Clothing-to-homewares seller Next (LON:NXT) upgraded FY27 profit guidance by £12 million following a better-than-expected H1, both in the UK and overseas. The retail star turn said its H1 performance was all the more unexpected given the strong sales growth delivered last year.
Led by CEO Simon Wolfson, Next acknowledged that part of its recent market overperformance has been the result of two unusually warm UK summers.
Next hikes guidance again
For the year to January 2027, Next increased its profit guidance from £1.243 billion to £1.255 billion. The FTSE 100 company pinned the upgrade on a ‘small upgrade’ in sales expectations as well as better-than-anticipated cost savings in warehousing.
The retailer’s latest upgrade follows a strong H1 in which pre-tax profits ticked up 10.5% to £569 million with a boost from hot weather. Despite the tough retail backdrop, full price sales rose 7.7% and total sales including markdowns increased by 8.9%.
Overseas progress excites
International online revenue shot up 23.9% in H1, despite disruption in the Middle East in Q1, with higher marketing spending boosting sales. This stellar performance prompted Next to raise its FY27 sales guidance for the division by £40 million, implying year-on-year growth of 20.5%.
| Full price sales versus last year | H1 actual | H1 guidance |
| Online UK | +7.4% | +4.6% |
| Retail Stores | -1.7% | -3.3% |
| Total UK | +3.6% | +1.3% |
| Online International | +23.9% | +14.7% |
Source: Next, H1 results
Elsewhere, retail store sales were down 1.7% and UK online sales were up 7.4%. Next nudged its H2 UK sales growth estimate down slightly, from 2.8% to 2%.
‘The reduction is modest,’ said Next, ‘and we do not anticipate a precipitous decline in spending, rather a slow, steady decline as the year progresses.
‘Our primary concerns are rising inflation, higher mortgage interest costs and a weak employment market. These worries will only be compounded if they are accompanied by tax increases’, warned the company.
Under Wolfson, this best-in-class retailer has forged a reputation for under-promising and over-delivering. And Next deserves credit for extending its stunning run of profit upgrades in the face of cost pressures and frail consumer spending.
The firm’s fresh FY27 guidance implies an 8.4% rise in taxable profits for the current year. And with Next taking market share at home and abroad, we think there could be further upgrades to come.
As Charles Allen, senior industry analyst at Bloomberg Intelligence, points out: ‘Next’s £12 million increase in fiscal 2027 pre-tax profit guidance still looks prudent, with only 6.7% profit growth needed in H2 to reach the new £1.26 billion target after H1 profit rose 10.5% to £569 million, just ahead of expectations.’
