High street giant Next has bumper Christmas but remains cautious amid worsening UK jobs market | Money News

One of the UK’s largest clothing retailers has reported a bumper Christmas but warned of a slowdown.

The update from department store Next, considered a good indicator of the health of the high street, contrasts with the fortunes of Claire’s and The Original Factory Shop (TOFS), which are on the brink of collapse with more than 2,000 jobs at risk.

Next has, for the fifth time in a row, increased its profit guidance, believing it will have a pre-tax profit of £1.15bn for the year to 31 January, £15m more than expected, thanks to strong sales in the run-up to Christmas.

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The company again said it was boosted by the cyber attack on rival Marks and Spencer, “very favourable summer weather”, and improved stock levels. Sales were up 10.6% in the nine weeks to Christmas, compared to last year, Next said.

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But it cautioned it will face a “tough” time in the UK through the first half of 2026 as it sees jobs market woes weighing on consumer spending.

The unemployment rate has risen to 5.1% since Labour came to power in July 2024, as the increase in employer national insurance contributions weighed on hiring.

Record Christmas for supermarkets

Supermarkets also had a record festive period, according to industry data from consumer insight company Worldpanel by Numerator.

Shoppers spent an average of £476 at supermarkets in December, the figures showed, and grocers saw sales rise 3.8% to £13.8bn in the four weeks to 28 December.

Behind the rise was £1bn in spending on premium own brands for the first time, which were in 92% of shoppers’ baskets as people sought to treat themselves at a lower price point.

Deals and promotions were increasingly popular, making up a third (33.3%) of spending, up from 32% last year, the highest proportion of overall sales since December 2019, before the COVID pandemic.

Lower price rises, as inflation slowed, increased use of loyalty cards and buying deals were behind the boost, Worldpanel by Numerator said.