Next has upgraded its full-year profit guidance for the third time in 2026, offering fresh hope that UK consumers remain willing to spend despite ongoing household budget pressures.
The clothing and homeware retailer attributed the strong performance to sunny weather and the release of “pent-up demand” across the Middle East and northern Europe during the quarter.
Next recorded a 9% rise in full-price sales during the 13 weeks ended 1 August, more than double its initial estimate of a 4% increase for the period.
The FTSE 100 retailer owns the UK rights to US brands Gap and Victoria’s Secret, as well as stakes in labels including Reiss and Joules.
Chief executive Simon Wolfson now expects the company to close the year with a pre-tax profit of £1.2bn, roughly £25m higher than previously forecast.
That figure would represent a potential 7.3% rise against last year, marking another strong annual performance for the business.
Shares in Next jumped by almost 7% to a fresh record high on Wednesday morning, making it the best performer across the entire FTSE 100 index.
The retailer, which operates more than 500 stores across the UK, has a well-established history of setting conservative expectations before consistently beating them.
This pattern of under-promising and over-delivering has helped push the company’s share price up by more than 20% over the past year alone.
Garry White, chief investment commentator at wealth manager Raymond James, said Next’s update showed it could “outperform despite a challenging backdrop for consumer spending.”
White added: “If there is one lesson investors have learned from Next over the years, it is that management has a habit of under-promising and over-delivering, making guidance upgrades feel less like surprises and more a feature of the investment case.”
Next’s strong results stand in sharp contrast to the difficulties being reported by several rival retailers operating in the same environment.
Many retailers have warned of rising inflation and falling consumer confidence linked to the ongoing Iran war, adding pressure to already strained trading conditions.
John Lewis chair Jason Tarry recently told employees that profits were being squeezed by “really tough” trading conditions, according to the Financial Times.
Tarry said the business was dealing with an environment where it “will trade into lower sales and higher costs,” signalling a difficult road ahead for the partnership.
He said: “We have to adjust for an immediate future that we weren’t expecting even six months ago, let alone a couple of years ago.”
Tarry added: “It is difficult when things are tough from a sales perspective, but we’re holding our nerve around our focus on margin improvement and firm stock control, rather than just trying to chase top-line sales.”
Next’s ability to grow sales and margins while peers struggle underlines the strength of both its brand portfolio and its operational model heading into the second half of the year.