The stock market has not been a happy place for retailers in recent years, particularly those in the fashion business. 

Big chains have come and gone, former darlings have become fallen angels, share prices have waxed and waned. 

Prospects today seem as gruelling as ever, amid rising inflation, economic woes and fierce competition.

Yet this type of environment can deliver rich pickings and certain stocks stand out from the pack.

Next

In the  year to January, Next profits topped £1billion for the first time. Buried in the results, chief executive Simon Wolfson mentioned an employee who felt entitled to a new laptop as the business was making so much money. For Wolfson, that logic was flawed. 

Elegant: A Next dress from its summer collection

As he explained, Next shareholders have an average of 150 shares each, receiving a dividend of about £350 a year. 

Those shareholders cannot afford unnecessary expenses – so no new laptops unless employees deserve them.

The tale is testament to Wolfson’s laser-focused leadership. He became chief executive at the tender age of 33, to some scepticism, not least because his father had chaired Next through the 1990s.

But Wolfson junior has proved the doubters wrong. Earnings have soared since he took the helm in 2001 and the Next shares have risen more than 13-fold to £128.20. The current level is not cheap but reflects a firm with a tip-top record and a clear strategy for growth.

In the past, Next was all about its own brand, sold at home. Today, Wolfson has a fast-growing international business, uses other websites to sell Next gear and offers numerous brands on his site, boosting their sales and his bottom line.

Brokers forecast a 7 per cent rise in annual profits to £1.08 billion with the dividend rising to £2.50 and the chance of a special extra payout too.

The shares may well take a breather after recent momentum. For investors with a long-term horizon, however, there should be further gains.

Traded on: main market Ticker: NXT Contact: nextplc.co.uk or 0371 384 2164

Boohoo

Just five years ago, Boohoo shares were trading at £4.33, valuing the online fashion retailer at more than £4.5billion.

Today, the stock is changing hands at just 21.4p, and the business is worth little more than £300 million.

Mistakes, mishaps and mismanagement have hit the business hard, alongside regular beatings from Mike Ashley’s Fraser Group, which owns 27 per cent of Boohoo.

Amid the carnage, an unlikely success story emerged – Debenhams: bought out of administration in 2021 and now a profitable, online marketplace for around 15,000 brands.

The man behind the turnaround, Dan Finley, is now running Boohoo in its entirety.

Early days have proved challenging. In March, Finley announced that the group would change its name to Debenhams and the group’s youth-focused brands, Boohoo, Pretty Little Thing and MAN, would adopt the marketplace model of their older sibling, alongside Karen Millen, another brand within the group.

Finley seemed optimistic but brokers were unsettled by falling revenues and the prospect of short-term pain and marked the shares down.

The stock has slumped nearly 30 per cent since Finley stepped in. Cautious investors should watch and wait but, if Finley manages to execute his plans, the shares could increase substantially over the next few years.

Traded on: Aim Ticker: DEBS Contact: boohooplc.com or 0161 233 2050

M&S

For years, M&S was a byword for British success. In 1997, the group became the first retailer to make £1billion in profit. 

Shoppers loved it and the shares soared to give the business a market valuation of more than £19billion. 

It’s been a roller coaster ride ever since, as the company lost its way and a succession of bosses tried to put it right. When Stuart Machin became chief executive in 2022, scepticism was rife.

‘Bump in the road’: The brutal cyber attack M&S suffered in April could be an opportunity for patient investors, according to Joanne Hart

Until last month, those doubts were quashed. Machin – and chairman Archie Norman – were taking all the right steps, M&S was back on track and the shares responded with enthusiasm, tripling in three years to £4.12. 

Then came April’s brutal cyber attack.

Last week, Machin admitted this savage incident could cost the group £300 million and that disruption is likely to continue until July. 

However, he also revealed a 22 per cent increase in profits to £875 million for the year to March 29, the highest figure in more than 15 years. 

Sales rose in food, clothing, homeware and beauty, losses reduced at the joint venture with Ocado and the cyber attack was described as ‘a bump in the road’.

The dividend also rose 20 per cent to 3.6p. Many shareholders remain unnerved, however, not least because the dividend increase was far less than they had been led to expect.

Machin stressed that M&S is in rude financial health but, to many, the cyber commotion has cast a long shadow and the shares are still nearly 9 per cent lower than they were a few weeks ago. 

This represents an opportunity for patient investors. The next few weeks may be hairy, but the next few years are likely to be far more fruitful. At £3.76, the shares should rebound.

Traded on: main market Ticker: MKS Contact: corporate.marksandspencer.com

Mulberry

Mulberry bags have many fans, from the Princess of Wales to Kate Moss. Investors are less enthusiastic. 

Trading at £25 in 2012, its shares have tumbled to 76p amid falling sales, rising debts and increasing losses. In September a new boss was brought in.

Andrea Baldo has a long history in fashion, most recently at Danish brand Ganni, which he revitalised in store and online.

He intends to do even better at Mulberry. First, he is keen to restore faith in the business at home, building on Mulberry’s heritage as a Somerset-based brand. 

Several steps have already been taken, including a vigorous cost-cutting exercise, but there is plenty more to do, not least making sure the bags look good, are well priced and on sale in the right places.

Mike Ashley, who owns 37 per cent of Mulberry, has criticised previous management and tried to buy the business last year.

Baldo is trying to build bridges and work with its largest shareholder, Challice.

Baldo is targeting a 30 per cent increase in sales to more than £200million, solid profits and substantial share price recovery over the medium term. 

Adventurous investors or Mulberry fans may fancy a punt at 76p. After all, anyone with 500 shares or more is entitled to a 20 per cent discount at top stores.

Traded on: Aim Ticker: MUL Contact: mulberry.com or 01761 234 500

DIY INVESTING PLATFORMS

AJ Bell

AJ Bell

Easy investing and ready-made portfolios

Hargreaves Lansdown

Hargreaves Lansdown

Free fund dealing and investment ideas

interactive investor

interactive investor

Flat-fee investing from £4.99 per month

InvestEngine

InvestEngine

Account and trading fee-free ETF investing

Trading 212

Trading 212

Free share dealing and no account fee

Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.

Compare the best investing account for you