(Bloomberg) — Next Plc warned UK shoppers face pressure from higher energy bills and mortgage costs before Christmas, as the retailer gears up for a more modest autumn and winter after a hot summer fueled a surge in online sales.
The British fashion and homewares retailer trimmed its UK sales forecast for the second half to 2% from 2.8% on Thursday. That was despite nudging its full-year profit forecast higher for the fourth time this fiscal year, reflecting better-than-expected demand for its clothing in the first six months.
“We’ve moderated our expectations for the whole season, including Christmas,” Next Chief Executive Officer Simon Wolfson said in an interview. “Ultimately the inflation pressure is likely to feed through as pressure on the consumer.”
While the UK economy held up better than expected due to sunny weather and the World Cup football over the summer, retailers and consumers have also faced a spike in energy bills triggered by the conflict in the Middle East that has spurred inflation and weighed on consumer confidence.
Next said it is concerned about the impact of inflation, higher interest rates and a weak employment market on UK consumer behavior — though it also predicted the decline in spending would be slow and steady rather than “precipitous.”
‘Pressures’
“It’s a combination of inflationary pressures going through, particularly on energy as a result of the war, as we go through into the second half,” Wolfson said, adding the government has little fiscal room to shield households. But he also warned ministers not to raise taxes in the upcoming budget.
“If taxes on investment go up, then we’ll have less investment in the UK and if we have less investment, we’ll have less growth,” he said.
Under Wolfson, Next has a record of lifting guidance at trading updates. Its shares hit a record in August after second-quarter sales surged, driven by hot weather in Britain and pent-up demand in the Middle East and northern Europe.
The stock rose as much as 3.3% in London on Thursday before paring the gain.
While the dampened UK outlook will likely prompt debate, “we think that Next investors will be satisfied today as the company navigates industry headwinds with style,” Jefferies analyst Frederick Wild said in a note.
The fastest growth is coming from overseas, where Next has been investing in marketing and improvements to its direct-to-consumer website and delivery. The retailer boosted guidance for international sales by 20% for the second half.
Next has been on an acquisitive streak in recent years, buying brands including FatFace, Joules, Cath Kidston and Made.com. It has also partnered with fashion platforms like Zalando AG’s fulfillment network for its international business.
Still, the picture was less rosy at its network of about 500 stores across the UK. A drop in full-priced sales in the first half was in part driven by unfavorable comparisons to last year, when rival Marks & Spencer Group Plc was hit by a cyberattack. But Next also pointed to lackluster demand for its own-branded menswear, which it expects to continue due to a lack of new ranges.
More stories like this are available on bloomberg.com
©2026 Bloomberg L.P.
