Fashion retailer Next has reported a 13.8% rise in first-half profit and reaffirmed its full-year guidance but warned that sales growth is likely to slow in the months ahead as economic pressures weigh on consumers.
The FTSE 100 group, which operates around 460 stores in the UK and Ireland and sells online in more than 70 countries, posted a pretax profit of £515 million in the six months to the end of July. It maintained its forecast for full-year pretax profit of £1.105 billion, up from £1.011 billion in 2024/25.
Shares in Next have climbed by a quarter so far this year, reflecting investor confidence in the company’s resilience. However, management cautioned that the second half of the year will be more challenging. Full-price sales growth is expected to slow to 4.5%, down sharply from the 10.5% increase recorded in the second quarter, when the company benefited from disruption at rival Marks & Spencer following a cyberattack.
The retailer cited weakening labour market conditions and the lingering impact of April’s employer tax increases as key risks. With around 80% of its sales generated in the UK, Next is widely viewed as a barometer of domestic consumer sentiment.
Despite recent industry data showing that British shoppers spent more in August, uncertainty over taxation and employment is unsettling retailers. Many fear consumer spending could falter in the run-up to the government’s budget on November 26. Last month, 60 retail executives signed a letter urging finance minister Rachel Reeves not to impose further taxes on the sector.
Chief executive Simon Wolfson, who has led Next for 25 years, struck a cautious note on the broader economic outlook. “At best we expect anaemic growth, with progress constrained by four factors: declining job opportunities, new regulation that erodes competitiveness, government spending commitments that are beyond its means, and a rising tax burden that undermines national productivity,” he said.
Wolfson warned that job opportunities, particularly at entry level, are set to fall sharply. Rising costs, tighter regulation, and the advance of mechanisation are already putting pressure on employment, he said. Next’s own vacancies are down by about 35% compared to two years ago, while applications for roles have surged 75%. The company employs 41,000 people across the UK.
Official data this week showed payroll numbers falling for a seventh consecutive month, alongside signs of slowing wage growth. Wolfson has previously criticised Labour government legislation, including the Employment Rights Bill, which he argues will hamper recruitment, and the Renters’ Rights Bill, which he says risks reducing mobility in the housing market.
Nonetheless, he welcomed proposals to speed up the construction planning process as a potential boost to growth. But with consumer spending under strain and job creation slowing, Next remains braced for tougher trading in the months ahead.
