From the Guardian · · 2m
Next raises profit forecast on summer heat boost
The UK fashion retailer lifts full-year profit expectations for the fourth time this year, crediting unusually warm weather and cost-cutting efforts.
In brief
The UK fashion retailer lifts full-year profit expectations for the fourth time this year, crediting unusually warm weather and cost-cutting efforts. Next is raising profits to £1.26bn after hot summers drove unexpected sales growth, but the company warns consumer spending may worsen ahead. Originally reported by the…
Next raises profit forecast again
The FTSE 100 retailer lifted full-year profit expectations to £1.26bn, marking the fourth increase this year. Unusually warm summers in the UK drove unexpected sales growth across stores and online.
“The first half was much better than we originally anticipated, both in the UK and overseas.”
Hot weather drove summer wardrobe refresh
Total sales across the group rose 9% in the six months to July, with pre-tax profits up 11% to £566m. Customers logged in to refresh summer wardrobes online, offsetting a small decline in physical stores.
Cost-cutting efforts paid off
Next cut costs across warehouses and other operations, contributing to the overperformance beyond what warm weather alone could explain. The company achieved £1bn in annual profits for the first time in the year ending January 2025.
Company warns on consumer spending ahead
Next lowered UK sales growth expectations from 2.8% to 2% for the next six months, citing rising inflation, higher mortgage costs, and a weak jobs market. Chief executive Simon Wolfson said things are likely to worsen, not improve.
“I think things are likely to get worse rather than better.”
Humans still lead fashion design
Despite deploying AI across the business, Next said consumers prefer authentic human creativity. The company is investing more in designers using traditional techniques like painting and drawing rather than computer-aided design.
“Consumers prefer the authentic creativity of human beings.”
Middle East tensions not raising shipping costs
Chief executive Simon Wolfson said escalating hostilities in the Middle East have not triggered further cost increases. Shipping surcharges from the February conflict are already factored in and have not worsened since March.
“All those cost increases are baked in, and if anything are not as bad as March.”
Profit forecast hinges on government budget
Next expressed concern about the government's £100bn deficit and potential tax increases in the October budget. The company warned that without room to manoeuvre, the government could worsen consumer spending rather than help it.
“It has a £100bn deficit. That means not only can we not expect the government to necessarily alleviate the problem, but potentially make it worse.”
At a glance
Next is raising profits to £1.26bn after hot summers drove unexpected sales growth, but the company warns consumer spending may worsen ahead.
