In 2025, the UK retail landscape has become a vivid illustration of how agility and digital resilience can define success or failure. Next plc and Marks & Spencer (M&S), two stalwarts of British retail, have found themselves on markedly different trajectories this year, underscoring the critical importance of cybersecurity and digital innovation in a rapidly evolving market.
Next's second quarter results, ending July 26, were nothing short of spectacular. The company reported a 10.5% rise in full-price sales year-on-year, surpassing its own guidance by £49 million. This surge was fueled by a combination of unusually favorable UK weather and a significant disruption at a major competitor—M&S, which suffered a crippling cyberattack earlier in the year. The retailer's total group sales are now expected to reach £6.7 billion for the year, marking a 6.3% increase over last year, while profit before tax is forecast to climb by 9.3% to just over £1.1 billion.
Next’s success is not merely a stroke of luck. The company’s strategic pivot towards digital-first operations has paid dividends, with e-commerce now accounting for over 40% of total sales and online sales growth projected at 19.4% for the latter half of the year. International online sales, in particular, have been a bright spot, growing 28.1% in the first half and expected to maintain strong momentum. This growth has been bolstered by an effective digital marketing push that exceeded expectations, allowing Next to increase spending while maintaining profitability.
Analysts have taken note. Next holds a “Buy” rating with a price target of £10,800 and a technical “Buy” signal. With a market capitalization of £14.23 billion, it is viewed as a bellwether for the sector’s digital transformation. The company’s ability to maintain operational continuity and customer trust during periods of sector-wide disruption has made it a safe haven for consumers and investors alike.
In stark contrast, M&S has faced a turbulent year. In April 2025, the retailer fell victim to a devastating cyberattack attributed to the Scattered Spider group, using the DragonForce ransomware variant. The attack forced M&S to suspend online operations for nearly six weeks, resulting in a £300 million hit to profits and a £700 million loss in market value. The disruption also triggered a pause on 200 job listings and caused significant supply chain chaos.
M&S CEO Stuart Machin candidly acknowledged the setback, admitting the company “lost ground” to rivals during this period. The incident exposed vulnerabilities in M&S’s legacy IT infrastructure and highlighted the critical need for robust cybersecurity measures in retail. The company is now working closely with cybersecurity experts like CrowdStrike to restore systems, with full recovery expected by August 2025. However, the attack has forced M&S to accelerate IT upgrades drastically, compressing a planned two-year overhaul into just six months—a costly and disruptive move that raises questions about its long-term competitiveness.
The ripple effects of M&S’s troubles have been felt across the sector. Competitors such as Next, Zara, and H&M capitalized on the disruption, capturing market share from a brand once synonymous with British retail stability. This shift illustrates a broader strategic lesson: in today’s digital age, legacy brands that fail to invest in cybersecurity and seamless customer experiences risk rapid erosion of their market position.
Despite the strong first half, Next remains cautious about the outlook for the remainder of 2025, particularly in the UK. The company expects UK sales growth to slow sharply to 1.9% in the second half, down from 7.6% in the first half. This slowdown is attributed to a deteriorating jobs market and the lingering effects of the UK government’s April hike in employer National Insurance contributions and minimum wage increases. Next warned that these factors “will increasingly dampen consumer spending as the year progresses.”
Nevertheless, Next upgraded its full-year profit guidance for the third time in five months, now targeting £1.105 billion in pre-tax profit, a £25 million increase from earlier forecasts. The company also raised its forecast for full-price sales growth in the second half to 4.5%, up from 3.5%, primarily driven by stronger-than-expected international sales.
Next’s strategic moves extend beyond organic growth. In late July, the retailer acquired Seraphine, a maternity fashion brand famously worn by the Princess of Wales during her pregnancies, for £600,000 after the brand collapsed into administration. By bringing back Seraphine’s founder as an adviser, Next aims to revive and expand the label, signaling its commitment to diversifying its portfolio and capturing niche markets.
Market reactions to Next’s performance have been positive, with shares rising nearly 30% since the start of the year, despite a slight dip of 1% on July 31 amid broader market fluctuations. Investors are clearly betting on Next’s digital-first strategy and operational agility as key drivers of future resilience.
Experts like Richard Hunter, head of markets at Interactive Investor, highlight that the cyberattack at M&S and the favorable weather were tailwinds for Next’s strong first half that are unlikely to be repeated. Hunter noted, “The group has a very simple and clear appreciation for product (the brand) and platform (enabling third-party sales) being its current drivers.” He also pointed out that Next’s focus on full-price sales over discounts has attracted customers willing to buy fewer but more expensive items, potentially opening avenues for moving slightly upmarket.
The divergent fortunes of Next and M&S underscore a profound shift in the UK retail sector. Agility, digital innovation, and cybersecurity are no longer optional but essential. Retailers that invest in these areas build a moat of trust and reliability, which is crucial in an era where disruptions—whether economic or cyber—can swiftly erode market share.
For investors, the message is clear: prioritize companies that combine operational robustness with digital savvy. Next’s outperformance offers a blueprint, while M&S’s cyberattack serves as a cautionary tale about the risks of underinvestment in technology and security.
As the UK retail sector navigates ongoing economic uncertainties and evolving consumer behaviors, the winners will be those who anticipate disruption and adapt proactively. In this new normal, agility isn’t just an advantage—it’s a survival trait.
