Fashion giant Next has increased its profit guidance for the third time this year after a heatwave-driven surge in sales. Takings jumped 9.2% in the 13 weeks to the start of August, smashing its forecast 4% increase and providing an extra £70 million boost.
Sales and Profit Forecasts Raised
Next now expects annual sales to exceed £6 billion, with profits set to rise by more than 7% to £1.24 billion. In the UK, sales rose 2.8%, driven by online shopping, while store sales declined. Online international sales soared 37% year-on-year, according to the latest update to investors.
The company attributed the over-performance to warmer-than-expected UK weather in June and July, as well as increased spending on profitable marketing campaigns. It also cited pent-up demand in the Middle East and Northern Europe after a weaker start to the year.
Impact of Iran War and Price Adjustments
Trading in Next's overseas business has been affected by the Iran war, which began in late February, with the Middle East accounting for around 6% of annual sales. Chief executive Lord Simon Wolfson previously said the company planned to raise prices in some overseas countries by as much as 8% to offset the impact.
Julie Palmer, managing partner at advisory group BTG, said: "The fashion retailer remains not only undeterred by the supply chain cost pressures from the war and disruption on the Strait of Hormuz, but even seems to have underestimated the resulting pent-up demand in some markets that has worked in their favour."
Market Reaction and Analyst Views
Shares in Next, which operates more than 800 stores in the UK and Ireland and has an online operation serving the UK and overseas, rose 7% in early trading, extending their gain so far in 2026 to 19%.
Richard Hunter, head of markets at investment platform Interactive Investor, said: "Next has done it again, breezing past its own estimates which has led to yet another profit upgrade for the year as a whole."
Chris Beauchamp, chief market analyst at IG, said: "In an ever-changing world, upgrades to Next's profit forecast is much-needed certainty."
Retailers saw sales rise unexpectedly in June as shoppers increased spending on air conditioning and clothing, official data showed last month, adding to signs of an economic pickup spurred by weather and the soccer World Cup. The data aligned with a GfK survey of improved consumer sentiment, helped by hopes about new prime minister Andy Burnham, despite concerns about the war in Iran.
