REG - Next PLC - Trading Statement

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RNS Number : 7182N  Next PLC  06 January 2026

Trading Statement - 6 January 2026

HEADLINES

Christmas Trading and Full Year Guidance - Year Ending January 2026
 ·   In the nine weeks to 27 December, full price sales(1) were up +10.6% versus
     last year, which compares to our guidance for the quarter of +7.0%

     o  UK sales were up +5.9%

     o  International sales were up +38.3%
 ·   This over-achievement, along with additional sales forecast in January, adds
     £51m to full price sales and we are increasing guidance for full year profit
     before tax(2) by +£15m to £1,150m
 ·   Profit before tax is now forecast to be up +13.7% versus last year, and
     post-tax Earnings Per Share (EPS) up +16.1%

(1) Full price sales include all items sold in NEXT Retail Stores, NEXT Online including third-party brands, and NEXT Finance interest income, but excludes Sale events, Clearance, Total Platform commission and subsidiaries' sales.

(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, (3) an exceptional £16m gain from the sale of land in November
2025 and (4) profit from this year's 53rd week.  Note, last year also
excluded an exceptional, non-cash, loss relating to the closure of our defined
benefit pension scheme.

Initial Guidance for the Year Ahead - Year Ending January 2027
 ·   Full price sales growth forecast to be up +4.5%
 ·   Group profit before tax forecast to be £1,202m, up +4.5%
 ·   Assuming the Group makes no further acquisitions, cash available for
     distribution to shareholders, including ordinary dividends, is expected to be
     £768m.  This represents 4.8% of our current market capitalisation
 ·   Anticipated shareholder distributions, combined with forecast EPS growth of
     +4.3%, would deliver total shareholder return (at a constant P/E ratio) of
     9.1%

The Remainder of this Statement

The remainder of this document is divided into two parts: Part 1 focuses on
the current year and Part 2 gives our initial guidance for sales, profit and
cash flow in the year ahead.

 

PART 1: THE CURRENT YEAR

Full Price Sales Performance to 27 December 2025

The table below sets out the full price sales performance for the nine weeks
to 27 December and for the year to 27 December.  Performance in the year to
the end of Q3 is shown in grey.

 Full price sales by division versus last year  Year to Q3  Q4 to date:       Year to date:

                                                            9 wks to 27 Dec   48 wks to 27 Dec
 UK - Online NEXT Brand                         +5.8%       +8.8%             +6.5%
 UK - Online LABEL                              +12.7%      +9.5%             +11.9%
 UK - ONLINE TOTAL                              +8.7%       +9.1%             +8.8%
 Retail stores                                  +4.3%       +1.4%             +3.5%
 TOTAL UK                                       +6.8%       +5.9%             +6.6%
 ONLINE INTERNATIONAL                           +31.5%      +38.3%            +33.0%
 TOTAL PRODUCT FULL PRICE SALES                 +11.5%      +11.1%            +11.4%
 NEXT Finance interest income                   +0.3%       - 0.3%            +0.2%
 TOTAL FULL PRICE SALES                         +10.8%      +10.6%            +10.7%

 

Growth in the UK slowed but not by as much as we expected.  UK growth was
+5.9%, compared to our previous guidance of +4.1%.  We believe that sales
benefited from higher stock levels than last year, when supplier deliveries
were delayed by disruption in Bangladesh and global freight networks.

International Online sales were up +38.3%, materially better than our guidance
of +24.3%.  This overperformance was driven by two factors:

 ·   We were able to increase profitable marketing expenditure by more than
     anticipated.
 ·   Sales through our main European aggregator, Zalando, were better than
     anticipated following our transition to ZEOS's platform in August.  This
     change improved stock availability by allowing the same stock-holding to serve
     both the Zalando and NEXT websites across Europe.

 

End-of-Season Sale

The amount of stock in our end-of-season Sale was higher than we previously
anticipated and up +5% on last year.  The adverse effect of more Sale stock
was offset by better than expected clearance rates.  The net effect was to
add £30m to guidance for total Group sales, but was profit neutral.

Sales and Profit Guidance for the Current Year

Our sales, profit and EPS guidance for the current year is set out below along
with our previous guidance.  We have assumed that sales growth in January
will be in line with Q4 to date.

                                                         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                                   £5,603m        +10.7%              £5,552m        +9.7%
 Total Group sales(3) (inc. markdown & investments)      £6,971m        +10.3%              £6,870m        +8.7%
 NEXT Group profit before tax                            £1,150m        +13.7%              £1,135m        +12.2%
 Post-tax EPS                                            738.8p         +16.1%              729.4p         +14.6%

(3) Total Group sales are the sum of total sales (full price and markdown) from all of the Group's divisions plus revenue from subsidiary companies.  Subsidiaries' turnover is calculated using our share of our subsidiaries' turnover.
53rd Week

The financial year ending January 2026 is a 53-week year.  The guidance above
relates to a 52-week period in order to provide a direct comparison against
previous years.  The addition of week 53 will add around £22m of profit
before tax and around £20m of cash flow, which is reflected in the 53-week
cash flow forecast below.

Cash Generation, Shareholder Distributions and Net Debt

Cash generation in the year remains strong and we expect to generate £474m of
surplus cash, after deducting interest, tax, capital expenditure, funding
customer receivables and paying ordinary dividends, but before any investments
and further distributions to shareholders.  This includes the exceptional
£54m cash inflow from the sale of land near Waltham Abbey, Essex, as
announced in the RNS statement issued on 25 November.

As explained in our previous guidance, we plan to increase net debt in line
with the increase in PBIT (profit before interest and tax).  This will
increase net debt (excluding lease liabilities) at the year end by around
£79m to £739m.  Our forecast for cash and shareholder distributions is
summarised below.

 Cash flow and shareholder distributions £m                        2025/26 (e)
 Cash generation before investments and shareholder distributions  706
 Additional cash generated from land sale (exceptional)            54
 Ordinary dividends                                                (286)
 Surplus cash after ordinary dividends                             474
 Increase in net debt                                              79
 Cash available for distribution/investment                        553
 Investments in third-parties                                      (1)
 Share buybacks                                                    (131)
 Proposed capital distribution by B Share Scheme                   (421)
 Remaining surplus cash                                            0

Share buybacks

During the year we purchased £131m of shares at an average share price of
£109.  This reduced the number of net shares(4) by 1.0% since the start of
this financial year.  For most of the year, our share price has largely
remained above our buyback price limit, limiting the scope for buybacks.

We have always aimed to achieve a minimum 8% Equivalent Rate of Return (ERR)
on the purchase of our own shares.  ERR is calculated by dividing anticipated
NEXT Group pre-tax profits by the current market capitalisation(5).

(4) Net shares are shares in issue less the shares held in our Employee Share
Ownership Trust.

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

Capital return through proposed B Share Scheme

As announced in the RNS issued on 19 December, we propose that remaining
surplus cash for 2025/26, totalling £421m, is returned to shareholders by way
of a B Share Scheme.  This scheme is subject to shareholder approval at the
General Meeting scheduled for Thursday 15 January 2026.

The effect of the scheme will be to return £3.60 per ordinary share.  The
proposed record time to participate in the scheme is 6pm on 15 January 2026,
with shares issued that day.  The B Shares will be redeemed and cancelled on
16 January 2026.  Payment to shareholders would be on or before Wednesday 28
January 2026.

PART 2: GUIDANCE FOR THE YEAR AHEAD

GUIDANCE FOR SALES, PROFIT AND EPS IN 2026/27
 Guidance for the full year 2026/27 (52 wks vs 52 wks)  Full year (e)  % Versus 2025/26
 NEXT full price sales                                  £5,855m        +4.5%
 Total Group sales (inc. markdown & investments)        £7,261m        +4.2%
 NEXT Group profit before tax                           £1,202m        +4.5%
 Post-tax EPS (assuming no share buybacks)              770.4p         +4.3%

Currently our share price is above our buyback price limit of £128, so we
have assumed that surplus cash will be returned by way of a special dividend
or other capital return.  This may of course change but, for the moment, we
are not forecasting any enhancement in EPS through buybacks.  For details of
surplus cash, please see below.

Full Price Sales

We are forecasting that full price sales, including NEXT Finance interest
income, will be up +4.5%.   Growth forecast in the UK and International
business is summarised below.  For comparison, the right hand column shows
the equivalent numbers for the current year to date.

 Full price sales guidance versus prior year  2026/27 (e)    Year to date 2025/26
 UK (Online + Retail Stores)                  +1.6%          +6.6%
 International Online                         +16.5%         +33.0%
 TOTAL PRODUCT SALES                          +4.8%          +11.4%
 NEXT Finance interest income                 - 0.6%         +0.2%
 TOTAL FULL PRICE SALES                       +4.5%          +10.7%

We expect growth next year to be lower than the current year for four
reasons:

 ·   In the UK, growth in the current year was boosted by very favourable summer
     weather, competitor disruption and improved stock levels.  So we will face
     tough UK comparatives, particularly in the first half.
 ·   Continuing pressures on UK employment are likely to filter through into the
     consumer economy as the year progresses.
 ·   Growth from our overseas direct websites is likely to moderate from the
     exceptional levels achieved this year.  In the current year, direct
     international sales benefited from +60% increase in profitable marketing
     expenditure.  We think it is unlikely that we will be able to profitably
     increase our marketing expenditure by as much next year.  Within this
     guidance, we have assumed that overseas marketing will increase by around
     +25%.
 ·   In 2025, two one-off changes in overseas stock availability served to boost
     our international sales.  These were:

     o  A significant increase in the amount of wholly-owned brands and licensed
     products made available on overseas websites

     o  Combining our Direct and Aggregator stock holdings in Europe through ZEOS
     in August resulted in a step change in Aggregator sales

Total Group Sales

Total Group sales growth of +4.2% is lower than full price sales growth of
+4.5%, mainly due to markdown sales not growing as quickly.

CASH GENERATION, SHAREHOLDER DISTRIBUTIONS AND NET DEBT

In the year to January 2027, we expect to generate £417m of surplus cash
after deducting interest, tax, capital expenditure, funding customer
receivables and paying ordinary dividends, but before any investments and
distributions to shareholders.  We plan to increase our net debt in line with
PBIT and close the year at around £777m (excluding lease liabilities).

Our forecast for cash and shareholder distributions is summarised as
follows:

 Cash flow and shareholder distributions £m                              2026/27 (e)
 Cash generation before investments and shareholder distributions        730
 Ordinary dividends                                                      (313)
 Surplus cash after ordinary dividends                                   417
 Increase in net debt                                                    38
 Cash available for distribution/investments                             455
 Investments, share buybacks, special dividends or other capital return  (455)
 Remaining surplus cash                                                  0

The combination of ordinary dividends and capital returns, totalling £768m,
represents 4.8% of our current market capitalisation.  This, combined with
underlying EPS growth of +4.3%, would deliver a total shareholder return (at a
constant P/E ratio) of 9.1%.

FULL YEAR RESULTS ANNOUNCEMENT

We are scheduled to announce our results for the full year ending 31 January
2026 on Thursday 26 March 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, Tuesday 6 January 2026
 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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