Next's market cap is returning to its long-term peak of 20x earnings, above its average of 15x and is now far from the floor of 10x earnings, which it has reached three times over the past decade.
Led by the cautious Simon Wolfson, Next, which thrives in the toughest segment - the mid-market - of a ruthless industry, is pursuing a deftly calibrated expansion strategy and remains a finely tuned cash machine.
Once again this year, it is online sales - especially internationally - that are driving growth. Remarkably, store sales continue to grow again, albeit at a pace that is, of course, far slower.
As a result, the group's revenue and pre-tax profit are up 10.7% and 13.7% respectively. It is worth noting that, in the game of beating analysts' and the market's expectations, Next makes a strong impression - notably because the fiscal year now ending included 53 weeks, versus guidance previously set on a 52-week period.
Last year, opex linked to the development of digital and logistics platforms rose to the point that Next said it was losing £0.07 of margin for every £1 of sales shifting from physical to digital. However, this margin compression appears to have been halted in 2025.
Next's profitability, once far above that of its peers, has been falling significantly for a long time now. However, it is still near the top of the pack, at levels comparable to the best-in-class Inditex.
The group had until then been a compulsive buyer of its own shares - one of those famed ‘cannibals', a colloquial term used by investors to describe companies keen on share buybacks.
That has served it very well, since its share count has been halved in twenty years. The result is that its EPS has been multiplied by six, while revenue has not even doubled over this period.
It is with relief and approval that one notes these buybacks have fallen sharply over the past twelve months, with its valuation multiples at the top.
