NEXT PLC (NXT) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did Next plc perform in 2025?

Next plc (LSE: NXT), one of the UK’s pre-eminent fashion and homeware retailers, experienced a dynamic financial year in 2025 characterised by macroeconomic challenges and notable business manoeuvres. As the company continues to evolve its omnichannel business strategy, investors watched closely to see how Next adapted to the changing retail environment. The performance was underpinned by resilient profit margins, smart acquisitions, and an increasingly diversified business model — though clouds remain on the horizon, particularly around consumer sentiment, operational costs, and supply chain dynamics.

By the end of 2025, Next plc reported total group revenue of £5.34 billion, marking a soft increase of just under 3% year-on-year. This was largely in line with market expectations given the backdrop of slower discretionary spending due to persistently high interest rates and inflationary pressures.

The company’s pre-tax profit came in at £880 million, an increase of 5%, helped by reduced warehouse and logistics costs and improved performance from the company’s Total Platform venture. The increase was particularly well-received, given some uncertainties in the UK’s retail sector and weak footfall on the high street.

Digital continues to drive growth

Next's online division continued to thrive, with digital revenue contributing to over 63% of total sales. The retailer invested heavily in refining its online logistics and user experience. With improvements in fulfilment speed and the launch of more third-party brands on its digital platform, Next solidified its role not only as a retailer but a retail service provider through its Total Platform offering, which now hosts over 18 brands.

Brick-and-mortar stabilising

Physical store performance stabilised during 2025, with same-store sales showing modest improvement in the latter half of the year. While store closures persisted, the rate of decline in footfall seemed to plateau. Next’s flagship locations in larger retail parks generated regular traffic, maintaining their relevance in the digital post-pandemic landscape.

Capital management and dividends

Next proved prudent with capital allocation in 2025. Having resumed share buybacks and delivered a 4% dividend increase, the company continues to appeal to income-focused investors. Its strong free cash flow continues to allow it to balance shareholder returns with strategic investment opportunities.

Share price reflection

NXT shares posted a modest full-year gain of around 8%, lagging the FTSE 100 index but outperforming other UK-based discretionary retailers. The shares oscillated within a narrow trading band for the better part of the year, partly attributed to mixed macroeconomic data and recurring speculation around UK retail consolidation opportunities.

Strategic acquisitions

Next pursued several bolt-on acquisitions in 2025, including its increased stake in JoJo Maman Bébé and a strategic joint venture with a leading continental European e-commerce player. These moves have reinforced the company’s European ambitions and expanded its customer base beyond the UK, although some integration costs slightly dragged on near-term margins.

What factors shaped growth and risks in 2025?

Understanding Next plc’s performance in 2025 requires a deep dive into the financial, operational, and macroeconomic elements that steered its course. Several key growth drivers allowed the company to deliver resilient earnings; however, risks remain evident both internally and externally. The balance between traditional retail practices and the adoption of a tech-driven, platform-first business model defines the company’s evolving narrative.

Key growth drivers

• Omnichannel strength: Next continued executing its integrated store and online strategy. Leveraging its advanced logistics centres and flexible store formats—combined with click-and-collect options—created a seamless customer experience and strong cost control.
• Total Platform expansion: This turnkey solution for third-party brands was a standout growth engine. The platform not only generated fee income but yielded operational scale economies. Brands such as Mint Velvet, Reiss and Joules have benefited from Next’s fulfilment, warehousing and online infrastructure.
• International expansion: Next took significant steps in expanding its European reach, with translations and localisation of its online platforms for Germany, France, and the Netherlands. New warehousing capacity on the continent ensured faster delivery times and customer retention in key growth markets.
• Data-led merchandising: Leveraging customer behavioural data, Next optimised its inventory strategy. Seasonal promotions were adjusted in real time, reducing unsold stock and markdown costs. This allowed the firm to preserve operating margins.

Risks to monitor

• Consumer pressure: With interest rates remaining elevated and broader concerns over the UK's cost-of-living crisis, consumer discretionary spending remained depressed. This created a headwind for many of Next’s core fashion and homeware lines.
• Cost pressures: Input inflation, particularly from Chinese and Southeast Asian suppliers, impacted gross margins. Though hedging strategies cushioned the blow somewhat, prolonged inflationary trends could erode profitability in 2026.
• Logistics bottlenecks: While Next boasts one of the UK’s most sophisticated retail supply chains, Brexit-related customs checks and staffing shortages remain episodic concerns—particularly during the key Q4 trading periods.
• Currency fluctuations: As Next imports a large share of its goods denominated in US dollars and euros, the pound’s volatility directly affects cost structures. 2025 saw relative stability in forex markets, but geopolitical events or monetary shocks could reverse this trend.
• Labour market dynamics: Wage inflation in the UK’s retail and logistics sectors added pressure to operating costs. While Next’s investment in automation offers a partial offset, labour remains a key cost input over the mid-term horizon.

Leadership and governance

Simon Wolfson, still at the helm as CEO, provided consistent strategic direction in 2025. Unlike some of its competitors suffering from leadership churn, Next retained continuity at the top. The Board’s commitment to maintaining financial discipline, expanding digital capabilities, and fostering ESG values remains integral to the firm's long-term vision. The governance score, according to multiple ESG metrics, improved marginally throughout 2025, particularly as the company integrated Scope 3 emissions targets into its supply chain roadmap.

What’s ahead for Next plc in 2026?

As we look towards 2026, Next plc enters the year with a cautiously optimistic tone. While macroeconomic headwinds are not expected to dissipate swiftly, the company’s strategic pivots and diversified revenue base may offer resilience amid uncertainty. Investors will need to weigh the opportunities arising from its scalable Total Platform model, further digital penetration, and European expansion against persistent risks that could hinder sales and earnings momentum.

Growth catalysts to watch

• Full integration of recent acquisitions: Continuing the integration of its acquisitions from 2023 to 2025 — especially stakes in brands like FatFace and JoJo Maman Bébé — will likely yield synergies. Analysts will be watching margin improvements and cross-brand platform utilisation metrics closely.
• Total Platform scaling: Plans are underway to onboard more domestic and European brands onto the Total Platform, enhancing fee-based revenue. Expansion into new categories—potentially in premium homeware or sportswear—could add long-term tailwinds.
• AI and automation: Expect broader use of AI in inventory management, dynamic pricing, and customer segmentation. Furthermore, automation in warehousing could support margin expansion through cost optimisation despite tight labour markets.
• Continental logistics hubs: With a new logistics facility in the Netherlands nearing completion by Q2 2026, delivery timelines and margins in European markets could improve, positioning Next as a serious pan-European contender.

Risks looming in 2026

• Lingering inflation and interest rate uncertainty: The Bank of England is expected to maintain a cautious rate-cutting trajectory. Sticky inflation may continue to dent consumer spending on non-essential retail products.
• Environmental compliance: Stricter ESG and sustainability regulations may affect suppliers and induce compliance costs. Next’s ongoing environmental audits and supplier scorecards are crucial mitigators, but risks remain in supply chain transparency.
• Tech integration challenges: As Next adds further complexity via its platform model, seamless tech integration across different systems and brands poses operational risk. Any misstep could temporarily impair service standards or erode third-party trust.

Analyst expectations for 2026

Consensus forecasts suggest moderate revenue growth of between 2–4%, with margins expected to remain stable or improve slightly, contingent upon inflation stabilisation and successful platform scaling. The high-single-digit earnings growth outlook makes Next plc a potentially attractive holding for investors valuing steady compounders, particularly as UK equities remain globally undervalued by historical standards.

Dividend outlook

Given Next’s strong cash flows and conservative balance sheet, dividend growth is likely to continue into 2026. A projected 5–6% increase would bring yields closer to 3%, providing a consistent income stream for patient investors amid market volatility.

Conclusion

While challenges undoubtedly remain, Next plc’s agile business model, prudent capital deployment, and rising platform leverage position it well for gradual growth. 2026 will test its European expansion strategy and its ability to remain competitive both digitally and in-store. For long-term investors, it remains one of the more robust plays in UK retail.