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Next to take lead on Thursday with post-Christmas trading update

The clothing retailer is the first of a deluge of updates from the sector expected over the next few weeks, with many forecasting a sharp downturn for the traditionally busy trading period
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Next is expected to keep its full-year pre-tax profit guidance at around £727mln

Next PLC (LON:NXT) will be kicking off the post-Christmas deluge of retailer updates on Thursday following what has been a rough few months for the sector.

Lee Wild, head of equity strategy, interactive investor, commented: “Already struggling to grow sales in the run-up to Christmas, a profit warning from ASOS PLC (LON:ASC) has dealt a massive blow to both online and high street fashion retailers.

“Next is not immune, already warning in September that the UK retail market remains volatile and is subject to ‘powerful structural and cyclical changes’.”

He added: “Next shares have lost almost a quarter of their value since the end of November, and now look cheap assuming sales do keep growing.

“Forecasts are for annual mid-single-digit profit growth over the next five years, which is hardly aggressive, but fear is that near-term headwinds could threaten full-year sales and profit guidance.”

Analysts predict unchanged profit forecasts

In a note at the beginning of December, analysts at UBS said they believe Next’s full-year pre-tax profit guidance is unlikely to change much from the £727mln consensus if its full price sales forecast for 1% growth in Next Brand sales for the fourth quarter is met.

That is in line with company guidance made on 1 November, although temperatures since then have probably been a little milder than apparel retailers would prefer, and the British Retail Consortium’s apparel category in November was relatively weak.

However, against this, the UBS analysts added, online apparel sales was one of the fastest growing categories, with estimated year-on-year growth of around 7% last month.

Next's last comments were that they expected less stock into the post-Christmas Sale than last year, which could also help clearance rates, the analysts added.

Significant announcements expected:

Thursday January 3:

Trading update: Next PLC (LON:Q4), Staffline Group PLC (LON:STAF)

AGMs: PCG Entertainment PLC (LON:PCGE), Wishbone Gold PLC (LON:WSBN)

Ex-dividends to clip 0.7 points off FTSE 100 index: Auto Trader PLC (LON:AUTO), British Land Company PLC (LON:BLND), Experian PLC (LON:EXPN)

Economic data: UK construction PMI; US weekly jobless claims

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