Can the Next share price defy the odds and grow another 25% next year?

Harvey Jones is in awe of the Next share price, which has shrugged off the troubles hitting retail for another strong year of growth. Can it repeat this in 2025?

| 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.

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.

I’ll be honest and say I don’t understand the Next (LSE: NXT) share price. While big high street names fall and more shops get boarded up, the FTSE 100-listed clothing and homewares retailer goes from strength to strength, as do its shares.

In 2024, Ted Baker, Muji and The Body Shop went under (although the latter has bounced back under a new owner). Mike Ashley’s conglomerate Frasers Group has shuttered some acquired chains/e-shops too and its luxury Flannels operation has faltered. Sports Direct continues to shine for it, but the group is still being demoted to the FTSE 250.

Yet Next keeps powering ahead. Its shares are up 70.59% over two years and 23.09% over 12 months. So what’s its secret?

Should you invest £1,000 in Coca-Cola HBC 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 Coca-Cola HBC made the list?

See the 6 stocks

Can this FTSE 100 stock keep smashing it?

Created with Highcharts 11.4.3Next Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Good management is one answer. There’s a lot more to this business than that Next itself. It’s taken advantage of the retail rot to snap up Joules and MADE, and built large equity stakes in JoJo Maman Bébé, Reiss and FatFace.

Next’s Total Platform venture has brought in a new line of revenues, as it provides marketing, warehousing and distribution services to third-party businesses.

On 30 October the group posted a bumper Q3, as full-price sales surged 7.6% in the 13 weeks to 26 October, smashing its 5% forecast. This was boosted by a cold snap that had shoppers racing to buy winter wear. Even the weather is a tailwind for Next.

The board also upgraded Q4 guidance, which brought further cheer as this will include the crucial Christmas trading period.

It now forecasts 2024/25 sales of £5.02bn, slightly up from its previous £4.98bn forecast. It expects pre-tax profits to climb 9.5% to a little over £1bn.

2025 could be even tougher for retailers

I’ve admired Next for years but never bought them. I wrongly decided they couldn’t sustain their outperformance. Have I left it too late to play catch up?

As a rule, I hate buying stocks after they’ve had a good run. I’m worried the momentum will run out just as I take a belated position. I missed out with Next, but as ever with investing, there’s no hard and fast rule. I was wise to shun Frasers after its shares had rocketed 200% in short order. They’re down 30% over the last 12 months.

I think 2025 will be even tougher for retailers. After a bright first half, the UK economy is slowing, and that’s before Budget hikes to employer’s National Insurance contributions kick in next April. Next employs more than 30,000 people. Increasing the national minimum wage by an inflation-busting 6.7% will add to the retail squeeze and Next won’t be immune.

Higher inflation and interest rates won’t help either. No wonder Next shares have been volatile in recent months.

The 18 analysts offering one-year share price forecasts have set a median target of 10,470p. If correct, that’s up just 4.44% from today’s 10,025p. Five brokers name Next a Strong Buy but 13 say Hold and I’m with them. Except I don’t hold it.

Next shares look fairly valued trading at 15.46 times earnings but I think they may struggle to maintain their momentum in 2025. I won’t buy them today.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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 »