British fashion retailer Next Plc has raised its annual profit forecast for the fifth time in a year after reporting strong Christmas trading, fueled by better-than-expected full-price sales and robust international growth. The upbeat report sent Next shares higher in early trading on Tuesday.

Strong Christmas Sales Beat Expectations

Despite subdued consumer confidence ahead of Christmas and unseasonably mild weather, Next delivered a 10.6% rise in full-price sales over the nine weeks to December 27, 2025. UK sales increased by 5.9%, reflecting improved stock availability and higher inventory levels compared with the previous year, when supply chain disruptions in Bangladesh and global freight delays had constrained sales.

CEO Simon Wolfson highlighted that the strong festive trading performance underscores Next’s resilience in a challenging retail environment. “While consumer sentiment has been cautious, our strategic stock management and online reach have enabled us to outperform expectations,” Wolfson said.

International Sales Surge

Next’s international business, which operates online in over 70 countries, recorded a 38.3% jump in sales, exceeding forecasts. The surge reflects higher marketing investment and improved stock availability, helping the retailer expand its global footprint. Analysts note that international sales growth has been a key driver of Next’s overall performance, compensating for ongoing pressures in the UK market.

Profit Forecast Upgraded

Following the strong trading results, Next now expects a pre-tax profit of £1.15 billion ($1.56 billion) for the year ending January 31, 2026, up from the previous guidance of £1.135 billion and significantly higher than the £1.011 billion recorded in 2024/25, when Next surpassed £1 billion in profit for the first time.

The retailer cautioned, however, that growth is expected to slow in 2026/27, with full-price sales and profit growth projected at 4.5%. Challenges include tough comparative numbers in the UK and ongoing pressures on employment, which may affect consumer spending as the year progresses. Official data shows that Britain’s unemployment rate reached its highest since early 2021, which could dampen retail demand.

Market Reaction

Shares of Next, which operates over 800 stores in the UK and Ireland including Reiss, Joules, and FatFace outlets, rose 3.1%, extending gains over the last year to 47%. In contrast, shares of rival Marks & Spencer fell 1.4% ahead of its upcoming trading update.

Shore Capital analyst David Hughes noted:

“While we expect Next to continue performing better than most retailers, the tough economic backdrop may make future profit upgrades harder to achieve. Overseas growth is also likely to moderate from the exceptional levels seen in 2025/26.”

Outlook for UK Retail

Next’s performance highlights the importance of effective inventory management, online sales, and international expansion in navigating the current UK retail environment. While the retailer has shown resilience during the festive season, analysts caution that economic pressures, including rising employment costs and consumer uncertainty, could slow growth in the coming year.

Nevertheless, Next’s strategic investments in marketing, stock availability, and international online channels position it well to maintain competitiveness and deliver solid returns in both the UK and overseas markets.