1st Aug 2024 10:16
(Alliance News) - Next PLC announced an expectation-topping second quarter of sales, the clothing and homeware retailer shaking off a soggy start to the Great British summer and despite lapping a strong annual comparative.
Next shares traded 8.0% higher at 9,800.00 pence each in London on Thursday morning.
In the 13 weeks to July 27, full price sales rose 3.2% on-year, "exceeding our expectations by GBP42 million", Next said.
It had predicted second-quarter full price sales would fall 0.3% during the quarter, "given the exceptional summer last year".
In the entire first half, full price sales were up 4.4% versus last year. Next's guidance for this period was to be up 2.5%.
Total group sales, including markdown, subsidiaries and investments, in the first half rose 8.0%.
Looking ahead, Next raised its annual pretax profit outlook to GBP980 million, which would represent a 6.7% rise from the prior year. It had previously predicted profit of GBP960 million.
Deutsche Bank said upgrades from Next happen "come rain or shine". The investment bank highlighted Next's UK division outperforming. Next said UK full price sales, including online and bricks and mortar, improved 0.4%, "slightly ahead of our expectations".
"Overall investor expectations were subdued on the UK part of the business given weather, peer commentary, Kantar and credit card data but the International business is harder to forecast and the size of the beat here was unexpected. Despite bigger picture UK macro positivity, there has been a slightly more negative tone on the clothing retailers including Next. Accordingly, we see the beat as being taken well by the market," Deutsche analysts commented.
Jefferies hailed Next's "successful weatherproofing".
"Once again in Q2 Next's domestic online operations and strong international growth have proved an effective counterfoil to the vagaries of the British weather. This is a helpful reminder of the improving quality of the investment proposition (given a broader push across brands and geographies). With this should come a fuller valuation as the just reward to the reducing cyclical nature of the group," Jefferies analysts said.
Deutsche rates the stock at 'hold' but Jefferies has a 'buy' recommendation.
By Eric Cunha, Alliance News news editor
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