Fashion and home interiors chain Next upgraded its profit forecast for the year after reporting an “over-achievement” over Christmas.

The company’s positive statement showing an underlying 5.7% uplift in full-price sales in the nine weeks to 28 December compares with previous guidance of 3.5%.

“The over-achievement adds £27m to full price sales,” said the company.

Group profit before tax for the year to the end of January is now forecast to be up 10% on last year, and full price sales growth forecast to be up 3.5%.

For its 2025/26 financial year, Next forecasts full-price sales growth of 3.5% and pretax profit of £1,046m, up 3.6%.

Next’s performance is a shot in the arm for the sector which produced figures showing that it had been a lacklustre year for retailers.

Shoppers spent more in December compared with the year, said the British Retail Consortium, but growth of 3.2% was boosted by a big weekend of Black Friday sales, which are normally included in November’s figures.

Growth for the last three months of 2024 was only 0.4% higher than the previous year, ending a weak 12 months for retailers overall, and the BRC warned that 2025 would be “challenging” due to rising taxes and wage costs.

Market reaction

Charlie Huggins, manager at Wealth Club, commented: “Next has enjoyed a strong Christmas with its online business seeing an acceleration in sales growth in the fourth quarter, both in the UK and overseas.

“The year ahead is forecast to be more challenging, but Next still expects to grow sales and profit. It is a classic example of a strong business getting stronger.

“Next has also warned it will need to put up prices in the year ahead. Many other retailers are likely to follow suit. This is likely to add to inflationary pressures and could encourage consumers to tighten their belts in 2025.

“Overall, the UK retail sector sits between a rock and a hard place. Costs are going up, margins are likely to come down and consumers face an inflationary squeeze. Next though is well placed to weather the storm. If any retailer can thrive in this environment, it’s probably them.”

Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “Growing internationally is going to be the key to Next maintaining the impressive momentum of recent years and it has a solid foundation on which to build, with a double-digit sales boost expected next year.

“While the shares have retreated from recent highs, they are still some 12% up on this time last year and the company is well placed to take advantage of further opportunities as other retailers struggle.”