Next raises its profit forecast again – but why is the brand beating expectations?

Next recently announced that it was lifting profit forecasts for the full year to £875m – an improvement on its earlier prediction of £845m. While Lord Wolfson, the company’s Chief Executive, has said that the company had been “overly cautious” about its financial prospects, the Financial Times also suggested that warm weather in May and June had led to increased summer sales for the first half of the year. 

YouGov BrandIndex shows that Next’s Index scores (a measure of overall brand health) have comfortably outperformed the average across all the high street fashion brands that we track. Between 1 January 2023 – 21 September 2023, these scores rose from 28.1 to 32.7 (+4.6), while scores for the sector on average rose by a point over the same period – from 8.1 to 9.1. If the retailer was already in a stronger-than-average position before the year began, it also outperformed the rest of the sector in terms of how much brand perceptions improved. 

For example, we can see that Impression scores, which measure overall positive and negative perceptions of a brand, have grown from 35.1 to 39.2 (+4.1), while those for the sector only increased from 10.5 to 11.5 (+1.0). 

Perceptions of Next’s quality saw even greater improvements. Scores rose from 30.9 to 37.3 (+6.4), while industry scores rose from 11.3 to 13.0 (+1.7). Value for Money scores – perhaps a particularly relevant metric for customers in a cost-of-living crisis – also jumped from 19.9 to 24.8 (+4.9), while the industry saw far more sluggish growth from 2.9 to 3.3 (+0.4). 

Customer satisfaction scores jumped five points from 34.7 to 39.7, while scores across all high street fashion brands inched up from 9.1 to 10.1 (+1.0). 

Over the year so far, consumers have been more likely to pick Next out of a list of high street fashion brands. Consideration scores moved from 31.7 to 37.5 (+5.8), as industry scores went from 8.1 to 9.4 (+1.3).  

So alongside improved sales, Next can demonstrate improved standing among consumers. Small wonder, then, that the brand’s management are more optimistic about the future than they were before. 

This article originally appeared in City AM.