Next Boosts Guidance as Q2 Performance Beats Forecast

Next has published a trading statement for quarter two ahead of its half-year update in September.

Sales Growth

Full price sales in the second quarter were up +9.2% versus last year.  This was materially ahead of our forecast for the period of +4.0%. 

Performance Versus Guidance

Sales were £70m ahead of forecast (£19m in the UK and £51m overseas).  We believe this over-performance was due to the following: 

• The weather in the UK was as warm as last year’s exceptional summer, which we had not anticipated.
  
  
• The release of some pent-up demand in the Middle East and Northern Europe after a weaker first quarter in both territories.
  
  
• We were able to spend much more on profitable marketing than we had anticipated.

Upgrade to Full Year Profit Guidance 

We are increasing our full year pre-tax profit guidance by +£25m to £1,243m, up +7.3% on last year.  There are two elements to this upgrade:

• The addition of £70m of full price sales added +£15m of profit.
  
  
• The performance of our equity investments has been better than expected and we are increasing our forecast for full year profit by +£10m.
  

Rest of Year Sales Guidance 

We are maintaining our guidance for full price sales for the rest of the year to be up +5.0% versus last year. 

FULL PRICE SALES PERFORMANCE BY BUSINESS DIVISION 

Our full price sales performance versus last year, by business division, is set out below by quarter and for the first half.   

 
FULL PRICE SALES GUIDANCE FOR THE SECOND HALF 

We are maintaining our guidance for sales for the rest of the year to be up +5.0% versus last year, as set out below. 

In the UK, we expect sales in H2 to be up +2.8% on last year, in line with our performance in Q2.   

Growth in International sales in H2 is expected to moderate to +14%. This is because in August last year we achieved a one-off step change in our aggregator sales when we switched to ZEOS distribution services, materially increasing stock availability in our European aggregator business. So our comparative numbers become tougher from August onwards. 

REVISED FULL YEAR GUIDANCE

Our revised guidance for the full year is summarised below, along with our previous guidance which is shown in grey.

EARNINGS PER SHARE AND SHARE BUYBACKS

Our guidance for Earnings Per Share assumes that we complete £524m of share buybacks this year, which is £14m higher than our previous guidance. So far this year, we have purchased £355m of shares at an average share price of £127.69, reducing the number of shares in issue by 2.3%. This leaves £169m of remaining surplus cash available for return to shareholders. Share buybacks are subject to us achieving a minimum 8% equivalent rate of return (ERR) on the purchase.  ERR is calculated by dividing (1) anticipated NEXT Group pre-tax profits by (2) the current market capitalisation .  Based on our latest guidance, our share price limit for buybacks is £135.  In the event we cannot spend all of the remaining £169m on share buybacks, this would be returned to shareholders via a special dividend or capital return. 

INTERIM RESULTS

We are scheduled to announce our results for the first half of the year on Thursday 17 September 2026.  

Source : Next plc

Image : Next plc

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