UK's Next lifts profit outlook as warm weather, M&S disruption boost trade

By James Davey

LONDON (Reuters) -British clothing retailer Next raised its annual profit outlook for the third time in five months as it reported better-than-expected second-quarter sales, benefiting from warm weather and disruption at cyberattack-hit rival Marks & Spencer.

Next has around 460 stores in the UK and Ireland and an online presence in over 70 countries selling the Next brand and more than 700 other brands. With the United Kingdom accounting for around 80% of its sales, it is often considered a useful gauge of how British consumers are faring.

It said on Thursday full-price sales in the 13 weeks to July 26 rose 10.5% versus last year - ahead of guidance of 6.5% and compared to growth of 11.4% in the first quarter.

Sales overperformed against Next's expectations in both the UK and overseas, it said.

The retailer said UK sales growth of 7.8% was largely due to better than expected weather and "trading disruption at a major competitor", which it did not name.

However, Next's second quarter overlapped a period where M&S stopped taking online clothing orders following a cyberattack which has cost it 300 million pounds ($398 million) in profit.

Industry data has shown Next to be a beneficiary of M&S' woes, along with Zara and H&M.

Next said international sales grew a faster than expected 26.4% mainly because its digital marketing proved more effective than anticipated.

Though Next raised its guidance for second half full price sales growth to 4.5% from 3.5% previously, it remained cautious for the period.

It expects UK employment opportunities to continue to diminish, with the effects of April's employer tax increases continuing to filter through into the economy.

"We believe that this will increasingly dampen consumer spending as the year progresses," it said.

Reflecting that caution, Next shares were flat on Thursday, having risen 29% in 2025 so far.

"Next is cautious about the second half of the year, but the company has a good track record of under-promising and over-delivering," Zoe Gillespie, wealth manager at RBC Brewin Dolphin, said.

Next raised its forecast for year to January 2026 pretax profit by 25 million pounds to 1.105 billion pounds. Profit topped 1 billion pounds for the first time in 2024/25.

On Wednesday, Next bought the brand rights to maternity retailer Seraphine.

($1 = 0.7539 pounds)

(Reporting by James Davey; Editing by Sarah Young, Paul Sandle and Emelia Sithole-Matarise)