Up 33% in a year, where next for the share price of this FTSE 100 retailer?

Our writer explains why he recently bought the stock of a FTSE 100 company that’s one of the UK’s best at selling clothes, even if they’re not the most exciting styles.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Mature black couple enjoying shopping together in UK high street

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

In my opinion, the directors of Next (LSE:NXT), the FTSE 100 clothing, homewares and beauty products retailer, are experts when it comes to managing the expectations of investors.

That’s because, since the start of 2023, the company’s issued eight separate earnings upgrades, which have helped push the share price 68% higher.

Now, it might be a case of simply under-promising. Or it could just be that the group continues to outperform its directors’ own modest forecasts. Either way, earnings are clearly going in the right direction.

Should you invest £1,000 in Allianz Technology Trust Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Allianz Technology Trust Plc made the list?

See the 6 stocks

Created with Highcharts 11.4.3Next Plc PriceZoom1M3M6MYTD1Y5Y10YALL1 Oct 20193 Apr 2025Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '25202020202021202120222022202320232024202420252025www.fool.co.uk

A wolf in sheep’s clothing

The Economist recently described Next as a “boring brand” suggesting that “it sells garments that are unlikely to grace the runway or go viral on TikTok”. That may be a little unfair, but it did acknowledge that it’s an “exciting business” with a reputation for delivering strong results.

With Lord Wolfson at the helm, the company achieved record turnover and earnings during the 53 weeks ended 27 January 2024 (FY24). However, it expects to do better in FY25 and is now forecasting a profit before tax of £995m.

Part of its success is due to the way in which it has adapted to changing shopping habits with approximately 60% of its revenue now being generated online. It sees the internet as being complementary to its bricks and mortar stores rather than a threat.

In FY24, it reported earnings per share (EPS) of £6.62. During the first six months of its current financial year, EPS was 6.2% higher than for the same period in FY24. If this continues for the remainder of the year, the shares will be trading on a forward price-to-earnings ratio of 13.9.

Although not in bargain territory, I think this is a reasonable valuation for a company that has a good track record of growing its earnings. And it’s in line with the average for the FTSE 100 as a whole.

With over 800 shops in the UK, I suspect domestic growth will slow. That’s why the retailer plans to focus on expanding overseas. It’s in talks to roll out franchising and other partnerships in the US, Asia and Australia. It also hopes to generate additional revenue from licensing its technology platform to third-parties.

These are the reasons why I recently added the stock to my portfolio. But like any investment, there are potential threats.

Reasons to be cautious

Retailing is a tough business. And operating a chain of stores is particularly difficult, especially from a logistics perspective.

The sector is also exposed to wider economic conditions. Any slowdown in the UK economy is likely to impact Next’s sales. Although growth is expected, it’s not guaranteed. The budget, due to be held later this month, is likely to be a tough one.

We’ve also seen before how shoppers can quickly fall out of love with previously popular fashion brands. Dr Martens and Burberry are two good examples of this.

Also, I don’t like the fact that the dividend on offer is a little mean. With a yield of around 2%, income hunters could do better elsewhere.

However, despite these possible risks, I’m happy with my purchase. The retailer’s strong management team has built a reputation for delivering solid returns to shareholders. Long may this continue.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Beard has positions in Next Plc. The Motley Fool UK has recommended Burberry Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Here’s why Nvidia stock fell 13% in March

The Nvidia stock price rise was looking unstoppable. Should investors now be wondering if the same might be true of…

Read more »

US Stock

It’s ISA deadline week! Here’s my 3-step game plan

Jon Smith tries to calm the hype around the last minute ISA rush to buy stocks and explains why he's…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

£10,000 invested in BAE Systems shares at Christmas is now worth…

BAE Systems shares have been surging in the FTSE 100 in 2025, driven higher by the wavering US commitment to…

Read more »

Investing Articles

Up 19% in 2 weeks, can the Tesla share price rebound further?

Tesla's first-quarter delivery numbers came out today. Will they help persuade our writer to invest his money at the current…

Read more »