Stifel has adjusted its outlook for Next PLC (LSE:NXT) following a bullish turn for the retailer which saw shares rise 40% year to date.
Next’s strong market performance was a result of multiple guidance upgrades, but in Stifel’s view, Next’s latest trading performance “suggests a return to more historic trends”.
The “mature” Next brand will provide stable profits, while company growth will come from the label, overseas and total platform businesses, Stifel contended.
Next’s label business sells third-party clothing, home and beauty brands online, while total platform refers to online services, such as websites, marketing, warehousing, distribution networks and contact centres, to third-party brands.
“The post-pandemic step-back from online shopping and back into stores has been bigger and lasted longer than we expected, and has provided a tailwind for multi-channel retailers in 2023,” said Stifel.
However, “there are signs that this shift is coming to an end, with higher online growth for Next in the third quarter while in-store sales dropped”.
“Given this, we expect a return to historic trends for full-year 2025 onwards."
As a result of the above factors, Stifel has upgraded its Next price target, but downgraded the stock to a 'hold' given the limited upside from here on in.