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Can Next shares continue their positive 2019 run?

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Like most UK retailers in 2018, Next shares had a tough time of it. The stock had actually spent the first half of the year doing rather well, rising from £45.24 in January to £62.18 by mid-June, its best price for 27-months.

However, the economic anxiety that hit most of the market dragged the fashion firm sharply lower in 2018’s back end, leaving it at a 16-month nadir of £39.88 as fireworks went off on New Year’s Eve.

Since 2019 began it has seen a decent rebound, one that will likely only make its annual update all the more testing. Having risen more than 30% so far this year, Next shares now sit at a current trading price of £52.23.

As is tradition, Next was out of the gates early with its post-Christmas trading update, one that ended up setting 2019’s rebound in motion. For the holiday period – classed by Next as October 28th to December 29th – total full price sales (including interest income) rose 1.5%, with a 9.2% decline in Retail softened by a 15.2% surge Online.

The company claimed that ‘strong sales’ in the 3 weeks prior to Christmas, and a ‘good’ half-term holiday week at the end of October, ‘made up for disappointing sales in November’. For the full year, total full price sales were up 3.2%.

All this means that Next is expecting a 0.4% drop in pre-tax profit to a slightly lower than previously forecast £723 million, alongside a 4.4% increase in earnings per share. For the financial year to January 2020, meanwhile, the retailer forecast a further 1.1% decline in pre-tax profit to £715 million, with a 1.7% jump in total full price sales.

Any revision to that 2019/20 guidance may end up being the main driver of trading following Thursday’s full year results; that, or a pre-tax profit miss/beat for the year gone.

Next shares have a consensus rating of ‘Hold’ alongside an average target price of £53.17.

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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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