Physical store sales continue to decline but profits were up, allowing the company to raise the interim dividend
Next (NXT) underwhelms the market with latest figures
- Clothing retailer posts 13% growth in online revenue, as in store sales drop 5.5%.
- Shares drop 4% in early trading as market expected more.
- While company sees growth in online, it remains challenged by ongoing political uncertainty and shares remain no better than a ‘Hold’.
This morning’s results have come in slightly better than expected and the group said its full-year guidance remained unchanged. Full price sales rose 4.3%, helped by a solid 13% increase in online revenue. The long term pattern of good online sales was offset by a declining performance in the physical stores with sales on the high street down 5.5%. Interim profits were up 2.7% to £319.6mn and the company raised the interim dividend by 4.5%. Next said it continues to expect full-year sales growth of 3.6% with pre-tax profits of £725mn.
The market was clearly underwhelmed by the figures with the shares down 4% in early trading. However, that may be more to do with the fact they have seen a strong run into the results and some investors may now be taking profits. Given the considerable macro-economic and political uncertainty at present Next’s solid performance is positive for investors.
Our view on Next - Hold
While the company continues to see good growth in its online business and generates a good level of cash, the potential impact of the imminent Brexit creates a lot of short term uncertainty for retailers and given the outperformance of the shares in recent times they remain no better than a ‘Hold’.
If you're looking to invest in the general retail sector and you're not currently a customer of The Share Centre, sign up today. You can also view the full range of general retail companies and their share prices.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.