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%.

WELCOME BONUS - Free Share Bundle When You Invest £50! Get up to £500 cashback for investing with IG.

Invest in 15,000+ shares and ETFs. Open an account now, invest at least £50, and you’ll get a free share bundle worth between £40 and £200. T&Cs apply.

5.0

Open Account Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

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.