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?

Can this FTSE 100 stock keep smashing it?

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.