Results from Next show Brexit is having no impact on shoppers

Shares still took a small dip as the high street remains challenging.

Article updated: 21 March 2019 12:00pm Author: Ian Forrest

  • Company states a ‘No Deal’ scenario would leave spare change in shoppers’ pockets.
  • High street sales fall by 21% while online sales see 14% growth.
  • Shares remain a ‘hold’ for investors willing to accept a medium level of risk.

While the clothing retailer’s full year profits announced this morning are in line with expectations today, what really caught the eye were comments from the company to the effect that it had seen no indication so far that Brexit uncertainty was causing its customers to change their behaviour. The company went further to say even a ‘No Deal’ scenario could actually reduce prices for its customers.

Online sales push the high street down further

The stark contrast between online sales against those in the high street was again visible, with online rising 14% in the year to January, while those in the stores dropped by 21%. Profit in the current financial year is expected to drop from £723m to £715m but the dividend was raised by 4%.

Shares dropped 3% in early trading although that might be due to some profit-taking as they’ve outperformed the market so far this year. Another influencing factor could be that the company expects trading on the high street to remain challenging. However, Next believes it is well prepared for Brexit and pointed to the high level of employment and rising wages as factors that should support consumer spending.

Our View on Next - Buy

While the company continues to see good growth in its online business and generates a good level of cash, the ongoing fall in high street store sales and uncertainty around Brexit mean this is no better than a hold for now.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.