Next reports £1 billion in annual profits for the first time – what's next for the retailer?

Next has joined Tesco, Marks & Spencer and B&Q’s owner Kingfisher by achieving at least £1 billion in yearly profits, becoming only the fourth UK retailer to do so, says Harry Wise in This is Money.

Pre-tax profits climbed 10.1% to £1.01 billion in the year to 26 January 2025 thanks to strong e-commerce sales. However, the firm urged investors “to keep a level head”, saying it would be “a big mistake to view the company differently just because it has passed any milestone... profits can go down as well as up”.

Next’s low-key reaction to passing the £1 billion mark is just what you’d expect from a business led by Simon Wolfson, who has a reputation for “under-promising and over-delivering”, says Alistair Osborne in The Times. Still, he’s confident enough to begin the year “with a rare upgrade to profits guidance”, upping his forecasts by £20 million to £1.07 billion, despite worries about the impact that a rise in National Insurance will have on both sales and margins. The main reason for this is that Wolfson “no longer expects a 5% or so like-for-like drop in store sales as business moves online”.

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Can Next maintain the momentum?

Rival retailers “struggling” with the impact of National Insurance increases and consumers who are “more careful with their money” will be eager to learn just how Next has put together its “secret sauce”, says eToro’s Adam Vettese.

The key has been an early recognition of the importance of multiple distribution channels, especially online sales, which allowed it to diversify away from being a “traditional high-street stalwart”.

However, Next needs to find a way to “maintain the momentum”: M&S and Tesco, the previous two members of the billion club, went on “very different trajectories” following their milestones.

It’s hard to see Next suffering the fate of M&S and Kingfisher, “whose profits collapsed shortly after they hit the [£1 billion] mark”, says Aoife Morgan in the Retail Gazette.

While the company is arguably “nearing the top end of its potential in the UK”, its “rapidly expanding e-commerce platform” makes further international growth the next obvious move.

Next is already selling in India under its licensing and franchise agreement with Myntra, as well as through Nordstrom in the US. It is “hoping to grow a presence in Japan, China and South Korea”. It also benefits from “more stable and better management” than either Kingfisher or M&S had.

Wolfson is “unlikely to sacrifice future investment in order to maintain the £1 billion level, or become more profligate in his spending”, says Bloomberg’s Andrea Felsted, while Next’s international plans may enable it to weather any domestic turbulence. However, investors still need to prepare “for the day Wolfson decides to hang up his shopkeeper’s apron”.

After all, M&S’s decline in the late 1990s started with a “brutal” succession battle.

More broadly, it is an “uncomfortable” truth that “when a long-serving and successful leader bows out, a period in the wilderness follows”.

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