Today until noon (October 29) Next (LSE:NXT) the group’s share price rose 6% following the release of the group’s third quarter trading update. And the seller seems to be doing very well.

As regularly announced on the stock exchange in recent years, the company has updated its full-year pre-tax earnings forecasts. It now expects pre-tax profit of £1.13 billion in 2025, £30 million more than previously forecast.

The catalyst was good sales results. In the 13 weeks ending October 25, the company reported revenue growth of 10.5% year over year. Analysts expected an improvement of 4.5%.

Surprise!

The group is generating so much cash that it plans to pay (tbc) a special dividend of approximately £3.10 per share in January 2026.

It has also decided to stop buying its own shares, which are currently changing hands at around £143 each. This may mean that the seller believes that his goods are currently priced fairly. Judging by today’s investor reaction, they may be wrong.

But the situation is a little more complicated. The group has a self-imposed limit of £121 per share and must aim to achieve an equivalent rate of return of 8% – calculated by dividing forecast pre-tax profit by current market capitalization – on each purchase.

However, given the group’s forceful performance, I wonder how it can continue to grow. However, today’s announcement appears to contain a clear clue. Compared to the same quarter of 2024, foreign sales increased by 38.8%. The group’s brand appears to be as well received internationally as it is in the UK.

This success is attributed to a 50% augment in digital marketing spend and improved inventory availability. To the benefit of both companies, Next shares many of its warehouses in Europe Zalando.

The group also claims that global entertainment platforms like Netflix and Instagram provide insight into how people dress in other countries. The Internet allows you to place orders from the best retailers in the world without having to travel. And this cycle is self-perpetuating. As more and more people see others wearing internationally sourced clothes, they want to buy them.

Strong prospects

Next comes impressive business. It faces the same national challenges as other UK retailers – including higher national insurance costs and a sluggish economy – but appears to be doing better than most. Importantly, the group managed to leverage the Internet rather than viewing it as a threat. In the first half of the year, online sales of clothing, footwear and home furnishings accounted for 57.9% of the group’s total revenues.

However, excluding the special dividend, the stock offers a yield of less than FTSE100 average. And the fashion business is extremely arduous. Consumer tastes can change quickly, and with intense competition, brand loyalty is lower than before.

The company’s share price has increased by 45% since the beginning of the year, which may suggest an overvaluation. However, mainly due to its impressive track record of exceeding expectations and international potential, I believe Next stock is still worth considering.