Next plc’s knock-out interim earnings report has sent the online and brick-and-mortar fashion outlet’s share price to an all-time high of 9,826p on a £12.39 billion valuation.
It comes after the FTSE 100-listed group thoroughly surpassed sales expectations, with revenues surging by 4.4% year on year against expectations of a 2.5% increase.
Yet it was not necessarily due to Next’s domestic sales performance, which has been hampered by what AJ Bell’s investment director Russ Mould called a “truly miserable” time for the UK retail sector amid poor weather conditions.
True, UK sales did outperform, with sales up 0.4% compared to a projected loss of 0.3%.
“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,” said Mould.
“Many people might not realise Next has international operations and is active in 34 countries. At 1.7 million overseas customers, it is certainly not a marginal player and this amount compares to approximately one-fifth of its UK’s online customer base,” he added.
“Next has found the magic ingredients to deliver strong returns. It has a reputation for selling clothes that are considered good quality and will last a long time, something that’s important to many shoppers.
“The ordering and returns system runs smoothly and it also knows how to get the most from a store network. Combine these factors together and you’ve got a business that stays one step ahead of the competition.”
All in all Next’s excellent first half made it the second-best performer on the FTSE 100 this Thursday with an 8.4% gain, bested only by Rolls-Royce Holdings PLC (LSE:RR.)’s double-digit rally following a bumper shareholder returns announcement.