This FTSE 100 fashion icon just broke the £1bn profit ceiling! What’s next?

There aren’t that many FTSE 100 corporations that may declare to have posted £1bn in annual profit. However that’s precisely what this common excessive avenue fashion retailer did when it posted its full-year outcomes this morning.

Subsequent

Subsequent (LSE: NXT) is a well-loved and recognisable excessive avenue fashion model, specialising in clothes, footwear and residential merchandise. Established in 1982, the firm has grown to grow to be a staple on the UK excessive avenue, working over 500 shops nationwide. 

Past its bodily presence, it’s developed a profitable on-line platform catering to clients each domestically and internationally. The retailer provides a variety of merchandise, together with males’s, girls’s, and kids’s fashion, in addition to residence furnishings and equipment.​

For the fiscal 12 months ending January 2025, Subsequent just managed to cross the £1bn profit milestone, posting pre-tax profit of £1.011bn. This equates to a ten.1% enhance in annual earnings. 

In the meantime, group gross sales rose by 8.2% to £6.32 bn, pushed by expectations-beating gross sales in the preliminary eight weeks of the fiscal 12 months. Because of this, the firm has revised its gross sales progress forecast for the first half of the 12 months from 3.5% to six.5%, resulting in an anticipated annual progress charge of 5%.

Moreover, the retailer elevated its pre-tax profit steering by 5.4% to £1.066bn.

Tariff chaos continues 

In different information this morning, President Donald Trump plans to impose a 25% tariff on all imported cars to the US. The announcement despatched ripples by world monetary markets, with the FTSE 100 taking a minor hit. The UK helps a number of main automotive producers and associated industries, all of which might undergo as markets tackle the affect of declining automotive exports to the US. 

In fact automotive tariffs aren’t a difficulty for the agency, however whereas upcoming modifications to de-minimis customs thresholds are, they’re anticipated to have little affect on the firm’s total gross sales and earnings. In the EU, most of the firm’s enterprise already runs by a neighborhood subsidiary, that means it gained’t be affected by the rule change. The rest, offered through a UK entity and imported by customers, will face extra duties from 2028. Nonetheless, the monetary affect is anticipated to be minimal, with an estimated internet price of underneath £1m.

Nonetheless, the threat of losses from a broader financial downturn stays a risk. It’s additionally shifting in the direction of overvalued territory, with a price-to-earnings (P/E) ratio rising from 8.5 to 16. Add to this shifting client behaviour and rising competitors from the likes of Marks & Spencer, ASOS and Debenhams Group.

Whereas these particular commerce insurance policies could in a roundabout way affect the retailer, rising geopolitical tensions and market fluctuations stay a trigger for concern. All these components might affect the firm’s total operations and enterprise circumstances.​

On the proper observe

at present’s numbers and monetary efficiency, there are notable indicators of sturdy administration and a resilient enterprise mannequin. The corporate’s profitable integration of on-line and bodily retail channels positions it nicely in the evolving retail panorama. 

It’s doing nicely to reaffirm its place as a frontrunner inside the British fashion retail sector. Immediately’s outcomes reveal its skill to spice up gross sales by market adaptability. Regardless of the financial challenges, I feel this strategic method, mixed with a powerful market presence, might equate to a promising future for the agency.

General, I feel it’s a very good inventory to contemplate as a part of a portfolio geared toward leveraging UK progress and sidestepping the affect of US commerce tariffs.