Next PLC (LSE:NXT) is up over 4% on Wednesday after exceeding analyst expectations at its third-quarter update, leaving investors hopeful of an upcoming boost to the wider industry.
Although most shareholders' attention was focused on yet another profit upgrade, analysts at Shore Capital were looking at a potential industry read across.
Online sales at Next remain “a strong growth driver” having jumped by 6.5% year-on-year, while in-person revenues slumped by over half a percent – despite being up against normalised comparatives from 2022.
While many in-store companies have reported strong earnings over the past few months, in particular hospitality and leisure venues, the trend of a return to digital could prove decisive for some of London’s biggest strugglers, such as Boohoo Group PLC (AIM:BOO) and ASOS PLC (LSE:ASC).
Shore Capital added: “The focus on full-price sales, as opposed to sales during clearance events, suggests a potential shift in consumer spending habits towards quality over quantity.”
Full-price sales performed well enough for the group to lift its guidance for the channel to represent an annual jump of 3.1% if full-price sales growth continues at around 2% for the rest of the year.
ASOS, which is struggling to garner new customers, increase the amount of full-price sales and turn around excess stock, may need to take a leaf out of Next’s book – although the online group targeting middle-aged customers seems rather unlikely.
Shares in Next are up over 20% in 2023, having opened trading on Wednesday at around 6,000p.