High-flying Next becomes fourth retailer to hit £1bn profit milestone

Next has become just the fourth UK retailer to score at least £1billion in annual profits following bumper online trade.

Britain's biggest clothing seller now joins Tesco, Marks & Spencer and B&Q owner Kingfisher as one of the few UK retailers to exceed the £1billion mark.

The London-based company revealed its pre-tax profits climbed by 10.1 per cent, or £93million, to £1.01billion in the year ending January 2025, in line with recently upgraded expectations.

But Next urged investors to keep a level head about the £1billion profit result.

It said on Thursday: 'To some, it may seem an important milestone, even a cause of celebration. We do not share that view, not least because profits can go down as well as up.

'In fact, we think it would be a big mistake to view the company differently just because it has passed any milestone.'

Earnings growth was driven by strong e-commerce sales, which increased by 5 per cent to over £2.5billion domestically and by 27 per cent to £930million internationally.

Full-price revenues expanded by 5 per cent, thanks to rising demand for third-party brands in the UK and solid performances across Europe and the Middle East.

Total turnover jumped by 8.2 per cent to £6.3billion, helped by the takeovers of FatFace and Reiss Group that were completed towards the end of the previous year.

The firm expects even further growth this year, with full-price sales going up by 5 per cent, compared to the 3.5 per cent forecast two months ago.

And Next has hiked its pre-tax profit guidance by £20million to just under £1.1billion, with greater sales partly complemented by higher gross margins and cost savings.

Next said it was 'unusual...to begin a year on an optimistic note', adding: '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.'

Next shares increased by 5.75 per cent to £10,560p on early Thursday morning, making them the FTSE 100's best performer by far.

Over the past five years, the firm's shares have soared by approximately 166 per cent despite the Covid-19 pandemic and cost-of-living crisis dampening clothing demand.

Next warned that the tax hikes coming in April would hit consumer confidence and weaken the British employment market.

From next month, employers' National Insurance Contributions will go up by 1.2 percentage points to 15 per cent.

At the same time, the threshold at which firms start paying NI on staff salaries will drop from £9,100 per year to less than £5,000, and business rates relief will fall from 75 per cent to 40 per cent, up to a cap of £110,000 per company.

Richard Hunter, head of markets at Interactive Investor, said: 'Yet another set of next-level numbers has underlined the group’s unparalleled understanding of the market in which it operates and its ability to capitalise on new opportunities.

'Next has a reputation for under-promising and over-delivering, but its outlook statement this time is perhaps unusually upbeat.'