- Q2 full-price sales up 3.2%
- Full-year guidance raised
- Shares close in on £100
Shares in Next (NXT) rose 8% to an all-time high of £98.30 as the fashion and homeware retailer reported a forecast-beating rise in second-quarter sales and raised its outlook for the full year yet again.
OVERSEAS SALES BOOST
For the 13 weeks to 27 July, full-price sales - which include all items sold in Next Retail, Next Online including third-party brands, and Next Finance interest income - rose by 3.2% exceeding the company's expectations by £42m.
Given last year's exceptional summer the company had forecast Q2 sales would be down -0.3%, and in fairness UK in-store and online sales combined sales were flat but overseas online sales surged more than 20%.
For the first half, full-price sales were up +4.4% versus company guidance of a 2.5% increase, while total group sales including markdowns, subsidiaries and investments were up 8%.
Next said it was increasing its profit guidance for the full year to January 2025 by £20 million to £980 million, up 6.7% on last year, due to a combination of better first-half sales and cost savings of £9 million, mostly from logistics.
EXPERT VIEWS
Clive Black at Shore Capital was upbeat about the fashion and homeware retailer: ‘Next has a lot of admirers among UK equity investors, the firm more often than not being a core holding in portfolios where exposure to UK discretionary consumer goods has been quite modest. The second-quarter update underscores why the firm is held in such high regard by portfolio and wealth managers.
‘No doubt second-half expectations are also cautiously set, which means there could be further nudges up to profits down the line, £1 billion of pre-tax profit is touching distance away.
‘We commend Next on its second-quarter delivery, we can justify its premium sector rating and admire the manner which management is evolving the firm for onward growth given the relative maturity of its UK store platform.’
Russ Mould, investment director at AJ Bell, said: ‘While the first half of 2024 has been truly miserable for the UK retail sector thanks to unfavourable weather, the end of June perked up and much of July has had glorious sunshine. That’s encouraged people to get out of the house and into the shops.
‘Next has once again grabbed a slice of consumer spending, helping to make up for a challenging time earlier this year.’
‘However, you need to look beyond Blighty. Much of Next’s success in its second-quarter period came from overseas where growth rates were in double-digits.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Ian Conway) own shares in AJ Bell.
