Next's annual profit rises 14.5 percent amidst strong international performance

UK-based retailer Next has reported a significant increase in profitability for the year ending January 2026, driven by a surge in overseas online sales and improved margins. The group’s profit before tax reached 1,158 million pounds (1,547 million dollars), marking a 14.5 percent increase compared to the previous year.

Statutory profit before tax, which includes a 53rd week of trading and exceptional gains, rose by 20.8 percent to 1,193 million pounds. Post-tax earnings per share (EPS) grew by 17 percent to 744.2 pence.

International online sales drive group performance

The total group sales, including subsidiaries and investments, grew by 10.8 percent to 7,004 million pounds and full price sales were up 10.9 percent. A standout performer was the international online division, where full price sales jumped by 35 percent to 1,158 million pounds. This overseas growth was supported by a 63 percent increase in digital marketing expenditure and improved website functionality across 83 countries. The retailer noted that Europe was its fastest-growing region, with sales up by 40 percent.

In the UK, performance remained steady. Retail store full price sales increased by 2.3 percent on a like-for-like (LFL) basis, while the online UK business saw full price sales rise by 8.7 percent. Next noted that UK consumers are increasingly opting for fewer, higher-priced, and better-quality items.

Rising costs impact retail store profitability

Despite higher sales, profits in the UK retail stores division fell by 5 percent to 193 million pounds. This decline was attributed primarily to a 13 percent increase in entry-level wage costs following changes to the national minimum wage and national insurance.

Next chairman, Michael Roney, also announced several board changes. Group sales, marketing and human resources director, Jane Shields, is retiring after 40 years with the company. Additionally, Annette Court and Jeni Mundy have joined as independent non-executive directors.

Accelerated warehouse investment and AI integration

To support the unexpected 28 percent growth in online sales over the past two years, Next is pulling forward its warehouse development programme. The company plans to spend 307 million pounds over the next three years to expand capacity at its Elmsall site.

Next chief executive officer, Lord Wolfson, highlighted that the company is also integrating artificial intelligence (AI) to improve productivity. AI is currently being used for sales forecasting, markdown price optimisation, and assist in software development.

The company stated that AI is likely to change job roles rather than replace employees, with routine tasks being managed down through natural attrition.

Outlook for 2026/27 and middle east conflict

For the year ending January 2027, Next has increased its group profit guidance to 1,210 million pounds, a 4.5 percent increase. Full price sales are expected to grow by 4.5 percent.

However, the company warned of potential disruption from conflict in the Middle East, which accounts for approximately 6 percent of group turnover. Next has accounted for 15 million pounds in additional costs related to freight and fuel disruption.

The group remains committed to shareholder returns, having returned 839 million pounds in the past year through dividends, share buybacks, and a capital distribution. It intends to return a further 500 million pounds to shareholders in the coming year.