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”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
How to pay in a chequeReceiving or writing a cheque has become much less common in recent years as instant bank transfers have grown in popularity. Amid widespread bank branch closures, we explain what to do if you get a cheque, and how you can pay one into your bank account.
-
Crypto assets of seven million UK investors at risk – how to keep yours safeCryptocurrency wallet rules make it hard to track down assets after someone has died, even if they leave a will saying who they would like to inherit them
-
8 of the best properties for sale with kitchen gardensThe best properties for sale with kitchen gardens – from a 17th-century timber-framed hall house in Norfolk, to an Arts & Crafts house in West Sussex designed by Charles Voysey with a garden by Gertrude Jekyll
-
Why investors can no longer trust traditional statistical indicatorsOpinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growthGrowth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estatesThe best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
What we can learn from Britain’s "Dashing Dozen" stocksStocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
The rise of Robin Zeng: China’s billionaire battery kingRobin Zeng, a pioneer in EV batteries, is vying with Li Ka-shing for the title of Hong Kong’s richest person. He is typical of a new kind of tycoon in China
-
Europe’s forgotten equities offer value, growth and strong cash flowsOpinion Jonathon Regis, co-portfolio manager, Developed Markets UCITS Strategy, Lansdowne Partners, highlights forgotten equities he'd put his money in
