Next Shares Increase on Positive Full-Year Profit Outlook

Shares of Next PLC experienced a notable increase on Thursday as the retailer’s optimistic forecast for full-year profits overshadowed a mixed bag of first-half results.

At 3:34 am (0734 GMT), Next’s shares were trading 3.2% higher at £10,670. The company has updated its profit before tax (PBT) guidance for the fiscal year 2025 to £995 million, a rise from the earlier estimate of £980 million. This revision aligns with projections from RBC Capital Markets, which estimated PBT at £1,002 million.

While the first-half results were varied, several business segments outperformed expectations, contributing to the improved forecast. Total sales for the half-year reached £2.9 billion, surpassing the consensus estimate of £2.8 billion provided by RBC. Profits also exceeded targets, with an underlying PBT of £452 million compared to the anticipated £441 million.

Next reported earnings per share of 282.8p, exceeding RBC’s expectation of 269.1p. In terms of individual business segments, retail sales generated £867 million in revenue, outperforming the expected £853 million. Retail EBIT was recorded at £98 million, exceeding forecasts of £95 million.

Online sales proved to be another highlight, generating £1.6 billion, slightly above the projected £1.5 billion. The EBIT for the online division met expectations at £265 million. The finance division contributed £150 million in sales, with EBIT at £97 million, surpassing RBC’s estimate of £84 million. However, the Total Platform business, which supports other brands with logistics and technology, fell short of predictions, posting profits of £23 million.

Analysts at RBC noted that full-price sales growth for the first six weeks of the third quarter increased by 6.9% year-on-year, ahead of their estimate of 4% year-on-year. Consequently, Next has revised its sales growth forecast for the second half of the year to a target of 3.7% year-on-year, an improvement from the previous estimate of 2.5%.

RBC analysts believe that Next’s strengths in omnichannel retailing and its efficient logistics network will remain key advantages as the company continues to navigate a challenging retail landscape. They also pointed out the potential for Next to further develop its high-return Total Platform business for external brands, leveraging its robust systems and online warehousing and distribution expertise. However, this expansion may introduce complexity and potential merger and acquisition risks.