Next Plc CEO warns of 'anaemic growth' in UK economy

Next Plc has reported strong half-year results but issued a cautious outlook for the second half of the year, warning that sales growth is expected to slow.

The company's profit before tax increased by 13.8 percent to 515 million pounds in the six months to July 2025. Full-price sales also rose by 10.9 percent. Next forecast sales growth of 4.5 per cent for the second half of the year, down from the 10.5 per cent achieved in the second quarter, when it benefited from a cyber attack at rival Marks and Spencer. 

The company is maintaining its full-year guidance for pre-tax profit at 1.105 billion pounds, an increase of 9.3 percent but it cautioned that UK sales growth will achieve only 1.9 percent growth in the final six months of its financial year, against growth of 7.6 percent in the first half. The company's shares fell 6 percent in early London trading following the announcement.

Cautious outlook on the UK economy

Next’s CEO, Lord Wolfson, noted that the company first raised concerns about a potential weakening in UK employment two years ago. The situation has not materially improved, as vacancies continue to fall and pay-as-you-earn payroll numbers are now "moving backwards". Wolfson stated that the UK economy is not facing a "cliff edge" but expects "anaemic growth".

This is due to rising costs, increasing regulation, and job displacement from mechanisation and AI. The CEO added that these changes are likely to be gradual, with the impact being felt most by those trying to enter the workforce or move jobs, rather than through sudden mass redundancies.

The company anticipates that UK employment opportunities will continue to decline, which will increasingly dampen consumer spending in the second half of the year. Additionally, factors that boosted first-half sales, such as favourable weather and a competitor's disruption, are not expected to have a significant effect in the second half.

International growth and operational strengths

In the first half, Next's full-price sales grew by 11.6 percent, with international sales growing by a notable 28 percent. The company expects to see lower international growth in the second half as it faces stronger comparatives from the previous year.

Despite economic challenges, Lord Wolfson believes that Next is in a strong position due to its multiple avenues for growth, both in the UK and overseas. The company is focusing on improving its product offering, expanding its online platform and international businesses, and controlling costs.

The company also plans to continue its investments in store upgrades, technology, and its supply chain, which have already contributed to sales growth and higher customer satisfaction.