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Beaufort Securities' View

lse:nxt

#1

"This morning Next published a good Christmas trading update. In November the board guided Christmas sales to be down -0.3%. However, Christmas period sales were up 1.5%. This resulted in a small increase to FY18 (to Jan) PBT guidance from £717m to £725m. Note the shares trade ex-div of a 45p dividend tomorrow.

The shares were up strongly on this news, mainly due to the better than expected sales growth but probably also due to a mini short squeeze (Next is one of the most shorted stocks 6.8%). But the outlook statement is less positive, highlighting the pressures on high street retailers and the UK consumer, and guiding FY19 profit of £705m (down 3% on FY18?s £725m guidance).

This theme is likely to sustain and although Next?s significant on-line business is growing, as a group the top line is declining. We prefer to avoid negative growth companies. Long term we expect the shares to underperform and change our recommendation from HOLD to SELL""

Full article: https://www.beaufortsecurities.com/img/pdfs/research/next030118.pdf