Charts: Next becomes the latest member of UK retail’s £1bn profit club

Retailer Next today announced group retail profit of just over £1bn pre-tax for the year ending January 31, 2025, placing the retailer in an exclusive club of four UK retail businesses to have hit the prestigious mark. 

Tesco’s adjusted operating profit and pre-tax profits last year both came in at over £2bn, B&Q and Screwfix parent company Kingfisher had group retail profit of over a billion pounds in 2022, and Marks & Spencer last reported £1bn in profit in 2008. 

This year was shaping up as a race between Next and JD Sports to join the club, but the sportswear specialist adjusted its profit guidance in November to below the £1bn range. 

The chart below puts Next’s achievement in context:

What makes Next’s results so impressive here is that it managed to exceed a billion in pre-tax group sales on revenue of just over £6bn. The margin they quote in their results is 16%, which would not look out of place on the balance sheet of a successful luxury retailer. 

These are nominal figures. If historic profit was inflation adjusted, it may be the case that a number of other retailers have hit a billion pre-tax in 2025 prices. For example, M&S’ just over £1bn in 2007-08 works out as in excess of £1.6bn when adjusted by the CPI rate. 

Another pedantic point is that we are not talking here about statutory pre-tax results. These do not include the adjustments that retailers make for costs thought to be one-off or exceptional. By that measure, Next’s figures slide just under £1bn. Interestingly, M&S’ figures for 2007-08 were actually higher on their statutory than their adjusted figures.

What’s in a number?

While many retail leaders would be overjoyed at topping £1bn of profit, Next chief executive Lord Wolfson has been predicatbly philosophical about the milestone. 

In the results, there was a section titled ‘£1bn – What’s in a number?’ in which Wolfson laid out his reasons why he thinks it’s a “big mistake to view the company different just because it has passed any milestone”. 

“The pitfalls of being overly impressed with this number are worth discussing,” he went on. “Because they go to the heart of what a business is for, and the type of business we strive to be”. 

Wolfson says that just because Next has passed the £1bn profit mark, doesn’t mean it can be “less demanding in our approach to running the business”. 

“We can be no less rigorous in the control of costs and maintenance of margins,” he adds. “[Or] any less demanding in terms of return on capital or less disciplined in the way we allocate capital.”

He also makes the point that a corporation isn’t a person, which is why “our focus has always been the delivery of sustainable growth in earnings per share. This focus has allowed us to deliver a twenty-ninefold increase in EPS… over the last thirty years”.