Next PLC (LSE:NXT) has done it again, dropping in with a profit upgrade while most of the high street has been shrouded in doom and gloom.
Shares in the FTSE 100 clothing group strutted over 8% higher in morning trading to a new all-time of over 10,800p, while plaudits flowed from City analysts, who noted the online and international divisions drove growth, as UK store sales remained slightly sluggish.
"Next has produced another strong set of results with an unexpected profit upgrade for this early period in the year,” said Adam Cochrane at Deutsche Bank.
"Given the economic uncertainty and volatility we are hearing elsewhere, this is a real sign of confidence from Next, in our view.”
Cochrane flagged the better first-half outlook combined with "some potential" for the second half sales to be stronger and described the company’s valuation of around 15 times 2025 earnings as "well warranted… given the consistency in earnings delivery".
Sreedhar Mahamkali at UBS seems to think the retailer’s found a higher gear, saying it has "entered a new phase of sustainably higher earnings growth.
"In the choppy consumer sector NXT is unique," he said, entering the new year with strong momentum and expected 9%-plus EPS growth "enhancing its safe haven appeal".
He said Next remains UBS's top pick in the European retail sector.
Panmure Liberum’s Anubhav Malhotra gave credit the digital side of the business, saying "Next continues to avoid the doom and gloom of UK retail", pointing to a 2% PBT guidance upgrade this morning, driven by better than expected sales growth in recent weeks.
"The upgrade is driven by better online growth, where both UK and International businesses are performing above expectations.
"We think Next’s improved online proposition with more third-party brands, new own-brands, new licenses, and faster and more accurate delivery is allowing it to take share from struggling pure-play online incumbents."
Hargreaves Lansdown’s Aarin Chiekrie gave props to the "eye-watering pace" of the international division that allowed Next to deliver "yet another profit upgrade continuing its hot streak".
He said online and overseas sales combined as the "driving force", offsetting a sluggish performance from the UK physical stores which "have come under a bit of pressure given the structural decline of the high street".
Interactive Investor’s Richard Hunter tried to warn any sceptics.
"Next has a reputation for under-promising and over-delivering, but its outlook statement this time is perhaps unusually upbeat," he said.
"Next naysayers have missed out on some stellar returns, but may not yet have entirely missed the boat.”
He had some stats handy noting that the share price has risen by 122% over the last five years and by 59% over the last three, though the performance over the last 12 months has been a "more pedestrian" at 7%.
"If the retailer’s level of inexorable progress is maintained as has been the case to date,” Hunter wrote, “those who doubt the company’s prospects may continue to do so at their peril."