Thank You, Next For Investors Following FY Results?
Spreadex | Mar 18, 2019 09:17
Like most UK retailers in 2018, the high street staple 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 PLC now sits 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 PLC (LON:NXT) has a consensus rating of ‘Hold’ alongside an average target price of £53.17.
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