Next PLC Q1 Sales Beat Forecasts, Profit Guidance Raised Despite Middle East Disruption

• UK online NEXT Brand: +5.8%
• UK online LABEL: +15.7%
• UK online total: +10.1%
• Retail stores: -3.4%
• Total UK: +4.4%
• Total online international: +12.8%
• Total product full price sales: +6.5%
• NEXT Finance interest income: +0.9%

Why Next beat expectations in Q1: a flying start, then disruption, then recovery

Next splits the quarter into three distinct trading periods, and that tells the real story. In the first five weeks, before the conflict in the Middle East hit trading and before tougher UK comparatives kicked in, total full price sales surged +11.8%.

Then came weeks 6 to 8, when the conflict disrupted services in the region. Total full price sales dipped slightly to -0.2%, with international sales falling -8.9%.

By weeks 9 to 13, trade had started to recover as delivery services normalised, and total full price sales bounced back to +5.3%. That rebound matters because it suggests the disruption hurt, but did not derail, the business.

There is also an important bit of context here. Last year included a 53rd week, so Next is comparing offset weeks rather than exact calendar weeks. That is sensible and makes the year-on-year numbers more meaningful.

Middle East disruption costs: higher freight and energy bills, but Next says profits are protected

This is the key risk section of the RNS. Next has updated the expected cost hit from the conflict in the Middle East, and the gross numbers are chunky.

Total cost increases are now expected to be £47 million for the full year, up from the previous forecast of £15 million. These higher costs mainly come from air freight, overseas delivery, inbound shipping to the UK, and fuel and energy costs in UK operations.

Middle East impact and mitigations	New full-year forecast
Total cost increases	£47 million
Total cost savings and margin gains	£47 million
Net impact	£0 million

The encouraging part is that Next expects to offset all of that. It plans to do so through overseas price increases, currency gains in Europe, better product margins from lower factory gate prices, and other cost savings.

The biggest single offsets are £13 million from price increases in the Middle East, £12 million from better factory gate prices, and £16 million from other cost savings.

My view: this is positive, but it is not risk-free. Saying the net impact is zero is reassuring, yet it depends on management executing well and the situation not getting materially worse. Next is being upfront about that, which I like.

Will shoppers face higher prices?

Outside Europe, yes in some places. Next says international price increases will be implemented in May and will be no more than +8% in any territory.

In Europe, there is no need for price rises because currency gains have offset the extra costs. In the UK, Next says it does not expect to raise prices above the 0.6% already forecast at the start of the year.

That is a decent result for UK customers and a decent sign for investors too. It suggests Next has enough operational grip to defend margin without leaning too heavily on domestic shoppers.

Next full-year guidance: steady sales outlook, slightly higher profits

Despite the Q1 beat, Next is not upgrading sales guidance for the rest of the year. That may look cautious, but it is very much in keeping with how the company tends to communicate.

Full-year full price sales guidance is now +5.0%, compared with previous guidance of +4.5%. Total Group sales are expected to be £7.3 billion, up +4.6%.

Profit before tax is now guided at £1,218 million, up +5.2% year on year. Post-tax EPS – earnings per share – is expected to be 792.9p, up +6.5%.

• Q2 UK sales forecast: +1.0%
• Q2 international sales forecast: +17.0%
• Second-half international sales forecast: +14.0%
• Full-year UK sales forecast: +2.8%
• Full-year international sales forecast: +14.4%

The cautious tone on Q2 UK sales makes sense. Next points out that last year’s second quarter benefited from unusually warm weather and competitor disruption, so the comparisons are harder.

International growth is expected to remain strong, although it should moderate in the second half because last August benefited from a one-off improvement in aggregator sales after switching to ZEOS distribution services.

Next share buybacks and EPS: another quiet positive for shareholders

Next also gave a useful update on capital returns. Its EPS guidance assumes it completes £510 million of share buybacks this year, and it has already bought £196 million of shares at an average price of £126.52.

That has reduced the number of shares by 1.3%. Fewer shares in issue can help support EPS, which is one reason the earnings growth is slightly ahead of the profit growth.

The company says its current share price limit for buybacks is £132, based on its minimum 8% equivalent rate of return. If it cannot spend the full buyback budget, any leftover cash would be returned via a special dividend or capital return.

That is shareholder-friendly. It does not guarantee returns, but it does show discipline around cash allocation.

What this Next PLC RNS means for retail investors

This is a strong trading statement. Not a flashy one, but a very solid one.

The positives are clear: sales beat forecasts, online remains strong, international has recovered after disruption, profit guidance has been increased, and management believes the cost shock from the Middle East can be fully offset.

The negatives are also real: store sales are still falling, Q2 UK comparatives look tougher, and the zero net impact from disruption depends on assumptions that may or may not hold. If freight or energy costs move the wrong way, or disruption worsens, guidance could come under pressure.

Even so, this reads like classic Next – operationally sharp, financially disciplined, and careful not to get carried away after one good quarter. For investors, that usually beats hype.

The next sales update will cover the first 26 weeks to 1 August 2026 and is scheduled for 5 August 2026. That will be the next real test of whether this Q1 strength has legs.