Next, one of the UK’s leading retailers is on track to reach a remarkable milestone: annual profits of £1 billion this financial year.
While a simple glance may suggest only modest growth from the £498 million achieved in 2008—an annual compound rate of 4%—this perspective fails to account for significant challenges faced by the retail sector.
The 2008 financial crash and the global pandemic reshaped the industry, leaving many giants like BHS and Debenhams in their wake.
In stark contrast, Next has continued to thrive and, in terms of stock market value, now dwarfs even Marks & Spencer, with £13 billion to M&S’s £7.5 billion.
CEO Simon Wolfson sees 2024 as a turning point for international and platform expansion.However, the real success for shareholders lies in the dramatic improvement in Next’s earnings per share (EPS), driven by consistent share buybacks.
In 2008, Next repurchased 26 million shares, reducing the number of shares in circulation to 201 million. Today, that figure stands at just 126 million.
With profits doubling and fewer shares available, EPS has surged. Over the past two decades, EPS has enjoyed a compound annual growth rate of 17.5% for most of that period, followed by a more recent rate of 8.2%.
Despite concerns about UK growth stagnation since 2017, CEO Simon Wolfson sees 2024 as a potential turning point.
A quarter of Next’s online sales now come from overseas, with new opportunities in international markets and third-party brand partnerships.
While the current share price of £104 reflects high expectations, the future could indeed signal a new era of sustained growth for Next, converting these opportunities into tangible value for shareholders.