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Next shares strut lower as it maintains full-year guidance

Next usually underpromises and over-delivers so investors were left disappointed by the absence of an upgrade to its forecasts

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Next PLC (LON:NXT) shares fell as it left its guidance for the year unchanged as confirmed a 4.3% rise in full-price sales in the first half.

The fashion retailer said total group sales for the six months to the end of July increased 3.7% year-on-year to £2.06bn as growth in online sales and its credit finance arm offset weaker sales from retail stores. 

Brand sales, including markdowns, gained 3.8%. Retail sales continued to struggle, with store sales down 5.5%, but online sales jumped 12.6%.

Profit before tax edged up 2.7% to £319mln.

The interim dividend was hiked by 4.5% to 57.5p as the company's cash position rose to £42.1mln from £23.5mln last year. 

The company maintained the forecasts it gave for the full year in July’s first-half trading update, including a 3.5% rise in full-price sales and a 0.3% increase in pre-tax profit to £725mln.

Next expects the buyback of £300mln shares to push up earnings per share (EPS) by 5.1%. EPS is estimated to rise by 5.2%. 

Absence of upgrade

The group usually underpromises and over-delivers so investors were left disappointed by the absence of an upgrade to its guidance, sending shares down 4.8% to 5,874p in morning trading. 

Neil Wilson, chief market analyst at Markets.com, said the firm is highly-cash generative but there has been no upgrade from the July update so there has been a touch of profit-taking.

"Shares dipped over 4% in early trade as investors were perhaps looking for a bit more of a positive outlook, however well they know Lord Wolfson.  

"The stock is starting to test the 2018 highs around £62 and the market maybe needs a little bit extra to get it over the line and today didn’t deliver that."

However, overall, Wilson thinks Next is in good shape.

 

Quick facts: Next PLC

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LSE:NXT
Market: LSE
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