High street staple Next saw its share price jump in early trading on Tuesday after a frenzied Christmas shopping period boosted sales.
The group’s share price rose 2.8 per cent to 13,970 pence, with shares rising 14.8 per cent over the past six months.
During the final quarter, full prices sales were up 10.6 per cent compared to last year, beating expectations of seven per cent.
Adam Vettese, market analyst for eToro said: “Next has delivered another resilient Christmas performance, underscoring its position as one of the UK high street’s strongest operators.”
“Much of this quality story is already reflected in the share price after a strong run over the past year, which leaves less room for error if consumer demand softens.”
Soft UK sales
UK sales also beat prior expectations of 4.1 per cent, hitting 5.9 per cent, bolstered by heightened online shopping and higher stock levels.
However, retail stores continued to suffer from low footfall, with just 1.4 per cent of sales coming from physical shops.
International sales rocketed a staggering 38.3 per cent, exceeding guidance of 24.3 per cent, with the FTSE 100 company crediting the over performance to increased marketing expenditure and the performance of its European partner Zalando.
The boost in shoppers generated £51m in profit, leading the group to hikes its guidance by £15m to £1.15bn, a year on year increase of 13.7 per cent, marking the third profit upgrade in over five months.
Next also bought back £131m of shares at average prices of £109m, reducing the number of net shares by one percent, and anticipates to have approximately £768m available for shareholder distribution in the next financial year.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Next’s Christmas trading update gave investors plenty to be jolly about, capping a solid year 2025 for the UK fashion powerhouse.
“Unwrapping some of the headline figures, sales growth continues to be driven by its online channel, which already accounts for more than half of group sales.
“Within that, overseas sales have continued to grow at an eye watering pace.”
Looking ahead
Despite the strong Christmas trading period, the group expects growth to be muted in the next financial year, anticipating total products sales to rise by just 4.8 per cent.
The group has credited this decline in expectations to favourable summer weather, competitor disruption and improved stock levels bolstering sales in 2025.
The company also anticipates the ongoing pressures on UK employment to dampen consumer confidence, with UK sales predicted to rise by only 1.6 per cent.
International sales are anticipated to rise 16.5 per cent, with the group deeming it unlikely to increase its marketing expenditure as much in the next financial year, as well as the rise in stock availability not predicted to occur again.
In the year to January 2027, it expects to generate £417m of surplus cash after tax, with plans to increase its net debt by £777m.
Ignoring Next’s gloomy UK outlook, analysts remain bullish on the store’s performance, crediting its track record of “under-promising and over-delivering”.
Chiekrie said: “With Next’s track record of under-promising and over-delivering, this growth target looks a touch conservative.
“Next remains one of the brightest sparks in the UK retail scene, and there’s potential for more success if it can continue nailing its overseas expansion.”