Next plc (LSE:NXT) reported first-quarter full-price sales growth of 6.2%, comfortably ahead of its previous forecast of 4%, as strong early-season demand and continued momentum in online and international operations offset weaker performance from UK retail stores.
The better-than-expected trading added an estimated £8 million to profits, leading the retailer to raise its full-year profit guidance to £1.218 billion. Despite the upgrade, the company left its overall sales outlook unchanged, warning that tougher comparisons later in the year could slow growth.
Online and international channels continue to drive momentum
The group highlighted robust performance across its online platform and international business, while UK store sales remained under pressure. Management noted that future growth rates may moderate as the company laps unusually warm weather conditions seen last year as well as prior one-off gains from European aggregator sales.
Even so, the company said underlying demand trends remain healthy across key product categories and overseas markets.
Middle East disruption creates £47 million cost headwind
Next also outlined the financial impact of ongoing conflict in the Middle East, estimating that freight, fuel and energy costs will increase by approximately £47 million during the current year.
The retailer said these additional expenses would be fully offset through a combination of overseas price increases, currency benefits, operational efficiencies and margin improvements. Importantly, the company stated that no further UK price rises are planned beyond those already announced.
Share buybacks and shareholder returns remain a priority
The company reaffirmed its £510 million share buyback programme and disclosed that £196 million worth of shares has already been repurchased.
Management also indicated that any excess capital not allocated toward buybacks would likely be returned to shareholders through special distributions, underlining confidence in the group’s cash generation and earnings trajectory.
Strong fundamentals offset weaker short-term technical signals
Next’s outlook continues to be supported by strong profitability, resilient margins, improving leverage and robust cash flow generation. Valuation metrics also remain favourable, helped by a reasonable price-to-earnings ratio and an attractive dividend yield.
However, near-term technical indicators remain weaker, with the shares trading below key moving averages and the MACD indicator remaining negative.
More about Next plc
Next plc is a UK-based retailer specialising in fashion, homeware and related products through a combination of online platforms, physical stores and financial services operations. The group sells both own-brand and third-party products across domestic and international markets, with a growing presence through online aggregators and distribution partnerships, particularly in Europe and the Middle East.
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