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Can Next shares find some light in the retail gloom?

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For a while there, high street staple, Next shares, were bucking the sector trend, rising from an opening price of £48.35 to a 16 month peak of £62 during June.

Yet since the end of July the stock has been in trouble, tumbling back to a 6 month-plus low of £50 by late-October. Next shares now sit at a current trading price of £52.60.

Next trading update

The firm’s last update was actually pretty recent, with the company posting its half year results at the end of September.

Total group sales rose 3.8% to £1.986 billion, with a 6.9% slide in the high street-focused Retail division overcome by a very healthy 16.8% in the buoyant Online segment.

It even managed to eke out a 0.5% increase in pre-tax profit to £311.1 million, with a 4.9% jump in earnings to 185.6p per share.

All this allowed Next to up its full year guidance.

Total full price sales including interest income are expected to rise 3.0%, while group pre-tax profit is now forecast to nudge 0.1% higher to £727 million against the previously estimated 1.3% decline to £717 million. It did temper these upgrades, however, by reiterating its ‘cautious’ view of a ‘volatile’ pre-Brexit market.

Next third quarter statement

In terms of Wednesday’s third quarter statement, investors will at the very least want to hear that the company is on track to meet the revised guidance outlined in September.

Another upgrade will be welcome, but given the state of the retail sector it might be tough to come by. As for the Q3 sales specifically, analysts are looking for a 2% increase at the Next Brand.

Next shares have a consensus rating of ‘Hold’ alongside an average target price of £50.84.

This article is brought to you in association with Spreadex. All opinions expressed in this article are from the author and do not necessarily represent the opinions of The Armchair Trader. You can find out more about Spreadex products and services here, or find more articles from Connor Campbell here.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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