Next PLC (LSE:NXT) should serve up solid first-half results on Thursday, said Barclays, but the emphasis will be on how the clothing retailer has started the third quarter.
It was only a month and a half ago that the FTSE 100 group delivered its latest update, when it said second-quarter sales beat its guidance and management raised full-year profit expectations.
The company, well known for setting guidance that it expects to beat, pencilled in full-year profits of £860mln, £10mln higher than previous guidance and up 4.5% compared to 2021's final result.
Analysts at Barclays said investors should keep their eyes on commentary about post-period trading, and whether there is any change to full-year profit before tax guidance, which was raised by £10mln to £860mln in August.
Additionally, they believe investors be concerned about any profit headwinds for the next financial year, “when consumer weakness could be coupled with higher energy costs.”
Barclays notes that Next is unlikely to be specific on any of these issues, but did add that any commentary is likely to move the share price on the day of the results.
However, while the backdrop is unhelpful for Next and retailers in general, the analysts believe the company “remains extremely well run with a solid balance sheet.”
Broker Peel Hunt pretty much agreed, saying current trading is "likely to be more subdued", with tough comparatives from a year ago and hot August weather and warm to start to September that "is not conducive to driving the early sale of autumn/winter product".
While sales momentum is expected to have picked up over the past week or so, the broker said its expectations of a slow start "means that material changes to forward guidance look unlikely".