Credit Suisse downgraded Next Plc (LON:NXT) to ‘underperform’ as prices remain soft across Europe despite it being almost a year since the pound dropped post Brexit and two years since the main falls in the Euro/US$.
“The price survey would seem to suggest that Next has cut entry level pricing during Sping and Summer, possibly in response to the very poor 1Q sales (Retail - 8.1%, Directory +3.3%).
“We continue to believe that its strategy of expanding UK space is incorrect for a mature retailer and that self-help from Credit, International and Label will diminish, and potentially reverse, over the next two years.
“With earnings, margins and cash conversion continuing to fall we regard Next as a value trap.”
Credit Suisse's target price has been cut to 3,956p from 4,250p. Shares fell 5.4% to 4,068p
Marks & Spencer PLC meanwhile (LON:MKS) has seen stable premium prices month on month but have still fallen by almost 40% over the past year.
“This confirms the price realignment that has been ongoing for the past year, but may suggest that it is now complete, said the Swiss broker. Neutral is its view on M&S with a 370p target.
Marks & Spencer shares fell by 3.6% to 355p.