UK retailer Next has once again raised its profit forecast for fiscal 2027, lifting its pretax profit target to £1.26 billion from £1.24 billion. The modest increase marks the company's 17th guidance upgrade in four years, according to analysts at European investment bank Berenberg, who described the first-half performance as broadly in line with expectations.
The update, which came alongside the company's interim results, also revealed a notable shift in where Next expects its growth to come from. The retailer added £40 million to its international sales outlook while trimming its UK sales view by £18 million. Berenberg interpreted that as a slightly more cautious stance on the domestic consumer, even as the company continues to outperform.
What's behind the numbers?
Next is one of the UK's largest clothing and homeware retailers, with a strong online presence and a network of high-street stores. The company has a track record of regularly updating its guidance, often raising it as results come in better than expected. This latest move continues that pattern, though the scale of the upgrade is small.
The bigger story is the changing mix of growth. By boosting its international sales forecast, Next is signalling that it sees more opportunity overseas, particularly through its online platform and third-party brands. At the same time, trimming the UK outlook suggests the domestic market remains challenging, with shoppers facing pressure from higher living costs and cautious spending.
Berenberg, which has a positive stance on the stock, noted that the first-half performance was in line with its expectations. The bank's commentary echoes its recent views on other European retailers, such as Marks & Spencer's recovery and the strong performance of budget brands like Sinsay.
Why does this matter for investors?
For everyday investors, Next's repeated guidance upgrades are a sign of a well-run company that consistently beats its own expectations. The fact that it has raised its profit target 17 times in four years suggests management is conservative in its initial forecasts and then delivers upside.
However, the shift toward international growth is worth watching. If the UK market is softening, Next's ability to grow overseas becomes more important. The company's online platform, which sells its own brands as well as third-party labels, gives it a way to reach customers beyond the UK without the cost of opening physical stores.
Berenberg's positive stance adds to the picture. The bank has been active in covering European retail and auto stocks, recently cutting Stellantis to hold and upgrading BMW to buy. Its view on Next suggests the retailer remains a standout in a tough sector.
What to watch next
Investors will be looking at how Next's international expansion progresses and whether the UK sales slowdown deepens. The company's ability to keep raising guidance will depend on consumer demand, particularly in the key holiday season.
For now, the message from Next and Berenberg is one of cautious optimism. The profit target is higher, but the growth is increasingly coming from abroad. That could be a positive sign for the company's long-term prospects, even as the domestic market remains under pressure.
As always, past performance is not a guarantee of future results. But for those following the retail sector, Next's latest update is another reminder that some companies can thrive even in a challenging economic environment.
