Next PLC's (LSE:NXT) management struck a quietly confident tone on a recent UBS investor roadshow.
Despite a cautious consumer backdrop, chief executive Simon Wolfson and finance director Jonathan Blanchard told investors that the retailer’s customers remain in good financial health, even if they are buying fewer clothes overall.
Shoppers are opting for better quality rather than more volume, with average selling prices up 4% but like-for-like prices rising only 1%, suggesting a shift towards mid-range garments rather than budget items.
Competition in UK clothing retail has eased as weaker players and promotional chains have exited, helping to keep the market “rational”. Next’s delivery and fulfilment network, dense and efficient by international standards, remains a key advantage.
Internationally, the company sees room for expansion, particularly in Europe and the Middle East, where sales growth has been supported by faster delivery times and better online functionality.
A combined stock pool with Zalando is expected to improve product availability and extend reach in markets where Zalando already outperforms.
Next’s “Total Platform” strategy, which could extend into third-party logistics, remains central to its medium-term growth story. Management reiterated its disciplined approach to cash returns, sticking with its 8% expected return on equity as a guide for buybacks and dividends.
UBS remains upbeat, with a 14,500p target price, around 17% above the current level, and a “buy” rating on a retailer that still looks ahead of the pack.
In late afternoon trading, the shares were up 3% to 12,995p.