Next PLC (LSE:NXT) delivered its almost customary beat-and-raise as part of its first quarter results, but analysts said the update fell short of elevated market expectations, with guidance seen as cautious despite improving trends.
The FTSE 100 retail bellwether reported full-price sales growth of 6.2% for the first quarter, ahead of its own 4.0% forecast.
But this was below the 7-8% many investors had pencilled in, UBS flagged.
The £28 million sales beat translated into an £8 million increase in profit guidance, lifting full-year pre-tax profit to £1.218 billion.
Analysts pointed to a mixed regional performance. UK growth of 4.4% was slightly ahead of forecasts but slowed through the quarter, while international sales growth of 12.8% missed expectations, despite a strong rebound to 18.3% towards the end of the period as disruption in the Middle East eased.
Analysts at UBS said the improving international exit rate "suggests momentum returning", and given this, sees the company’s maintained sales guidance as "conservative".
Deutsche Bank's summary was that this was "a best in class company [providing] another small upgrade and a more conservative view on the inflationary impact costs in the Middle East lasting the remainder of the year."
Overall, the update was seen as “solid”, noting the modest profit upgrade and unchanged sales outlook, even after factoring in higher costs linked to the war in the Middle East.
Both sets of analysts highlighted that an additional £32 million of cost pressures are expected this year but should be offset through pricing and efficiencies, leaving the full-year outlook broadly intact.
This upgrade is likely to have been unexpected by the market, said Jefferies, and "complemented by a complete offset to Middle East cost increases" and no signs of change to underlying consumer behaviour outside of weather impacts and the upcoming annualisation of market share gains from the M&S cyberattack last summer.
Next shares fell in early trading, before climbing 3.9% to 13,120p, climbing further from the six-month low around 12,000p in late March.