Next share price: Analysts say group has turned a corner

Comments follow retailer’s interims

Next share price: Analysts say group has turned a corner

Next (LON:NXT) has turned a corner, analysts at Hargreaves Lansdown have said. The comments came after the retailer updated investors on its interim performance yesterday, lifting its sales and profit guidance for the full year.

Next’s share price jumped following the update, adding 13.06 percent to 4,994.00p and outperforming the broader market selloff, which saw the benchmark FTSE 100 index slump 1.14 percent to 7,295.39, after the Bank of England signalled that it would hike rates going forward. The retailer’s shares, however, remain about eight percent down over the past year, as compared with an over seven-percent rise in the Footsie.

Hargreaves Lansdown said yesterday that conditions for Next were less challenging than they were six months ago and the fact that it is proposing a share buyback reiterated the positive news. Citywire quoted the broker’s analyst George Salmon as commenting that the Next Directory had ‘turned a corner’ and that the decision to spend £11 million refreshing the website and employing more staff had paid off.

“This positive tone continues through the results,” he pointed out. “While special dividends are still the main means of returning surplus cash to shareholders, Next is now proposing a buyback too.”

Salmon added that while the buyback might only be a ‘small tweak in policy,’ it nevertheless “says a lot about the group’s confidence”.

The comments came as the FTSE 100 retailer posted a drop in half-year sales and earnings yesterday following a difficult six months. Despite the downbeat results, the company lifted its sales and profit guidance, having seen ‘encouraging’ trading over the past three months.

Both Peel Hunt and Shore Capital reaffirmed Next as a ‘hold’ yesterday. According to MarketBeat, the blue-chip retailer currently has a consensus ‘hold’ rating and an average price target of 4,459.10p. 

As of 08:09 BST, Friday, 15 September, NEXT plc share price is 5,080.00p.

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