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Fashion retailer Next has raised its annual profit forecast after Christmas trading proved stronger than expected. The company now anticipates annual profits of £1.15 billion, marking the fifth profit upgrade it has announced over the past year.
Next reported that full-price sales in the nine weeks to 27 December 2025 increased by 10.6% compared with the same period last year. Within this, UK full-price sales over the Christmas period rose by 5.9%, while international revenues saw a much sharper increase of 38.3%.
Despite the positive results, Next has warned that UK sales growth is expected to slow in 2026/27. The retailer cited “pressures on employment” as a key factor likely to weigh on consumer spending. As a result, it has forecast UK sales growth of just 1.6% for the forthcoming financial year.
The company also noted that its performance in 2025 was supported by unusually favourable summer weather, as well as temporary disruption at Marks & Spencer, which diverted some shoppers.
Although Next enjoyed a strong Christmas period, this was not reflected across the wider retail sector. Last week, the parent company of Claire’s and The Original Factory Shop announced plans to enter administration, placing 2,500 jobs at risk.
Analysts believe that Next’s detailed understanding of its customer base continues to underpin its strong performance. The retailer also benefits from allowing customers to “trade up” to higher-quality or premium products, tapping into a trend among more affluent shoppers to prioritise fewer, higher-value purchases.
Taken together, these high street developments highlight how rising unemployment, weaker consumer confidence and ongoing changes in shopping habits mean retail businesses will need to remain agile in the year ahead.
