As usual, Next Plc has defied the festive gloom and delivered a good Christmas, upgrading its profit outlook for the current fiscal year. The shares rose as much as 4%.

But dig a little deeper, and the real message here is the outlook for the next fiscal year to January 2026. For the broader British retail sector, it’s not an encouraging one.

Next Chief Executive Officer Simon Wolfson cautioned that UK growth was likely to slow, as the employer tax increases announced by Chancellor of the Exchequer Rachel Reeves in October — and their potential impact on prices and employment — begin to filter through to the economy.

Christmas didn’t turn out too badly for Next, although spending didn’t get going in earnest until close to the holiday. The UK held up, but this was driven by online sales and at the expense of its stores, where full-price sales fell 2.1% in the nine weeks to Dec. 28. Meanwhile, overseas sales were stronger than Next had expected in the run-up to the holiday. This helped the retailer increase its full-year pretax profit guidance by £5 million........

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