Next plc Raises Guidance After Strong Q3 Sales

Next PLC (LON: NXT) significantly outperformed expectations in its third-quarter trading statement, leading to increased full-year profit guidance.

The retailer's full-price sales surged by 10.5% in the thirteen weeks leading up to October 25th, surpassing the company's initial forecast of 4.5% by £76 million.

UK sales increased by 5.4% compared to the previous year, while overseas sales demonstrated exceptional growth of 38.8%. This overseas performance was notably higher than the 28.1% growth achieved in the first half of the year and considerably exceeded the guided 19.4%.

Based on the strong Q3 results and an improved sales outlook for Q4, Next has raised its full-year profit before tax guidance by £30 million to £1.135 billion. The company now anticipates full-price sales growth of 7.0% for the fourth quarter, up from the previous estimate of 4.5%.

The increase in total group sales guidance has increased by £150m, £38m more than Next full price sales due to markdown sales and additional Clearance sales.

The company placed more of its surplus stock into its mid-season Sale in September rather than its Christmas Sale, allowing the stock to be sold for longer during this financial year than the equivalent Sale stock last year.

Driver Breakdown:

• UK Sales Resilience: Despite anticipating a slowdown, UK sales remained robust, driven by improved stock levels.
• International Expansion: Strategic digital marketing investments and consolidated European warehousing operations significantly boosted international sales.
• Profitability Focus: Increased marketing expenditure was directly linked to strong returns, prompting further investment in high-performing channels.

Next anticipates generating around £425m of surplus cash, and when combined with the planned increase in net debt, this means that the company has c.£500m available for distribution.

There has been £131m returned to shareholders through share buybacks; however, the company is assuming that it will make no further share buybacks in the current financial year because the share price is higher than the buyback limit of £121 per share.

In the absence of any acquisitions or further buybacks, the company intends to return remaining surplus cash by way of a special dividend at the end of January 2026. Based on that assumption and the latest guidance, this special dividend would be around £3.10 per share.