Whether or not all of Next Plc’s (LON:NXT) problem come down to weather UBS analyst Andrew Hughes reckons it will be the biggest short-term influence on sales.
Another risk is competition, particularly from Associated British Food Plc (LON:ABF) Primark.
“The main risk is whether Primark destabilises the low end of the market to the degree that the mid market will be unable to make price increases stick,” the analyst said.
He added: “As always, Next will seek to compete on product and service rather than margin sacrifice. Industry capacity is likely to remain a headwind although there could be a modest offset from MKS closures and the recent withdrawal from some US brands.”
Earnings growth may be hard to come by, according to Hughes, and so he expects the focus to be on protecting cash flows.
Nonetheless, UBS rates Next as a ‘buy’ and its £58.50 target suggests some 15% upside to the current share price.