Although Next recorded impressive yearly results, other clothing retailers such as H&M continued to struggle as UK consumers remain cautious in their spending.
British multinational clothing giant Next revealedon Thursday that its full price sales for 2024 increased 5.8%, whereas total group sales, including subsidiaries, rose 8.2% to £6.3 billion (€7.6bn). Post-tax earnings per share also advanced 9.9%.
Next’s profit before tax surged 10.1% to just over £1bn (€1.2bn), with pre-tax earnings per share soaring 11.6%, boosted by share buybacks.
The company’s share price rose 6.7% on Thursday morning.
Next noted that full price sales had exceeded expectations in the first eight weeks of this year. It also hiked its full price sales outlook for the first half of 2025 by 6.5%, up from a previous forecast of 3.5%. Next expects full year sales to increase by 5%, up from its last guidance of 3.5%.
The group’s pre-tax profit outlook for the year up to January 2026 was also raised by 5.4%, now expected to come to about £1.1bn (€1.3bn).
The retail chain has been doing well despite the overall UK economy lagging considerably in the last several months, amid dampened consumer sentiment and anxieties over sticky inflation and the cost of living.
The chain has stayed resilient even as e-commerce competitors such as Asos have seen a boost in demand lately, especially since the pandemic. This online shopping buzz has partly been driven by increased access to the internet across the world, as well as the adoption of digital payment services.
Next said in its full year earnings report on its website: “It is unusual for NEXT to begin a year on an optimistic note, yet that was our stance this time last year. It felt as though the company was entering a new era: the worst of the retail-to-online structural shift appeared to be behind us, the pandemic was well and truly over, and the cost of living crisis was abating.”
Russ Mould, investment director at AJ Bell, said in a note: “Next is the envy of the retail sector. Once again it has upgraded sales and profit guidance, leaving its rivals in the dust. Next is typically a cautious outfit, preferring to under-promise and over-deliver, which makes its latest optimism a surprise given the fragile market backdrop.”
Mould pointed out that although US tariffs are not expected to impact the business much, a trade war could still weaken consumer sentiment, which may in turn affect the retail sector. He also highlighted that Next was in a better position than several of its competitors to handle market turbulence, since it was already doing better than other retailers.
H&M sees slow first quarter
In contrast to Next’s positive update, H&M reported a fall in gross profit for the first quarter of the year, coming in at SEK 27.2bn (€2.5bn), down from SEK 27.7bn (€2.6bn) in the same quarter last year. Net sales grew marginally by 3% in the first quarter.
Operating profit plunged to SEK 1.2bn (€110.9m) in the first quarter of 2025, down from SEK 2.1bn (€194.0m) in Q1 2024. Similarly, H&M’s operating margin came up to 2.2% in Q1 2025, down from 3.9% in the first quarter of 2024.
Mould said: “H&M’s results are proof of the divergent fortunes in retail. Whereas Next is singing from the rooftops, H&M is down in the gutter. It’s not a great start to the year but the Swedish retailer doesn’t seem too fussed. It says the first quarter is always the smallest contributor in terms of sales and margin, and that it’s seeing tentative signs of improvement.”
He also pointed out that the retailer, like many global competitors, had been shutting stores in favour of more digital investment, which may have contributed to dampened demand.