Next credits 'acceleration of marketing efforts' for H1 growth
Next lifted digital marketing spend 56% in H1, crediting an 'acceleration of marketing efforts' for beating forecasts and raising full-year profit guidance to £1.255bn.
Updated
The brief
- Next increased digital marketing spend by £39m (56%) in H1 2026/27, with UK spend up 39% to £52m and international D2C spend up 63% to £51m.
- UK marketing delivered £1.82 incremental cash profit per £1 spent, down from £2.08 but above the £1.50 hurdle rate; international returns rose to £1.77 per £1.
- Group profit before tax rose 10.5% to £569m, and Next raised full-year profit guidance by £12m to £1.255bn, with international marketing spend planned to grow 42% in H2.
Next increased digital marketing spend by £39m, a rise of 56%, in the first half of its 2026/27 financial year, as the retailer prioritises online growth in the UK and overseas.
The additional spend contributed to higher sales across the period. While a jump of that size could have dented profitability, Next said it offset the cost of the extra digital activity through improved warehouse efficiencies and higher gross margins from paying suppliers less.
Next had lowered its forecast because of "overperformance" last year and external headwinds. After a good summer, CEO Lord Simon Wolfson said the business beat those estimates comfortably, a result he attributed in part to an "acceleration of marketing efforts".
UK: marketing drove half of online full-price sales growth
In the UK, Next spent £52m on digital marketing during the first half, up 39% from £37m last year. The retailer estimates marketing contributed 3.8 percentage points of its 7.4% growth in UK online full-price sales, with the remaining 3.6 points coming from underlying growth.
The return on UK marketing investment fell, however, from £2.08 to £1.82 in incremental cash profit for every £1 spent. Next attributed the decline partly to competitor disruption in the previous year, which had flattened returns.
Wolfson stressed Next was not "deciding to spend more because we want to", but because it is "getting the returns on the marketing that are above our hurdle rate [of £1.50]".
Group results
For the six months to the end of July, total group sales increased 9% to £3.54bn, while statutory revenue rose 9.6% to £3.45bn. Group profit before tax was up 10.5% to £569m, with statutory profit before tax increasing 11.2% to £566m.
Profit after tax rose 10.4% to £427m, and the group's pre-tax margin improved from 15.8% to 16.1%.
International: returns climbing as spend jumps 63%
Internationally, Next increased direct-to-consumer marketing spend by 63% to £51m. This generated an estimated £1.77 in incremental cash profit for every £1 spent, slightly ahead of the £1.75 return recorded the previous year.
Europe accounted for £26m of international marketing investment, up 75%, while Next spent £15m in the Middle East, up 37%. The retailer also invested £3m in the US, where its return was £1.48 per £1 spent — below its £1.50 investment threshold — although it said more recent spend was generating returns above that level.
International full-price sales increased 24%, with Next estimating that marketing activity was responsible for 23% of the increase. Direct-to-consumer sales also benefited from improvements to website functionality, delivery services and returns, which the retailer said had improved conversion and customer retention.
"What drove our growth overseas was increased investment in marketing as a result of the better returns we were getting on that expenditure," said Lord Wolfson.
Next has raised its expectations in international markets accordingly and plans to keep increasing marketing investment where returns meet its profitability threshold. International marketing spend is set to rise 42% year on year in the second half.
Guidance raised
The company has lifted its full-year profit before tax guidance by £12m to £1.255bn, while total group sales guidance has increased by £22m to £7.5bn. Full-price sales are expected to grow 6.7% for the year.
Next said the profit upgrade reflects both higher sales expectations and additional cost savings, particularly in warehousing. Warehouse costs are expected to fall to 6.7% of sales this year, from 6.8% in 2025/26.
This, Wolfson argued, should allow more money to go into marketing to drive growth, rather than cutting costs for their own sake.
Based on Marketing Week
Filed under next, retail, digital-marketing, ecommerce, marketing-investment
Priya Raman
Show full bio
Correspondent covering industry trends and analytics at Marketing Herald.