REG - Next PLC - Trading Statement

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RNS Number : 2757T  Next PLC  31 July 2025

31 July 2025

Trading Statement for the Second Quarter

HEADLINES
 ·                     In the thirteen weeks to 26 July, NEXT full price sales(1) were up +10.5%
                       versus last year.  This was +£49m ahead of our guidance for the period of
                       +6.5%.
 ·                     Sales overperformed in both the UK and overseas, for the following reasons:

                       -  In the UK, we believe that the overperformance was largely due to better
                       than expected weather and trading disruption at a major competitor.

                       - International sales grew faster than expected, mainly because our digital
                       marketing proved more effective than anticipated, enabling us to increase
                       profitable marketing expenditure.
 ·                     We are increasing our guidance for full price sales in the second half from
                       +3.5% to +4.5%.  This adds a further £27m of full price sales to our
                       forecast.
 ·                     The increase in sales in Q2, along with our improved sales guidance for H2,
                       means that we are increasing our full year guidance for profit(2) before tax
                       by +£25m to £1,105m.

(1) NEXT full price sales include items sold in Retail and Online plus NEXT
Finance interest income, but excludes Sale events, Clearance, Total Platform
commission and the sales from subsidiaries.

(2) NEXT Group profit before tax excludes: (1) the cost of brand amortisation,
(2) the profit attributable to shares that we do not own in subsidiary
companies.  In the prior year an exceptional, non-cash, loss relating to the
closure of our defined benefit pension scheme was also excluded

FULL PRICE SALES PERFORMANCE BY BUSINESS DIVISION

Our full price sales performance versus last year, by business division, is
set out below for the second quarter and the first half.

 Full price sales by division versus last year  Q2: 13 weeks      H1: 26 weeks

                                                to 26 July        to 26 July
 UK - Online NEXT Brand                         +9.0%             +6.8%
 UK - Online LABEL                              +10.1%            +12.6%
 UK - ONLINE TOTAL                              +9.5%             +9.2%
 Retail stores                                  +5.6%             +5.4%
 TOTAL UK                                       +7.8%             +7.6%
 Online International                           +26.4%            +28.1%
 TOTAL PRODUCT FULL PRICE SALES                 +11.1%            +11.6%
 NEXT Finance interest income                   +0.0%             +0.5%
 TOTAL FULL PRICE SALES                         +10.5%            +10.9%

 
END-OF-SEASON SALE
We went into the end-of-season Sale with surplus stock up +5% versus last year.  To date, clearance rates are in line with our expectations.
 
FULL PRICE SALES GUIDANCE FOR THE SECOND HALF AND FULL YEAR

We remain cautious for the second half, with full price sales forecast to
increase by +4.5% (as against +10.9% in the first half).  The table below
summarises our guidance for the UK and overseas versus last year.  Further
commentary is given below the table.

 Full price sales guidance versus last year  H1 (actual)  H2 (e)  Full year (e)
 UK (Retail + Online)                        +7.6%        +1.9%   +4.5%
 International Online                        +28.1%       +19.4%  +23.8%
 Total Product sales                         +11.6%       +4.8%   +8.0%
 NEXT Finance interest income                +0.5%        - 0.5%  - 0.0%
 Total full price sales                      +10.9%       +4.5%   +7.5%

Sales Guidance for the UK Explained

We are maintaining our H2 guidance for UK sales to be up +1.9% (versus +7.6%
in the first half).  There are three reasons that we expect lower growth in
the UK during the rest of the year:

 ·                     We expect UK employment opportunities to continue to diminish as we enter the
                       second half, with the effects of April's National Insurance changes continuing
                       to filter through into the economy as the year progresses.  We believe that
                       this will increasingly dampen consumer spending as the year progresses.
 ·                     The comparative numbers in the second half of last year were much stronger
                       than the first half.  For reference, in H1 last year the UK business was up
                       +0.7%, and in H2 it was up +4.3%.
 ·                     In the UK, we believe we exceeded expectations in Q2 as a result of better
                       summer weather and trading disruption at a major competitor.  We do not
                       expect either of these factors to have a material effect in the second half,
                       and so we are not increasing our guidance for UK sales in H2.

Sales Guidance for International Explained

We are upgrading our guidance for International Online sales in the second
half from +13.1% to +19.4%.  This is because we believe we can invest more in
profitable digital marketing than we had originally planned.  For reference,
international sales in Q1 were +30%, and +26% in Q2.

GUIDANCE FOR SALES, PROFIT AND EARNINGS PER SHARE (EPS)

Our revised guidance for the full year is summarised below, along with our
previous guidance which is shown in grey.

                                                         New guidance                       Previous guidance
 Guidance for the full year 2025/26 (52 weeks)           Full year (e)  % Versus 2024/25    Full year (e)  % Versus 2024/25
 NEXT full price sales                                   £5.44bn        +7.5%               £5.36bn        +6.0%
 Total Group sales(3) (inc. markdown & investments)      £6.72bn        +6.3%               £6.63bn        +5.0%
 NEXT Group profit before tax                            £1,105m        +9.3%               £1,080m        +6.8%
 Pre-tax EPS                                             944.1p         +11.7%              929.6p         +10.0%
 Post-tax EPS                                            709.0p         +11.4%              698.1p         +9.7%

(3) Total Group sales are the sum of total sales (full price and markdown)
from all of the Group's divisions plus revenue from subsidiaries and
investments.  Group sales are not statutory revenue.

Share buybacks and assumptions on EPS

In Q1, we purchased £81m of shares at an average share price of £104,
reducing shares in issue by 0.6%.  In Q2, the share price remained above our
buyback limit, so no further shares were purchased.

As a reminder, share buybacks are subject to us achieving a minimum 8%
Equivalent Rate of Return (ERR) on the purchase.  ERR is calculated by
dividing anticipated NEXT Group pre-tax profits by the current market
capitalisation(4).  Our latest guidance of pre-tax profits of £1,105m
results in a buyback limit of circa £118 per share.

(4) Market capitalisation is calculated based on expected average shares in
circulation for the year, and excludes shares in the NEXT Employee Share
Option Trust.

The guidance for EPS in the table above assumes that we make no further share
buybacks this year.

Special dividends

In the absence of any acquisitions, we intend to return any surplus cash that
we are unable to spend on share buybacks by way of a special dividend early
next year (2026).

A 53-week year

As a reminder, this year is a 53-week year, and profit from the additional
week is excluded from this sales and profit guidance.  We expect week 53 to
add a further c.£20m of profit.  At our Year End Results, we will report
week 53 as a distinct item, so it does not distort any comparisons.

INTERIM RESULTS

We are scheduled to announce our results for the first half of the year on
Thursday 18 September 2025.

 

Forward Looking Statements

Certain statements in this Trading Update are forward looking statements.
These statements may contain the words "anticipate", "believe", "intend",
"aim", "expects", "will", or words of similar meaning. By their nature,
forward looking statements involve risks, uncertainties or assumptions that
could cause actual results or events to differ materially from those expressed
or implied by those statements. As such, undue reliance should not be placed
on forward looking statements. Except as required by applicable law or
regulation, NEXT plc disclaims any obligation or undertaking to update these
statements to reflect events occurring after the date these statements were
published.

 

 

 Date:         Embargoed until 07:00 hrs, Thursday 31 July 2025
 Contacts:     Jonathan Blanchard, Chief Financial Officer (analyst calls)

               NEXT PLC                                                     Tel: 0333 777 8888
               Alistair Mackinnon-Musson                                    Email: next@rowbellpr.com

               Rowbell PR                                                   Tel: 020 7717 5239
 Photographs:  https://www.nextplc.co.uk/media/image-gallery/campaign-images
               (https://www.nextplc.co.uk/media/image-gallery/campaign-images)

 

 

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