6 January 2026
If you are covering Next’s latest trading statement, please see the following comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
“Next delivered a strong Christmas trading update this morning for the nine weeks to 27th December. Full-price sales rose 10.6%, well ahead of guidance of 7%, with UK sales up 5.9% and international up an impressive 38.3%.
“In the UK, growth was driven primarily by online, with Next’s own brand accelerating versus Q3 to 8.8%, and third-party brands performing well, including Next Label which grew 9.5%. International growth reflected profitable marketing, a better than anticipated transition to ZEOs - Zalando’s B2B tech solution platform for retailers - and improved stock availability.
“With a few weeks of trading still to go, Next has upped its FY26 sales guidance to 10.7% from 9.7%, and profit by 1%. The group also issued initial FY27 guidance, which is broadly in line with consensus on profit before tax and earnings per share, but conservative on full price sales growth at 4.5%. However, this is typical for Next.
“Next expects tough UK comparables, particularly in the first half due to weather, competitor disruption and better product availability, as well as the growing pressure on UK employment - though clearly the latter is barely impacting its momentum for now. International growth is expected to moderate as the group begins to annualise the initial benefits of the roll-out onto Zalando’s platform and marketing spend.
“Returns to shareholders in the new financial year are expected to be c.4.8% of the current market cap. This is in addition to the special dividend announced on 19th December, which is subject to approval on 15th January
“The group is trading on 18 times price to earnings, ahead of its five-year average of 14 times. However, given the changing profile of the business, which is giving Next diversified growth avenues, consistent performance and strong execution by management, this valuation is well supported.”
