By James Davey
LONDON (Reuters) -British clothing retailer Next on Thursday raised its profit outlook for the current year after earnings rose 10% in 2024/25 and topped one billion pounds for the first time, sending its shares sharply higher.
Next, often seen as a gauge of how British consumers are faring, said it made a pretax profit of 1.011 billion pounds ($1.31 billion) in its year to January 25, 2025, joining supermarket Tesco and clothing and food group Marks & Spencer in achieving this landmark profit figure. Total group sales rose 8.2% to 6.32 billion pounds.
The group’s shares rose 6% as Next also said full-price sales in the first eight weeks of its 2025/26 year had been ahead of its expectations.
“Our business in the UK has been slightly better-than-expected and our business overseas has been much better-than-expected,” CEO Simon Wolfson told Reuters.
Wolfson said he was encouraged by finance minister Rachel Reeves’ budget update on Wednesday, particularly on the issues of taxation and planning reform.
“It was encouraging that they didn’t say they were going to put taxes up,” he said.
Next upgraded its guidance for full-price sales growth in the first half to 6.5%, from 3.5% previously, resulting in an increase in full-year guidance to 5.0%, versus 3.5% previously.
Next raised its pretax profit guidance by 5.4% to 1.066 billion pounds.
The group did not upgrade its sales guidance for the second half of the year, noting that last year the second half was much stronger than the first, making comparative numbers tougher.
Also, Next expects UK tax rises that will come into effect in April to weaken the jobs market and weigh on consumer confidence as the year progresses.
Next flagged in January a 67 million pound increase in wage costs and National Insurance contributions in 2025/26 which it plans to offset via a combination of operational efficiencies, other savings and a 1% rise in prices on like-for-like goods.
Surveys published earlier this month showed British consumer spending lost momentum last month after a bounce at the start of the year, despite households’ rising confidence in their personal finances and the broader economy.
($1 = 0.7745 pounds)
(Reporting by James Davey. Editing by Sarah Young, Mark Potter and Jane Merriman)
