Interactive Investor

Insider: £5m windfall for FTSE 100 Lord

After a 25% jump in share price in just two months, this well-connected chief executive has sold a bunch of shares near a record high. Graeme Evans discusses what this means for the company. He also reports on buying at a mid-cap airline.

8th January 2024 08:52

Graeme Evans from interactive investor

High-flying Next (LSE:NXT) shares have netted £5 million for the chain’s long-serving chief executive after he opted to reduce his stake on the back of yet another profits upgrade.

Friday’s disposal by Lord Wolfson took place at 8,430p, a move that has captured the 25% upside for the FTSE 100-listed stock since the end of October. Next also disclosed a separate sale worth £1.1 million connected to finance director Amanda James.

Shares closed the week at 8,466p but had been at a record 8,550p on Thursday after Next delighted investors with a better-than-expected 5.7% rise in full-price sales for the nine weeks to 30 December.

The strong festive performance led to a £20 million increase in profit guidance to £905 million in the fifth upgrade in eight months.

Encouraged by a more benign consumer environment, Next expects full-price sales growth for the 2024/25 financial year of 2.5% and a further profit improvement of 5% to £960 million.

The return of real wage growth and easing cost inflation have boosted the outlook, although Next has also flagged risk factors such as rising unemployment and supply chain delays caused by disruption to shipping in the Suez Canal.

Lord Wolfson has run the business for more than two decades, building up a shareholding of 1.4 million directly owned shares in the 2022/23 annual report.

In November 2020, he raised £10 million by selling shares at 6,787p after a strong recovery from the hit at the onset of the Covid pandemic. At the time, the company said the move would allow Lord Wolfson to “spread his investments into other non-retail areas.”

On Friday, Deutsche Bank reiterated its “Hold” rating and upped its price target from 7,700p to 8,000p in a move implying a valuation of about 13.5 times 2024 earnings.

UBS, which reckons the shares are worth 7,250p, said it will be looking at the full-year results in March for additional clarity about the contribution of recent acquisitions such as Reiss and Joules.

It said the company’s updated profit guidance for the new financial year was in line with its expectations but that the disclosure of £275 million headroom for share buybacks or investments in 2025 was not widely anticipated.

A celebration purchase

Low-cost airline easyJet (LSE:EZJ) has been backed for further progress after one of its board members spent £50,000 on an increased stake in the FTSE 250-listed company.

Catherine Bradley marked the fourth anniversary of her appointment as a non-executive director with an acquisition of 10,000 shares at a price of 507p.

Her move on 2 January followed a year in which easyJet ranked among the best performing stocks in the FTSE 250 index, aided by a 40% improvement since mid-October. The company closed last week at 499.2p.

The demand for shares has come on the back of a record summer performance and signs that around three-quarters of Britons are planning to spend more on their holidays this year.

Shareholders will soon receive their first dividend since the pandemic with the £34 million distribution of 4.5p a share, representing 10% of after-tax headline profit. The company hopes to increase this to 20% when it announces the dividend for distribution in early 2025.

Analysts at Swiss bank UBS recently upped their price target on easyJet shares to 785p after the airline delivered annual results towards the top end of previous hopes.

They continue to see recovery in easyJet traffic volumes to 2019 levels, which should support further profits progress for the group.

UBS added: “The company has fleet deals that should sustain volume growth and currently the benign supply environment is aiding pricing.

“The easyJet holidays division has seen material growth in volumes and profitability and we expect the profitability of the division to more than double over the medium term.”

Bradley has held a number of senior finance roles in investment banking and risk management, including at Merrill Lynch and Credit Suisse. She is chair of interactive investor, a non-executive director of abrdn (LSE:ABDN) and senior independent director of B&Q owner Kingfisher (LSE:KGF).

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.