- Full-price sales ahead of estimates
- In-store trading improves
- Company keeps full-year outlook
High-street stalwart Next (NXT) defied the retail gloom with a third-quarter trading update which showed sales were slightly ahead of last year and ahead of management expectations.
Shares recovered 3% to £51.08 although that still leaves them down almost 40% since the start of the year.
SALES ACCELERATE DURING THE QUARTER
For the thirteen weeks to 29 October the firm reported full-price sales up 0.4% on the same period last year, slightly better than expected, and excluding Russia and Ukraine sales were up 1.5% compared with last year.
Actual full-price product sales were down -0.1% but interestingly in-store sales were up 3.1% suggesting people were once again visiting shops, whereas online sales were down 1.9% on last year.
Sales for the last five weeks of the quarter were up 1.4%, boosted by a strong week at the end of September when temperatures dropped and people bought coats and jumpers.
Shares has compiled data from the ONS (Office for National Statistics) which shows sales of clothing have held up better than non-food goods and significantly better than household goods or items such as watches and jewellery.
STICKING TO ITS KNITTING
Encouraged by its third-quarter performance, Next is maintaining its sales and earnings guidance for the full year.
On the basis full-price sales are down 2% on last year, the firm is projecting pre-tax profits of £840 million and EPS (earnings per share) of 554.5p up 4.5% on 2021.
That is slightly ahead of the S&P Market Intelligence consensus for earnings per share which sits at 542p, suggesting analysts will need to raise their forecasts by 2% to 3% which will make a welcome change.
While not exactly overflowing with enthusiasm, analysts at Shore Capital believe Next’s multi-channel (in-store and online) model is ‘likely to show resilience’ and describe it as ‘a market share winner in the context of a macroeconomic downturn’.
In contrast, Liberum analyst Anubhav Malhotra said: ‘The performance of the group is admirable and unchanged guidance for pretax profits of £840m and a very strong balance sheet provides comfort in making NEXT one of our top picks for the next 12 months.’
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