Next has become one of the few British retailers to surpass £1 billion in annual profit, reporting a pre-tax figure of £1.011 billion for the year ending January.
This marks a 10.1% increase from the previous year’s £918 million, placing the high street fashion retailer in the same league as Tesco, Marks & Spencer, and B&Q owner Kingfisher.
The strong results come as the company recorded an 8.2% rise in total sales to £6.3 billion, with full-price sales growing by 5.8%.
NEXT share price jumped more than 8% on the positive announcement.
The retailer credited robust consumer demand and strategic business decisions for its impressive performance.
NEXT raises profit forecast for current year
Buoyed by stronger-than-expected trading in the first eight weeks of the new financial year, Next has raised its profit forecast for the current year by £20 million to £1.07 billion, an expected 5.4% increase.
The company also revised its sales growth projections upward, now expecting a 5% rise in total sales and a 6.5% increase in full-price sales, compared with previous estimates of 3.5%.
Chief executive Simon Wolfson emphasized that achieving a £1 billion profit milestone would not alter the company’s disciplined approach to business.
“Reaching any level of profit cannot be used as an excuse for being less demanding in our approach to running the business,” he told investors.
Wolfson reiterated that Next must remain rigorous in cost control, margin management, and capital allocation to sustain long-term profitability.
Wolfson tempers celebration, warns of economic risks
Despite the company’s financial success, Wolfson played down the significance of crossing the £1 billion profit threshold.
“To some, it may seem an important milestone, even a cause for celebration. We do not share that view, not least because profits can go down as well as up,” he said.
Wolfson illustrated the company’s approach with an anecdote from an employee who had hoped that Next’s £1 billion earnings would justify additional spending.
“A colleague, frustrated at the cost constraints they worked within, was heard to say, ‘Surely, now we are making a billion, the company can buy me a new laptop.’ Buying that laptop may well have been a good investment, but reaching £1 billion profit does not make it more worthwhile,” he remarked.
Rather than focusing on profit milestones, Wolfson pointed to the company’s long-term goal of growing earnings per share (EPS), which has risen twenty-nine fold over the past three decades—from 22p to 636p.
Retail recovery and future challenges
Reflecting on the past year, Wolfson noted that 2024 marked a turning point for the retail industry.
“It is unusual for Next to begin a year on an optimistic note, yet that was our stance this time last year,” he said.
He attributed the company’s positive outlook to a stabilizing retail landscape, the fading impact of the pandemic, and an easing cost-of-living crisis.
However, he acknowledged that broader economic risks remain.
“We are as positive about the company today as we were then, albeit in an environment where the risks to the wider UK economy are growing.”
While Next remains confident in its strategy, it is preparing to navigate potential challenges posed by inflation, consumer spending fluctuations, and global economic uncertainties.
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