Next PLC Soars on Strong Q2 Results

Next PLC shares have experienced a notable increase following the company’s stronger-than-expected second-quarter results and an upward revision in its full-year profit before tax guidance.

As of 5:44 am (0944 GMT), Next PLC’s stock was trading 8.4% higher at £9,832.

The company has raised its profit before tax guidance for FY25 from £960 million to £980 million, surpassing RBC Capital Markets’ estimate of £972 million. This revision is attributed to an anticipated £11 million boost from additional sales coupled with £9 million in cost savings, primarily in logistics.

Next has also maintained its forecast for second-half full-price sales growth at 2.5% year-on-year, a decrease from the 4.4% growth observed in the first half, yet still consistent with trends from two years prior.

Full-price sales, a critical metric for the fashion retailer, rose by 3.2% in the second quarter and by 4.4% for the half-year, buoyed by unexpectedly strong online sales internationally.

Consequently, the company has increased its profit guidance for the full year by £20 million, now estimating it at £980 million, which represents a 6.7% increase compared to the previous year. However, retail sales saw a decline of 4.7% year-on-year, which was slightly worse than the anticipated decrease of 2.5%, attributed to challenging weather conditions in the second quarter, according to analysts at RBC Capital Markets.

Next PLC’s finance income experienced a modest 3.3% year-on-year increase, falling just short of market expectations.

In terms of inventory, the company has adeptly managed surplus stock, entering the sales season with a 21% increase in surplus inventory compared to the previous year, while clearance rates remain in line with forecasts.

The positive results from Next PLC are viewed as a promising sign for the broader retail sector. Analysts at RBC suggest that the company’s performance may signal a potential rise in consumer spending on clothing this autumn as household financial situations improve.

This optimistic sentiment is likely to extend to other prominent retailers, including Marks & Spencer, H&M, and JD Sports.