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magazineWhy Next is one of our favourite retailers
NEXT (NXT) £57.22
Gain to date: 36.5%
Original entry point: Buy at £41.91, 20 December 2018
Shares in high street bellwether Next (NXT) are up an impressive 36.5% since we selected the clothing retail firm as one of our top picks for 2019.
While some may be tempted to take profits off the table following a strong share price run, we’re staying positive as the cash generative retailer is run by one of the sector’s best-in-class management and remains set fair for online market share gains.
First quarter results (1 May) beat expectations with full price sales growth of 4.5% for the 13 weeks to 27 April boosted by unusually warm Easter weather. Next’s management also noted particular strength in February against last year’s snow-impacted comparatives.
Despite the quarterly sales beat, reflecting a 3.9% like-for-like sales decline in retail and online sales growth of 11.8%, Next’s management team led by CEO Simon Wolfson believes it is too early in the year to upgrade revenue and profit guidance for the year to January 2020, especially as sales comparatives toughen from here.
Guidance remains for pre-tax profit of £715m, down 1% year on year, and 3.4% earnings per share growth after Next’s £300m share buyback programme.
SHARES SAYS: We’re sticking with Next for its copious cash generation, capital returns and best-in-class management team, one able to navigate the tricky high street backdrop.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
