UK growth was in line with the performance for the rest of the year, but online sales growth increased at the expense of growth in retail stores, reports Next in a press release outlining its Christmas trading performance and guidance for the FY ending this month.
In the nine weeks to 28th December, full price sales were up +6.0% YoY. Next says this number was slightly flattered by the timing of the end-of-season sale – adjusting for this effect, underlying full price sales were up +5.7% (up on the retailer's previous guidance for the period of +3.5%). Unexpectedly, sales growth overseas accelerated in the run-up to the holiday period.
The over-achievement added £27m to full-price sales, and lifted Next's full-year guidance for group PBT by +£5m (to £1010m). Group PBT is now forecast to be up +10.0% on the previous year, with pre-tax Earnings Per Share (EPS) up +11.4%.
Total Group sales growth was +3.2% – lower than the full-price sales growth of +3.5%, mainly due to an expected reduction in markdown sales in Next's subsidiary companies.
Looking to the upcoming FY (ending January 2026), Next forecasts full-price sales growth to be up +3.5%, and group PBT to be £1046m (up +3.6%).
"We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy," says the retailer.
Next expects a combination of general wage inflation, the increase from April in the National Living Wage (NLW), the decrease in Employer National Insurance (ENI) threshold, and the increase in the ENI headline rate, to increase the cost of wages of £67m – and plans to offset this through a combination of operational efficiencies and other cost savings, plus a +1% increase in prices on LFL goods, which, it says, "is unwelcome, but still lower than UK general inflation".
