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High Street bellwether Next (LON:NXT) was boosted by strong retail sales as its Directory growth slowed in the third quarter.
The recent trend has seen the company, like its peers, affected by head-winds in the high street arm but against weak comparable figures, the retailer saw a rise of 5.9% in store sales, taking its growth for the year to 2.6%.
The Next Directory business grew 6.2% in the quarter, bringing the growth to 7% for the year to date, from 8.2% at the half way mark.
“Retail had a good third quarter but its comparatives were much less demanding than Directory,” Next said.
Investec said the retail sales results were “a positive read-across for the UK clothing sector,” but warned the weaker than expected Directory performance is “unlikely to ease near-term concerns over potential loss of more lucrative credit customers into cash over time”.
Overall group sales rose 6% in the quarter, bringing the total growth for the year to 4.4%.
The company has increased the low end of its full year profits guidance to £810mln from £805mln, with sales growth in the year to end January forecast to rise by a minimum of 4% rather than the 3.5% outlined in its interims. The top end of profit guidance remained unchanged at £845mln.
Keith Bowman, at Hargreaves Lansdown, said: “In all, in a sector overshadowed by the move towards online sales, Next remains a core retail holding”.
Analysts’ consensus remains to ‘hold’ the stock, as the share price, which has risen 15% in the year so far compared to a flat FTSE100, is “up with events”.
Next reiterated an ordinary dividend of 2.2% and a special dividend of 3.3%, which Investec says underpins the share price, which eased 50p to 7,895p today.