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Investing.com -- Next (LON:NXT) raised its full-year profit guidance for the third time in five months after second-quarter sales outpaced expectations, boosted by warm weather and disruption at a key competitor affected by a cyberattack.
The British fashion retailer said full-price (FP) sales in the 13 weeks to July 26 rose 10.5% year-on-year, ahead of the 6.5% growth it had forecast. That followed an 11.4% increase in the first quarter.
Sales in the U.K. rose 7.8%, supported by favourable weather and what the company described as trading disruption at a major rival.
While Next did not name the competitor, the period overlapped with Marks and Spencer Group (LON:MKS) halting online clothing orders due to a cyberattack, which the rival retailer has said could cost it £300 million in lost profit.
Next’s international sales climbed 26.4% in Q2, also beating expectations, driven by more effective digital marketing campaigns.
"Investors will likely be especially impressed with International growth of c.26%, keeping up the strong momentum of recent quarters," Jefferies analyst James Grzinic said in a note.
He said that the stock’s strong outperformance has been driven by “the appreciation of Next’s improving growth credentials,” supported by consistent upgrades and multiple expansion. "These fundamental merits should be an enduring attraction for long-term investors," he added.
Retail sales in the U.K. rose 7.8% in Q2, up from 5.2% in the first quarter, while the group said sales were strong both at home and abroad.
Despite maintaining a cautious outlook for the second half, Next upgraded its full-year guidance for full-price sales growth to 4.5%, up from 3.5% previously. This lifts its full-year sales growth forecast to 7.5%, above the 6.9% consensus cited by Jefferies.
The broker said the upgrade is driven entirely by stronger expectations for International Online, where the company sees further opportunity to "invest in profitable digital marketing."
It also raised its pre-tax profit forecast for the year to January 2026 by £25 million to £1.105 billion.
Guidance for U.K. second-half sales remains unchanged.