The Next (LSE: NXT) share price jumped 10% in early trading Thursday (27 March), on the back of results for the year ended January 2025. It dropped back a bit, showing a 6% gain on the day at the time of writing.

The high-street fashion chain hit the £1bn profit-before-tax milestone for the first time ever. At £1.01bn, it’s up 10% over the previous year. Total group sales increased by 8.2% with full-price sales up 5.8%. Earnings per share (EPS) rose 9.9%, benefiting from the company’s share buyback programme.

Sector pressure

The highly-competitive fashion business has been under the squeeze for some time. Shares in Burberry Group, for example, are down 40% in the past five years. And the 87% drop at Debenhams Group (formerly boohoo) over the same period is almost too painful to look at. The Next share price, going well against that trend, has climbed 164% in five years including the spike on results morning.

CEO Lord Wolfson said it was unusual “to begin a year on an optimistic note, yet that was our stance this time last year.” He added that “the worst of the retail-to-online structural shift appeared to be behind us, the pandemic was well and truly over, and the cost of living crisis was abating.“

The sector isn’t out of the woods yet though, as the boss warned: “We expect the UK tax rises in April to weaken the UK employment market and negatively impact consumer confidence as the year progresses.” It’s going to add around 1% to prices, he said.

Guidance lifted

Despite the problems the fashion retail business still faces, Next has upped its guidance for the current year. Full-price sales for the first eight weeks are already ahead of expectations. The board now expects a full-year full-price sales rise of 5%, with pre-tax profit up 5.4%.

Taking into account the effects of anticipated further buybacks, we could be on for an 8.5% increase in EPS by January 2026.

I almost forgot the dividend. At 233p total it represents a yield of 2.3% on the previous closing share price. It might not be one of the biggest on the FTSE 100. But the outlook for this year indicates cover by earnings of 2.8 times. And that boosts my confidence in progressive future rises.

Bullish consensus

Is a forecast price-to-earnings (P/E) ratio of 16 good value? If Next can keep up its impressive profit trajectory, I think it could be. But if I’ve learned anything from the past few horrendous years for the retail business, it’s that I need a safety margin in any shares I consider buying.

By contrast, Marks & Spencer is on a forecast P/E of only 12 even after its spectacular recovery. And it has diversification into food, househould goods and all the rest, which helps protect the business against single-sector weakness.

Still, I think anyone looking for the UK’s best long-term fashion business with possibly the strongest management in the sector (rather than Debenhams/boohoo, which I actually bought), should consider Next.