Best-in-class retailer Next (NXT) has delivered 11 upgrades to earnings forecasts in the last three years, the latest (8 May) driven by warm spring weather in the first quarter to 26 April.
Consequently, there is pressure on the fashion-to-homewares seller to raise guidance for a 12th time with its second-quarter update on 31 July.
Investors will want to learn if Next has benefited from Marks & Spencer’s (MKS) cyber-attack and sustained its strong overseas performance, and to hear CEO Simon Wolfson’s thinking on the share buyback, paused following a share price surge which meant the economics of buying back stock were no longer so compelling.
Balmy temperatures helped send full-price sales 11.4% higher year-on-year in the first quarter, way ahead of management’s expectation of a 6.5% increase, as the better weather coaxed consumers to its retail outlets.
As a result, Next nudged its year-to-January 2026 pre-tax profit guidance up by £14 million to £1.08 billion, implying 6.8% year-on-year growth.
However, the notoriously conservative company refrained from upgrading sales guidance for the rest of the year, warning the warm weather may have pulled forward sales. There is also the risk the recent run of heatwaves kept cash-strapped British consumers indoors, sapping second-quarter sales.
The FTSE 100 company’s run of upgrades demonstrates that retailers can thrive, regardless of what the weather does, if they sell the right product at the right price point in the right format for the target customer base.
Next has the knack of getting this right, but in common with retail rivals, is grappling with frail consumer confidence as well as higher wage and national insurance costs.
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