NEXT warns over price hikes and slowing growth after Budget measures
NEXT has cautioned over slowing sales growth in 2025 and said it will need to hike prices due to the impact of recent Budget measures.
The high street giant said it is facing a £67 million surge in its wage costs in the year to January 2026 after the Labour Government announced plans to increase employer national insurance contributions and the minimum wage from April.
It said it will need to push through an "unwelcome" 1% rise in prices as part of efforts to help offset the hit.
NEXT also warned that sales growth will pull back sharply over the year ahead as the Budget measures – which both take effect in April – are set to hit jobs and send prices rising across the economy.
It came as the firm reported a better than expected 5.7% rise in underlying full-price sales for its fourth quarter so far, and upped its full-year pre-tax profit outlook once again, pencilling in a 10% jump to £1.010 billion.
This compares with previous guidance for a 9.5% rise to £1.005 billion.
But over the new financial year to January 2026, it expects sales growth to slow to 3.5% and for group profits to increase by a more muted 3.6% to £1.05 billion.
NEXT said: "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."
It also warned that overseas sales growth – which had surged to 24% in 2024-25 – will fall back as it reins in marketing spend after investing heavily in this over the past year.
"We do not believe we can profitably increase our overseas marketing expenditure by the same percentage next year, and expect the growth to be closer to 20%," it said.
The firm said an expected 1% increase in prices will offset around £13 million of its higher wage bill.
It will look to make overall savings of £23 million in the face of the cost increase, with measures also including "improved working practices and other operational efficiencies in our warehouses, distribution networks and stores".
Charlie Huggins, manager at investment firm Wealth Club, who owns shares in NEXT, 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 though is well placed to weather the storm. If any retailer can thrive in this environment, it's probably them."
