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RNS Number : 1915F  Next PLC  29 October 2025

 

29 October 2025

Trading Statement for the Third Quarter

HEADLINES
 ·   In the thirteen weeks to 25 October, NEXT full price sales(1) were up +10.5%
     versus last year.  This was +£76m ahead of our guidance for the period of
     +4.5%.
 ·   Sales overperformed in both the UK and overseas:

     -    Sales in the UK were up +5.4% versus last year; lower than the +7.6%
     growth we achieved in the first half, but ahead of our guidance of +1.9%.

     -    Overseas sales were up +38.8% versus last year; ahead of the +28.1%
     growth we achieved in the first half, and materially better than our guidance
     of +19.4%.
 ·   We are increasing our guidance for full price sales in the fourth quarter from
     +4.5% to +7.0%.  This adds a further £36m of full price sales to our
     forecast.
 ·   The increase in sales in Q3, along with our improved sales guidance for Q4,
     means that we are increasing our full year guidance for profit(2) before tax
     by +£30m to £1,135m.

(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
and (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 third quarter and the year to date.

 Full price sales by division versus last year  H1: 26 wks   Q3: 13 wks    Year to date:

                                                to 26 July   to 25 Oct     39 wks to 25 Oct
 UK - Online NEXT Brand                         +6.8%        +4.2%         +5.8%
 UK - Online LABEL                              +12.6%       +13.0%        +12.7%
 UK - ONLINE TOTAL                              +9.2%        +7.8%         +8.7%
 Retail stores                                  +5.4%        +2.0%         +4.3%
 TOTAL UK                                       +7.6%        +5.4%         +6.8%
 TOTAL ONLINE INTERNATIONAL                     +28.1%       +38.8%        +31.5%
 TOTAL PRODUCT FULL PRICE SALES                 +11.6%       +11.2%        +11.5%
 NEXT Finance interest income                   +0.5%        - 0.1%        +0.3%
 TOTAL FULL PRICE SALES                         +10.9%       +10.5%        +10.8%

 

COMMENTARY ON SALES PERFORMANCE
UK

As expected, sales growth in the UK weakened in comparison to the exceptional
performance achieved in H1.  As a reminder, our UK sales performance in the
first half benefitted from favourable weather conditions and competitor
disruption.  Nonetheless, UK growth of +5.4% was stronger than we had
expected.  In hindsight, we think we underestimated the positive effect of
improved stock levels this year.  Last year, stock deliveries were delayed by
disruption in Bangladesh and constraints in global freight capacity.

International
Direct to consumer websites (nextdirect.com)

Growth through our direct websites was better than expected because we were
able to spend more on profitable digital marketing than anticipated.
Marketing expenditure in Q3 was up +50% versus our previous guidance of
+25%.  The increase in marketing expenditure was driven by the strength of
the returns we were able to achieve.  Our marketing budget is an estimate,
not a fixed sum.  As long as returns remain above our hurdle rate, we will
continue to carefully increase our investment.

Third-party aggregators

Sales in Europe have also benefitted from the consolidation of our
stockholding in the region.  Up until Q3 this year, the warehousing for our
direct websites was separate from the warehouses serving Zalando, our largest
aggregation partner.  As a result of merging these activities into one
warehousing operation and one stockholding, stock availability for our
business on Zalando has been significantly improved.  The new operation is
managed by Zalando's third-party logistics division, ZEOS.

Q4 FULL PRICE SALES GUIDANCE

We are upgrading our sales guidance for the final quarter from +4.5% to
+7.0%.  The following paragraphs explain our reasoning and set out the
guidance in detail.

In the UK, we expect sales growth to continue to moderate, slowing from +5.4%
in Q3, to +4.1% in Q4.

Last year, sales growth overseas stepped forward dramatically from Q3 to Q4.
As we annualise this step change we expect sales growth overseas to moderate
from +39% to +24%.  The +24% growth number is derived from our two-year
performance.  On a two-year basis growth in Q4 would be +65%, versus +67%
achieved in Q3.

 Full price sales guidance versus last year  H1      Q3      Q4 (e)  Full year (e)
 UK (Online + Retail Stores)                 +7.6%   +5.4%   +4.1%   +6.0%
 International Online                        +28.1%  +38.8%  +24.3%  +29.7%
 TOTAL PRODUCT SALES                         +11.6%  +11.2%  +7.4%   +10.3%
 NEXT Finance interest income                +0.5%   - 0.1%  - 0.1%  +0.2%
 TOTAL FULL PRICE SALES                      +10.9%  +10.5%  +7.0%   +9.7%

 

GUIDANCE FOR FULL YEAR SALES, PROFIT AND EARNINGS PER SHARE

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                                £5,552m        +9.7%               £5,440m        +7.5%
 Total Group sales (inc. markdown & investments)      £6,870m        +8.7%               £6,720m        +6.3%
 NEXT Group profit before tax                         £1,135m        +12.2%              £1,105m        +9.3%
 Post-tax EPS                                         729.4p         +14.6%              714.1p         +12.2%

The guidance for EPS in the table above assumes no further buybacks, as
explained below.

Total Group sales

Guidance for total Group sales(3) has increased by £150m; this is £38m more
than the increase in NEXT full price sales.  £23m of this increase comes
from the timing of markdown sales.  This season, we placed more of our
surplus stock into our mid-season Sale in September rather than our Christmas
Sale.  This stock therefore has longer to sell during this financial year
than the equivalent Sale stock last year.  We expect total surplus stock in
the second half to be up around +3.5%.  The remaining £15m comes mainly from
additional Clearance(4) sales.

(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.

(4  ) Our Clearance division sells unsold Sale stock from previous seasons.
This stock has been written down in value and carried over to the following
season, where it is then sold at full margin.

Assumptions on share buybacks and surplus cash

We anticipate that we will generate around £425m of surplus cash(5) this
year.  This, combined with our planned increase in net debt, means that we
have c.£500m available for distribution.  As explained in our Half Year
Results in September, the forecast increase in net debt is intended to
maintain the Company's net debt to PBIT ratio in line with last year, at 0.63.

We have returned £131m to shareholders through share buybacks, but we are
assuming that we make no further share buybacks in the current financial
year.  This is because our share price is currently much higher than our
buyback limit which, based on our latest guidance, is £121 per share.

As a reminder, NEXT 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(6).

Based on our latest guidance, remaining surplus cash is forecast to be
£369m.

(5)  Surplus cash is defined as cash generated after deducting interest, tax,
capital expenditure, funding customer receivables, investments or
acquisitions, and ordinary dividends.

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

Special dividends

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

As previously announced, our interim dividend (87p per share) will be paid on
5 January 2026.

A 53-week year

This year is a 53-week year, and profit from the additional week is excluded
from this sales and profit guidance.  The extra week is included in our cash
forecast.  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 the year-on-year comparisons.

CHRISTMAS TRADING STATEMENT

We are scheduled to give an update on sales to Saturday 27 December 2025, on
Tuesday 6 January 2026.

 
 
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, Wednesday 29 October 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://media.next.co.uk/section/corporate/corporate-imagery
               (https://media.next.co.uk/section/corporate/corporate-imagery)

 

 

 

 

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