Next raises profit guidance as Q2 sales beat forecasts

Next delivers a sizeable second-quarter sales beat

Next PLC has upgraded its full-year profit guidance after second-quarter full-price sales came in materially ahead of expectations.

Full-price sales rose 9.2% during the 13 weeks to 1 August 2026. Next had forecast growth of 4.0%, meaning sales finished £70 million ahead of its internal expectations.

That is a meaningful beat, but management has not simply carried the entire second-quarter performance into its outlook for the rest of the year. Guidance for second-half full-price sales remains unchanged at 5.0% growth.

The combination of stronger current trading and restrained forward assumptions is arguably the most important feature of this update.

The figures below are taken from the original company announcement.

The key numbers

Metric	New guidance or result	Previous guidance	Change or comparison
Q2 full-price sales growth	9.2%	4.0% forecast	5.2 percentage points ahead
H1 full-price sales growth	7.7%	Not disclosed	Versus last year
Full-year full-price sales	£6.0 billion	£5.9 billion	6.3% growth expected
Total Group sales	£7.5 billion	£7.3 billion	6.6% growth expected
Group profit before tax	£1.243 billion	£1.218 billion	£25 million upgrade
Post-tax earnings per share	812.9p	792.9p	9.2% growth expected
Planned share buybacks	£524 million	£510 million	£14 million increase

Full-price sales include products sold through Next's shops and online operations, third-party brands and Next Finance interest income. They exclude sale events, clearance activity, Total Platform commission and subsidiary sales.

What drove the outperformance?

Next identified three reasons why sales exceeded its forecast.

First, UK weather was as warm as the previous year's exceptional summer. The company had not expected those favourable conditions to repeat.

Second, Next saw pent-up demand emerge in the Middle East and Northern Europe following weaker first-quarter trading in both territories.

Third, the retailer was able to spend more than expected on profitable marketing. That wording matters. Higher advertising expenditure is only encouraging if the additional spending produces an acceptable return, and Next says the marketing was profitable.

Of the £70 million sales beat, £19 million came from the UK and £51 million came from overseas. International operations were therefore responsible for nearly three-quarters of the outperformance.

International sales are doing the heavy lifting

The divisional figures show a mixed performance beneath the strong headline number.

Division	Q1 growth	Q2 growth	H1 growth
UK online Next brand	5.8%	-1.2%	2.1%
UK online Label	15.7%	13.2%	14.4%
Total UK online	10.1%	5.0%	7.4%
Retail stores	-3.4%	-0.3%	-1.7%
Total UK	4.4%	2.8%	3.6%
Online international	12.8%	36.9%	23.9%
Total full-price sales	6.2%	9.2%	7.7%

International online sales increased by 36.9% in Q2, compared with UK growth of 2.8%. That overseas momentum is the clearest positive in the statement.

Within the UK, the picture is less straightforward. Online Label, which sells third-party brands, remained strong with Q2 growth of 13.2%. However, the online Next brand declined by 1.2%, while retail store sales fell 0.3%.

These declines are modest, but they show that the group's growth is not evenly distributed. The UK business is still growing overall, yet third-party brands and international sales are providing much of the momentum.

Why profit guidance increased by £25 million

Next has raised forecast Group profit before tax from £1.218 billion to £1.243 billion. The new figure represents expected year-on-year growth of 7.3%.

The upgrade has two components:

• The additional £70 million of full-price sales contributed £15 million to forecast profit.
• Better-than-expected performance from equity investments added a further £10 million.

This means not all of the upgrade came from the core retail operation. The £15 million retail contribution is supported by actual sales already delivered, while the £10 million investment contribution depends on the continued performance of those holdings.

Forecast post-tax earnings per share has also increased from 792.9p to 812.9p. That would represent growth of 9.2%, ahead of the expected 7.3% rise in pre-tax profit, partly reflecting the effect of share buybacks.

The upgrade follows Next's earlier first-quarter sales beat and guidance increase.

Next is not raising second-half sales guidance

Despite the Q2 beat, Next continues to expect full-price sales growth of 5.0% in the second half. That includes forecast UK growth of 2.8% and international growth of 14.0%.

The expected slowdown overseas has a specific explanation. In August 2025, Next moved to ZEOS distribution services, increasing stock availability for its European aggregator business. That created a one-off step change in sales, making the comparisons from August 2026 onwards more demanding.

International growth of 14.0% would still be substantial, but it is well below the 36.9% achieved in Q2. Investors should therefore expect reported growth to moderate even if the underlying operation continues to perform well.

There is also a question over how repeatable some Q2 benefits will be. Favourable weather and the release of pent-up demand helped performance, but neither factor can automatically be treated as permanent.

Buybacks provide another route for shareholder returns

Next now expects to complete £524 million of share buybacks during the year, £14 million more than previously planned.

So far, it has repurchased £355 million of shares at an average price of £127.69, reducing shares in issue by 2.3%. A lower share count can increase earnings per share because profits are divided across fewer shares.

The company has £169 million of remaining surplus cash available for shareholder returns. Buybacks are subject to Next achieving its minimum 8% equivalent rate of return, with the current purchase limit set at a share price of £135.

If the remaining cash cannot be used for buybacks, Next says it will return it through a special dividend or another capital return. The exact form and timing have not been disclosed.

What investors should watch next

This is a strong update, led by a material sales beat, another profit upgrade and rapid international growth. Maintaining second-half guidance also leaves some room for further upside if trading remains ahead of expectations.

The less positive reading is that UK growth remains comparatively modest, with retail stores and the online Next brand both declining in Q2. International comparisons are also about to become tougher, while £10 million of the profit upgrade comes from equity investments rather than additional retail sales.

Next is scheduled to publish its interim results on Thursday 17 September 2026. The main points to watch will be whether UK brand performance improves, whether overseas growth holds up against tougher comparisons and whether management changes its deliberately cautious second-half guidance.