Highlights
- Middle East conflict expected to add £15m to Next’s operating and supply chain costs.
- Next raises annual profit guidance to £1.2bn for the year ending January 2027.
- Use of AI technology helps Next cut operational costs and improve efficiency across stores and warehouses.
The retailer has revised its profit guidance upwards by £8m to £1.2bn for the year to January 2027, following stronger-than-expected sales in January.
Next also reported pre-tax profits of £1.16bn, up 14.5 per cent from the previous year, with overall sales increasing by almost 11 per cent to £7bn.
Sales growth was supported by overseas markets, third-party websites such as Zalando, and newly acquired brands including Cath Kidston, alongside strong UK store and online performance.
Operational strategies
Next acknowledged uncertainty over the medium-term effects of the Middle East conflict, including supply chain resilience, freight rates, factory prices, and consumer demand.
To manage risks, the company increased stock levels by 6 per cent and focused on warehouse development.
The retailer is also expanding the use of AI technology in operations. AI is helping with sales forecasting, optimising discounts, and ensuring the right range of sizes both in-store and online.
Next emphasised that AI will improve staff efficiency rather than replace jobs, mainly affecting routine processing roles, while other employees will need to adapt to changing workflows.
The company told The Guardian “If we are reflective of the wider economy, then those in jobs need not worry too much; the challenge will be for those looking to join the workforce.”
Next’s strategy demonstrates a balance between managing global cost pressures and maintaining profitability amid geopolitical uncertainty.
