Next has offset more forecast-beating festive sales figures by warning of slower UK growth and price hikes in 2025.
A surge in online sales in its fourth quarter means the retail giant expects to break the £1 billion profit barrier by a greater margin.
Further growth is seen in the new financial year, although it added that recent Budget measures have placed upward pressure on prices.
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Next festive sales beat forecasts
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Wage costs hit Next 2025 outlook
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House prices dipped in December
08:15 , Graeme Evans
Next shares are up 2% or 226p to 9780p following the retailer’s latest strong update. This level compares with 10,230p at the start of December.
The performance boosted confidence across the sector as Marks & Spencer lifted 3p to 385.8p and JD Sports Fashion rallied by 3.6p to 101.5p.
Other risers included Berkeley, which added 24p to 3862p after Barclays gave the housebuilder an Overweight recommendation.
The bank cut Taylor Wimpey to Equal Weight, helping to send the shares down by 1.95p to 118p. The FTSE 100 index fell 0.5% or 42.15 points to 8207.51.
07:59 , Graeme Evans
Next’s strong performance was driven by the acceleration of its online business in the nine weeks to 28 December, both in the UK and overseas.
Total online UK sales were 6.1% higher, compared with a 2.1% decline for the core high street estate.
Wealth Club manager Charlie Huggins said: “Next has pulled another rabbit out of the hat this Christmas, beating its sales forecasts once again. More important for investors is the guidance for the coming year.
“Calendar year 2025 is likely to be a bloodbath for the UK retail sector. The Autumn Budget means retailers will face a significant increase in employee costs and many will not be able to offset this.
“Next stands apart for its ability to do so, with its high margins, strong overseas growth and efficiency initiatives all helping it to preserve profitability.”
07:33 , Graeme Evans
Increases in the National Living Wage and the National Insurance changes announced in the Budget are expected to add £73 million to Next’s annual million wage bill of £900 million.
It said: “We intend to offset around £13 million of wage costs through raising prices. This will require an increase of around 1% in selling prices on like-for-like garments over and above any factory gate price increases.
“Fortunately, we are seeing 0% inflation in factory gate prices. So although we are increasing our bought-in gross margins, we still expect our prices to rise by less than the Bank of England’s target for inflation of 2%.”
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Next also believes it can make operational savings of around £23 million through improved working practices and other operational efficiencies in its warehouses, distribution networks and stores.
On the wider outlook, the retailer added: “We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.”
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07:19 , Graeme Evans
House prices fell 0.2% in December, according to the latest report by lender Halifax.
The decline, which followed five consecutive monthly increases, left the average price 3.3% higher for the year at £297,166.
Halifax said the housing market had been supported in recent months by falling mortgage rates, income growth and the announcement on upcoming Stamp Duty policy changes.
However, affordability remains a challenge for many as the Bank of England base rate is likely to come down more slowly than previously predicted.
Amanda Bryden, Halifax head of mortgages, added: “Providing employment conditions don’t deteriorate markedly from a more recent softening, buyer demand should hold up relatively well and, taking all this into account, we’re continuing to anticipate modest house price growth this year.”
Read more here
07:09 , Graeme Evans
Retailer Next has given another boost to profit guidance after sales figures beat forecasts in the nine weeks to 28 December.
Underlying full price sales rose 5.7% on a year earlier, which compares to its previous guidance for the period of 3.5%.
This adds £27 million to full price sales, lifting full year guidance for pre-tax profit in the year to the end of January by £5 million to £1.01 billion.
Initial guidance for the January 2026 year points to full price sales growth of 3.5% and pre-tax profits of almost £1.05 billion.
07:01 , Graeme Evans
The S&P 500 index rose 0.6% and the Nasdaq by 1.2% amid speculation that the Trump administration might take a softer-than-expected stance on tariffs.
Chip giant Nvidia rose 3.5% to achieve a record high valuation of $3.7 trillion, helping the Magnificent Seven of megacap stocks to rise by 1.9%.
The tech-led bounce was offset elsewhere on Wall Street as the Dow Jones Industrial Average finished slightly lower.
The FTSE 100 index is also forecast to open 67 points lower at 8183 this morning, having risen by 0.3% or 26 points in Monday’s session.