Christmas trading beats guidance: sales up 10.6% and profit guidance raised
Next PLC has delivered a strong festive performance and nudged guidance higher. In the nine weeks to 27 December, full price sales were up 10.6% versus last year, ahead of guidance for the quarter of 7.0%. UK sales rose 5.9%, while International Online surged 38.3%.
This outperformance, plus extra sales expected in January, adds £51 million to full price sales and lifts full-year profit before tax (PBT) guidance by £15 million to £1,150 million. That equates to PBT growth of 13.7% and post-tax EPS up 16.1% for the year ending January 2026.
Quick explainer: “full price sales” include Next Retail stores, Next Online (including third-party brands) and Next Finance interest income, but exclude Sale events, Clearance, Total Platform commission and subsidiaries’ sales.
Q4 trading snapshot
| Metric (9 weeks to 27 Dec) | Growth vs last year |
|---|---|
| Total full price sales | +10.6% |
| UK full price sales | +5.9% |
| International Online full price sales | +38.3% |
What drove the beat: marketing, platform gains and stock
- International Online outperformance was powered by the ability to increase profitable marketing spend more than anticipated.
- Sales via Zalando accelerated after Next’s transition to ZEOS in August, which improved stock availability by allowing the same inventory to serve both the Zalando and Next websites across Europe.
- In the UK, growth slowed versus earlier in the year but held up better than guided, helped by healthier stock levels compared with last year’s supply disruption.
End-of-season Sale stock was 5% higher year on year, but stronger clearance rates offset the margin headwind. Net effect: an extra £30 million of total Group sales, profit neutral.
Updated 2025/26 guidance (52 weeks): higher sales and earnings
| Guidance (52 weeks) | New | % vs 2024/25 | Previous | % vs 2024/25 |
|---|---|---|---|---|
| NEXT full price sales | £5,603m | +10.7% | £5,552m | +9.7% |
| Total Group sales (inc. markdown & investments) | £6,971m | +10.3% | £6,870m | +8.7% |
| NEXT Group profit before tax | £1,150m | +13.7% | £1,135m | +12.2% |
| Post-tax EPS | 738.8p | +16.1% | 729.4p | +14.6% |
Note the year is a 53-week period. For comparability, guidance above is on a 52-week basis. Week 53 is expected to add around £22 million to PBT and around £20 million to cash flow.
Cash generation, dividends, buybacks and the proposed B Share return
Cash generation remains robust. Next expects £474 million of surplus cash after ordinary dividends for 2025/26 (before investments and further distributions). Net debt, excluding leases, is set to rise by around £79 million to £739 million, in line with PBIT growth.
| Cash flow and distributions (2025/26 e) | £m |
|---|---|
| Cash generation before investments and shareholder distributions | 706 |
| Additional cash from land sale (exceptional) | 54 |
| Ordinary dividends | (286) |
| Surplus cash after ordinary dividends | 474 |
| Increase in net debt | 79 |
| Cash available for distribution/investment | 553 |
| Investments in third-parties | (1) |
| Share buybacks | (131) |
| Proposed capital distribution by B Share Scheme | (421) |
| Remaining surplus cash | 0 |
Next bought back £131 million of shares at an average price of £109, reducing net shares by 1.0%. Management targets a minimum 8% Equivalent Rate of Return (ERR) on buybacks – ERR is calculated by dividing anticipated Group pre-tax profits by current market capitalisation.
The Board proposes returning £421 million via a B Share Scheme – equivalent to £3.60 per ordinary share – subject to shareholder approval on Thursday 15 January 2026. The record time is 6pm on 15 January; B Shares will be redeemed and cancelled on 16 January, with payment on or before Wednesday 28 January 2026.
Initial 2026/27 outlook: steady progress after a bumper year
For the year to January 2027, Next guides to full price sales growth of 4.5% and PBT of £1,202 million, up 4.5%. Post-tax EPS is guided to 770.4p, up 4.3% assuming no buybacks.
| Guidance (2026/27, 52w vs 52w) | Full year (e) | % vs 2025/26 |
|---|---|---|
| NEXT full price sales | £5,855m | +4.5% |
| Total Group sales (inc. markdown & investments) | £7,261m | +4.2% |
| NEXT Group profit before tax | £1,202m | +4.5% |
| Post-tax EPS (no buybacks assumed) | 770.4p | +4.3% |
The company notes its share price is currently above the buyback price limit of £128, so it assumes surplus cash will be returned via a special dividend or other capital return instead. As a result, no EPS enhancement from buybacks is included in guidance.
Sales mix expectations for 2026/27
| Full price sales growth vs prior year | 2026/27 (e) | 2025/26 YTD |
|---|---|---|
| UK (Online + Retail Stores) | +1.6% | +6.6% |
| International Online | +16.5% | +33.0% |
| Total product sales | +4.8% | +11.4% |
| NEXT Finance interest income | -0.6% | +0.2% |
| Total full price sales | +4.5% | +10.7% |
Why slower growth? Management cites four factors: tough UK comparatives after a favourable 2025 summer, ongoing pressures on UK employment, moderating growth from overseas direct websites following a 60% increase in profitable marketing spend this year, and the non-repeat of two step-changes in overseas stock availability (more wholly owned/licensed product online and the ZEOS-driven aggregation of stock across Europe).
2026/27 cash and total shareholder return
| Cash flow and distributions (2026/27 e) | £m |
|---|---|
| Cash generation before investments and shareholder distributions | 730 |
| Ordinary dividends | (313) |
| Surplus cash after ordinary dividends | 417 |
| Increase in net debt | 38 |
| Cash available for distribution/investments | 455 |
| Investments, buybacks, special dividends or other capital return | (455) |
| Remaining surplus cash | 0 |
The combination of ordinary dividends and capital returns totals £768 million, equivalent to 4.8% of current market capitalisation. Together with forecast EPS growth of 4.3%, Next estimates a total shareholder return of 9.1% at a constant P/E ratio.
What it means for investors: my take
This is a classically “Next” update: measured guidance going in, delivery through peak, and disciplined capital returns. The positive surprise sits mainly in International Online, where increased profitable marketing and the ZEOS integration with Zalando moved the needle. UK trading proved resilient, helped by improved stock availability.
On cash, the blend of ordinary dividends, buybacks where returns stack up, and a one-off B Share distribution is clear and shareholder friendly. The 53rd week adds a tidy £22 million to PBT and circa £20 million to cash flow this year, though remember it is a calendar quirk, not a structural uplift.
Risks are visible and sensibly flagged: tougher UK comparatives, consumer pressures tied to employment, and more normal overseas growth after a year of heavy and profitable marketing spend. Execution on platforms like ZEOS and aggregators matters, and buybacks may stay constrained by the price limit if the share price remains firm. Net debt ticks up to £739 million this year and around £777 million next year, but management is increasing it in line with PBIT, which looks prudent.
What to watch next
- January trading – guidance assumes it tracks Q4 to date.
- Shareholder vote on the B Share Scheme on 15 January 2026 and the £3.60 per share return timetable.
- International momentum as marketing growth normalises and the ZEOS integration annualises.
- Capital return mix in 2026/27, given the buyback price limit of £128.
- Full-year results on Thursday 26 March 2026.
Key numbers at a glance
| Item | Figure |
|---|---|
| Q4 (9 weeks) full price sales growth | +10.6% |
| UK full price sales growth (Q4 to date) | +5.9% |
| International Online growth (Q4 to date) | +38.3% |
| FY25/26 PBT guidance (52 weeks) | £1,150m (+13.7%) |
| FY25/26 EPS guidance | 738.8p (+16.1%) |
| FY25/26 Total Group sales | £6,971m (+10.3%) |
| Week 53 uplift | ~£22m PBT, ~£20m cash flow |
| FY25/26 cash available for distribution/investment | £553m |
| B Share capital return (subject to approval) | £421m (£3.60 per share) |
| FY26/27 PBT guidance | £1,202m (+4.5%) |
| FY26/27 total distributions (dividends + returns) | £768m (4.8% of market cap) |
| FY26/27 total shareholder return assumption | 9.1% |
Overall, this is an encouraging peak-trading update with sensible upgrades and a clear plan to keep cash working for shareholders. The step down in growth next year looks realistic rather than pessimistic. Execution in International and measured capital allocation remain the twin pillars to watch.
