NEXT plc (LON: NXT) has raised its full-year profit forecast after posting a stronger-than-expected third quarter performance, driven by rapid international online growth and steady UK demand. The FTSE 100 retailer reported that full price sales rose by 10.5 percent in the thirteen weeks ending 25 October 2025, outperforming its previous guidance of 4.5 percent for the quarter.
The British apparel and homeware company said it now expects profit before tax to reach GBP 1.135 billion for the 2025–2026 financial year. This is an increase of GBP 30 million over its prior forecast and represents a 12.2 percent rise compared to the previous year. Earnings per share are also projected to rise by 14.6 percent to 729.4 pence. Analysts viewed the upward revision as a signal of operational strength across both domestic and international segments, with volume momentum now expected to carry through to the key Christmas trading period.
On the London Stock Exchange, shares of NEXT plc closed at 14,580 GBX on 29 October 2025, marking an 8.77 percent intraday rise, or 1,175 GBX higher than the previous close. This brought the retailer’s market valuation to a new 52-week high, with over GBP 41.5 million in turnover on the day and more than 483,000 shares traded.
Why are international online sales driving upside in NEXT plc’s growth outlook?
NEXT plc’s third quarter performance was notably boosted by a sharp acceleration in international online sales, which increased by 38.8 percent year-over-year. This growth figure exceeded the 28.1 percent increase recorded in the first half of the fiscal year and was well above the company’s guidance of 19.4 percent for the third quarter.
The retail group attributed the international growth spurt to higher-than-planned investments in digital marketing and logistics optimisation. Marketing spend in the third quarter rose by 50 percent compared to earlier forecasts of a 25 percent increase. Management noted that strong return on investment allowed the company to reinvest in profitable channels without breaching internal hurdle rates.
In Europe, NEXT plc consolidated warehousing and stockholding activities for its direct-to-consumer and third-party sales channels, improving availability and delivery efficiency. The move included integration with Zalando’s third-party logistics unit, ZEOS, to streamline operations across both platforms. The result was a more agile supply chain that allowed NEXT plc to maximise product exposure on Zalando while maintaining margin control.
What are the trends shaping UK sales and store performance for NEXT plc in Q3?
Sales within the United Kingdom grew by 5.4 percent in the third quarter, which marked a moderation from the 7.6 percent growth recorded in the first half of the fiscal year. Nonetheless, the third-quarter performance was significantly ahead of the retailer’s UK guidance of 1.9 percent.
Management pointed out that the first half of the year benefitted from tailwinds such as favourable weather and disruptions at competitor retailers. In contrast, the third quarter reflected more organic drivers, including improved inventory availability. In the prior year, supply chains were strained by freight issues and shipment delays from Bangladesh, resulting in limited stock at critical periods.
Online sales of the NEXT brand in the UK rose by 4.2 percent, while the LABEL segment, which includes partner brands, grew by 13.0 percent. The total online sales growth in the UK reached 7.8 percent. In comparison, retail stores grew at a slower pace of 2.0 percent in the quarter, although they still contributed positively to the blended UK sales figure.
What updates has NEXT plc made to its fourth quarter and full-year forecasts?
NEXT plc now expects fourth quarter full price sales to grow by 7.0 percent, up from the previous estimate of 4.5 percent. The revised guidance reflects confidence in the continuation of strong trends in international markets, coupled with a more moderate but stable performance in the UK.
Within the UK, fourth quarter sales growth is projected to decelerate to 4.1 percent as the base effects from the prior year come into play. On the international front, sales growth is expected to ease to 24.3 percent in the fourth quarter, compared to the 38.8 percent posted in the third quarter. The company noted that the expected slowdown is due to an annualisation effect from a strong Q4 performance last year.
For the full year ending January 2026, NEXT plc now expects total full price sales to reach GBP 5.552 billion, a 9.7 percent increase compared to the previous year. This is higher than the previous forecast of GBP 5.440 billion, which had anticipated 7.5 percent growth. Total Group sales, which include markdowns and revenues from subsidiaries and platform services, are projected at GBP 6.870 billion, a rise of 8.7 percent.
How is NEXT plc managing its capital return policy and surplus cash strategy?
NEXT plc anticipates generating approximately GBP 425 million in surplus cash this financial year. After accounting for a planned increase in net debt to maintain a consistent net debt-to-PBIT ratio of 0.63, the company estimates it will have around GBP 500 million available for distribution.
To date, the company has returned GBP 131 million to shareholders through share buybacks. However, no further buybacks are expected in the current fiscal year due to the rising share price. The internal buyback ceiling, which requires an 8 percent equivalent rate of return based on market capitalisation and pre-tax profit forecasts, currently sits at GBP 121 per share. With NEXT plc’s share price exceeding that level, management does not expect to execute further repurchases at this stage.
Instead, the company intends to distribute surplus cash via a special dividend of approximately GBP 3.10 per share, to be paid in late January 2026. This would follow the scheduled interim dividend of 87 pence per share, which is due for payment on 5 January 2026.
What are analysts saying about NEXT plc’s valuation and future performance?
The sharp rally in NEXT plc’s share price, combined with rising earnings forecasts and operational outperformance, has drawn positive commentary from institutional investors. While the stock is now trading at elevated levels, the consistent upward revision of earnings per share and strong international growth trajectory continue to underpin bullish sentiment.
NEXT plc’s guidance implies that post-tax earnings per share will grow by 14.6 percent to 729.4 pence, reflecting both strong underlying performance and capital discipline. Although share buybacks have paused due to valuation constraints, the proposed special dividend has been well received by investors seeking yield in a high-rate environment.
With the 53rd week of the financial year expected to add an incremental GBP 20 million in profit, the company will report the additional week separately in its year-end financials to preserve comparability. NEXT plc plans to provide a Christmas trading update on 6 January 2026, which will cover the period up to 27 December 2025 and could influence investor sentiment early in the new year.
Key takeaways from NEXT plc’s Q3 FY2025 results and upgraded full-year guidance
- NEXT plc raised its full-year profit before tax guidance to GBP 1.135 billion, a 12.2 percent increase from the previous year.
- Full price sales in Q3 FY2025 rose by 10.5 percent year-over-year, significantly above the retailer’s forecast of 4.5 percent.
- International online sales grew by 38.8 percent in the third quarter, outpacing the 28.1 percent growth achieved in the first half.
- UK sales rose 5.4 percent in Q3, with online growth of 7.8 percent and store sales contributing 2.0 percent.
- The company upgraded its Q4 full price sales outlook from 4.5 percent to 7.0 percent, citing momentum in overseas markets and stable UK demand.
- Total full price sales for the 2025–2026 financial year are now expected to reach GBP 5.552 billion, reflecting 9.7 percent annual growth.
- NEXT plc plans to return surplus capital to shareholders via a GBP 3.10 per share special dividend in January 2026.
- Share buybacks have been paused due to the current share price exceeding the company’s internal buyback threshold of GBP 121.
- The share price jumped 8.77 percent on 29 October 2025 to close at 14,580 GBX, hitting a new 52-week high.
- Over GBP 41.5 million worth of shares changed hands during the trading day, with institutional flows signaling bullish sentiment.
- NEXT plc will release its Christmas trading statement on 6 January 2026, covering performance up to 27 December 2025.
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