British clothing retailer Next edged up its annual forecast on Thursday, as it reported a 10.5% profit rise for its first half, but expects sales growth to slow in its second half and warned of headwinds in its core UK market. The group, which trades from more than 800 stores in the UK and Ireland, including Reiss, Joules and FatFace outlets, and has an online operation serving the UK and overseas markets, said full price sales were 7.7% higher in the six months to August 1, helped by a hot summer in Britain. But it said full price sales growth would slow to 5.8% in its second half, and moderated its second half sales growth expectations for the UK to 2.0% from 2.8%, flagging concerns in its home market which accounts for about three quarters of sales. "Our primary concerns are rising inflation, higher mortgage interest costs and a weak employment market. These worries will only be compounded if they are accompanied by tax increases," it said in reference to new finance minister John Healey's first budget on October 28. "It seems likely that it (the government) will have to increase taxes in order to fund its expenditure,” Reuters quoted it as saying. British households will see their energy bills rise in October, inflation ticked up on Wednesday, and, last week, Next rival John Lewis highlighted a tough UK trading environment, saying consumers were holding back on bigger ticket items. Rival Primark said trading in continental Europe remained challenging, though Zara owner Inditex reported a strong start to autumn trading. Next made a profit before tax of £569 million ($762 million) in its first half. It said its international business had made an encouraging start to the season, and raised its second half sales growth guidance to 20.5%. The retailer, whose shares have increased by a quarter over the last year, raised its profit before tax guidance for its year to January 2027 by £12 million ($16 million) to £1.255 billion, reflecting the small upgrade in sales expectations and some additional cost savings, mainly in warehousing. It made £1.158 billion in 2025/26.
