The Next big thing: now £4bn store eclipses M&S

New ranges and bigger shops help to deliver a rapid rise for retail giant

NEXT is poised to overtake Marks & Spencer’s core clothing and home business for the first time after years of rapid growth under the leadership of chief executive Lord Wolfson.

Sales at Next topped £4billion in the past year as the company grew by 7.2 per cent by opening bigger stores and adding new ranges.

Marks & Spencer is expected to confirm this week that its general merchandise business – which includes its clothing and home product sales – shrank. City analysts predict that will mean the business could drop marginally below £4billion in size for the first time since 2009.

Next has doubled in size from £2billion in 2002. In the same period the M&S merchandise business rose by just 3.6 per cent. Next is now worth almost £11billion making it second only to Tesco in the retail sector.

One City source said: ‘Next considers Marks & Spencer its benchmark and they will be very happy about this. However you want to cut it, we are watching it in the process of eclipsing its long-time rival. It’s been quietly capitalising on the problems at M&S’s clothing business for years and Next still has momentum on its side.’

Growth at M&S has been led by its food division for the past decade while the fortunes of its clothing business have ebbed and flowed. Food sales have increased by 52 per cent over the same period since 2002.

The resilience of Marks & Spencer’s food business has heartened the City as other grocers have descended into a price war and have been forced to slash profits. That has helped boost M&S’s share price to 530p, the highest price for more than seven years, valuing the business at £8.7billion.

M&S chief executive Marc Bolland, who is approaching his five-year anniversary in May, will reveal fourth-quarter sales on Thursday. He is expected to say that the growth in food sales is beating rivals.

However, profit margins on food are much lower than clothing and shareholders are waiting for evidence that M&S can tap into growth. The company has appointed supply chain gurus Mark and Neal Lindsey to help improve clothing margins.

Full-year profit will be announced in May and is forecast to increase 3 per cent to £640million.