Fashion retailer beat market expectations for second consecutive quarter.
Next (NXT) shrugs off retail gloom with 12% jump in online sales
- Shares react with an 8% rise is early trading.
- Retailer raises full year profit guidance from £715mn to £725mn.
- While shares trade at highest point for 12 months, we maintain our ‘hold’ recommendation.
Established high street fashion retailer Next had some good news for the market this morning as it reported better than expected sales and raised its full-year guidance for both profits and sales. Full price sales in the period increased by 4% compared to expectations of just 0.5%. Online sales rose by a decent 12% which helped to offset the 4.2% drop in sales at its physical stores. The company warned that an exceptional performance in July was not likely to be repeated but still raised its full year profit guidance from £715mn to £725mn and full-year sales growth from 1.7% to 2.6%.
These are strong figures from Next, the second consecutive quarter in which they’ve beaten expectations, so it was not surprising to see the shares respond in early trading with an 8% rise. Although they were boosted to some extent by the end of season sale they do indicate trading has improved for the company and defy some recent poor retail sales data.
Our View on Next - Hold
The shares are trading at their highest point for a year but we retain our ‘hold’ recommendation thanks to its strong online sales and good management.
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