7.54 billion pounds, reflecting a 7.6 percent increase. Post-tax earnings per share guidance is pegged at 820.6 pence.

The group highlighted logistical headwinds in continental Europe following the implementation of revised EU trade tariffs on July 1, 2026 and November 1, 2026. The policies apply duties to cross-border online orders fulfilled to EU addresses from stock located outside the trade bloc. While Next operates a regional fulfilment facility alongside logistics partner Zeos, certain consignments continue to dispatch from UK warehouses.

Management anticipates a net cost impact of approximately 5 million pounds this year while operations adapt, with plans to balance future expenditures through supply chain realignment and modest regional price adjustments.

The group has returned 355 million pounds via share repurchases to date, leaving 136 million pounds earmarked for capital allocation. Next noted that share buybacks remain contingent on market pricing meeting its internal threshold of a minimum 8 percent equivalent rate of return, based on a price ceiling of 136.50 pounds per share. Should market prices exceed that benchmark and alternative investments not materialise, remaining capital will be returned to investors via a special dividend or capital distribution.

Trading updates covering the Christmas period are scheduled for publication on January 6, 2027.