Retailers and hospitality businesses stand to lose a lot from Labour’s brave new tax world, but Next plc could be uniquely placed to come out relatively unscathed, according to new analysis from RBC capital markets.
RBC has upgraded Next to outperform with a 10,800p price target, despite retail sales falling more than anticipated in October and nearly every major chain warning that chancellor Rachel Reeves’ incoming tax hikes will negatively impact the sector,
Key to the FTSE 100 online and brick-and-mortar company’s resilience, according to analysts, are Next’s marketing efforts and consumer awareness, its automated logistics, and a robust online presence.
Online sales in overseas markets will also help, as will a “fairly benign sourcing outlook in 2025, with FX fairly stable, lower raw material prices and lower freight costs”.
Next shares rallied to an all-time high in October but have since fallen back.
On this point, RBC analysts said: “We think Next shares have corrected owing to concerns over the outlook for the UK consumer, staff cost increases and a firmer USD vs the GBP since the US election.
“However we think Next is well placed to offset cost pressures, and that its top line is likely to exceed market expectations.”
NEXT shares are currently trading at 9,816p each.