Next hikes profit targets as heatwave boosts sales

The FTSE 100 retail giant says pre-tax profit expectations for 2026 now £1.24bn, around £25m higher than previously estimated

Next has raised its profit forecasts for the year after sailing past second quarter expectations, positioning its shareholders for a windfall.

The FTSE 100 retail giant increased its pre-tax profit projections for 2026 to £1.24bn, some £25m above prior estimates. Should this be delivered, the figure would represent 7.3 per cent growth on the preceding year.

The group’s overall sales target, including markdowns and investments, was similarly lifted to £7.5bn from £7.3bn.

This comes after sales exceeded forecasts by £70m, which it attributed partly to a lift from the warm weather and the “release of some pent-up demand” in the Middle East and Northern Europe following a subdued first quarter.

Overall UK sales rose 2.8 per cent in the second quarter, while international purchases surged just under 37 per cent, as reported by City AM.

The Leicestershire-based high street mainstay added it was able to invest “much more” in profitable marketing than anticipated.

Chris Beauchamp, chief market analyst at IG, said: “In an ever-changing world, upgrades to Next’s profit forecast is much-needed certainty.”

He added: “Next continues to be one of the UK stock markets most impressive and consistent performers.”

Next increased its target for returning cash to investors, with plans to buy back £524m worth of its own shares this year, approximately £14 million more than previously expected. To date this year, the retail behemoth has spent £355m repurchasing its own stock at an average price of £127.69 per share, reducing its total share pool by 2.3 per cent.

This leaves Next with £169m in surplus cash that it intends to return to shareholders throughout the remainder of the financial year. The company confirmed it would continue buying back shares only within a strict price ceiling of £135.

Should the share price climb above £135, the firm intends instead to distribute the outstanding £169m directly to investors via a one-off special cash dividend.

Next shares have climbed more than nine per cent since the start of the year to just above £148. The stock staged something of a recovery over the past month after consumer confidence began to improve in the wake of the conflict in the Middle East.