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magazineNext's Christmas cracker of an update
Next (NXT) £48.65
Gain to date: 16.1%
Original entry price: Buy at £41.91, 20 December 2018
We are off to a flying start after last month flagging retailer Next (NXT) as one of top picks for 2019. The company reported robust festive trading in an update (3 Jan) which reignited market interest in the stock.
Against very downbeat expectations and despite a difficult November, the high street stalwart managed to increase full price sales between 28 October and 29 December by 1.5% year-on-year which was exactly in line with the guidance given in September.
Online business did a lot of the heavy lifting with web-based sales up 15.2% through the period. Investors were well prepared for the 9.2% decline in sales achieved in physical stores given the pressures on the high street and so this figure didn’t cause widespread concern.
The market was even prepared to look past a small downgrade in guidance for the year to January 2019 from £727m to £723m.
Shore Capital analyst Greg Lawless says Next has a ‘strong track record of under promising and over delivering’. He adds: ‘The company exerts strong cost and stock control and is highly cash generative, evidenced in the recurring £300m share buy-back programme.’
We continue to back chief executive Simon Wolfson’s ability to steer Next through a difficult backdrop.
Still a buy.
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