UK's Next raises profit forecast but cautious on sales outlook

By James Davey

LONDON (Reuters) -British clothing retailer Next nudged up its full year profit outlook for the second time in two months after first quarter full-price sales rose by a better-than-expected 11.4%, with a spell of warm weather boosting demand for summer ranges.

However, the group, which is often seen as a useful gauge of how British consumers are faring, said on Thursday it was not increasing its sales guidance for the rest of the year, believing the better weather has pulled sales forward.

"We believe much of the over-performance in the first quarter has been the result of warmer weather, which has benefited the sale of summer-weight clothing," it said. "It is likely that some of these sales have been pulled forward from Q2."

Next is also more cautious about sales in the second half because it believes the full effects of April's tax increases will begin to filter through to the wider economy. Comparative numbers with last year are also tougher.

Next said it was now forecasting a year to January 2026 pretax profit of 1.08 billion pounds ($1.4 billion) up from previous guidance of 1.066 billion pounds. It made 1.011 billion pounds in 2024/25, topping 1 billion pounds for the first time.

Shares in Next were up 2%, extending 2025 gains to 32%.

Next said its first quarter to April 26 outcome was better than it had anticipated in both the UK and overseas.

Full price sales growth in stores of 5.2% was "much stronger" than expected, but Next cautioned that "shops benefit disproportionately from the favourable weather".

It expects stores sales to return to being "broadly flat" for the rest of the year.

First quarter UK online sales rose 8.9%, while international online sales increased 29.6%.

For the full year, Next expects full price sales to grow 6.0%.

Next's first quarter only slightly overlapped a period where rival Marks & Spencer stopped taking online clothing orders following a cyberattack. M&S's online ordering has been suspended since April 25, with analysts estimating it is losing about 4 million pounds of online sales a day.

($1 = 0.7508 pounds)

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