Fashion retail chain Next has reported stronger-than-expected sales over the key Christmas period but warned rising unemployment could weigh on UK consumer spending this year.
Next said full price sales were ahead of its forecasts after rising 10.6% in the nine weeks to 27 December compared to 2024.
Annual profit is now forecast to be higher than the company originally predicted.
However, the retailer warned that sales in the UK would not grow as quickly this year, partly due to the weakening jobs market which has led to a rise in the unemployment rate.
Next said full-price sales in the UK rose by 5.9% over the Christmas period, while international revenues jumped by 38.3%.
As a result, it now expects to report full-year profits of £1.15bn, slightly ahead of its previous forecast. It is the fifth time Next has increased its guidance in the past financial year.
But for the coming year, the retailer expects sales growth will slow due to a number of factors, including continuing “pressures on UK employment” which it said were likely to “filter through into the consumer economy as the year progresses”.
Charles Allen, retail analyst at Bloomberg Intelligence, told the BBC’s Today programme: “Next has been consistently warning about the slight edge up in unemployment, particularly among younger people, and they remain concerned about that as something that could slow sales down.”
Next also said it would be tough to match 2025’s performance as it had been helped by “very favourable summer weather” and a boost it received when rival chain Marks & Spencer was hit by a cyber attack.
Allen said that overall, Next’s results showed that “when it came to the peak season, people did go out and spend in the UK”.
But he said spending was bunched in the last few weeks before Christmas, which was probably due to people waiting to see what was announced in the Budget.
“I think people wanted to see what their finances would look like,” he said.
Catherine Shuttleworth, owner of marketing agency Savvy, said Next had enjoyed good sales “in a time where consumer confidence has been pretty suppressed”.
She told the BBC she expects another “sure-footed” performance from the chain this year, adding: “Next is one of those organisations in retail that knows its customers pretty well.”
Looking at the wider picture for retail over Christmas, Shuttleworth said she thought results would be “steady” rather than “stellar”.
While she expects food retailers to have done well, the clothing sector will be more varied and talk “about some retailers leaving the High Street for good” will be heard over the next few weeks.
On Monday, the company behind retail chains Claire’s and The Original Factory Shop said it would be placing them into administration, putting 2,500 jobs at risk.
