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Next set for first-quarter sales surge thanks to milder weather, says Jefferies

With much wilder weather in the opening three months of 2019 compared with the same period last year, Jefferies is looking for Next to deliver first-quarter sales growth of 3.7% in next month’s update
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Growth is expected to slow again in the second quarter, though

Next PLC (LON:NXT) is expected to have enjoyed a “strongly weather-boosted start” to 2019 when the retailer posts its first-quarter trading update in two weeks’ time.

That’s according to US investment bank Jefferies, which is forecasting sales growth of 3.7% for the opening three months of the year, made up of a 13.2% rise in online sales and a 5.4% decline in in-store sales.

READ: Next confirms 2019 profit decline

“Industry statistics have already highlighted good demand in the UK for clothing in both February and March,” said analysts in a note to clients.

“Next itself flagged at the recent finals the strength of the weather support in Q1.”

Despite the pick-up in first-quarter trading, Jefferies doesn’t expect Next bosses to lift full-year guidance in the update.

“While supportive trading conditions at the start of the season bode well for markdown needs later in that same season, we are also aware of the extent to which NXT expects Q2 sales softness to balance out a buoyant Q1.

“We would be very surprised if the strong Q1 print would prompt a change in FY guidance.”

Price target raised

Jefferies repeated its forecast of a 1.1% rise in full-year sales and a 1.1% fall in pre-tax profits as a result of the shift towards lower-margin online sales.

“As a result, while we up our target price to 5,200p (from 4,600p), we stay on ‘hold’.”

Next shares rose 0.8% to 5,658p on Monday morning.

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