Jefferies expects Next (LON:NXT) to report a healthy recovery in full price sales at its first-half results next week, Proactive Investors has reported. The blue-chip retailer will update investors on its interim performance on Tuesday, after saying last month that it had seen a rise in sales for the 26 weeks to July 28, having benefitted from a hot weather spell across the UK.
Next’s share price has fallen deep into the red in London in today’s session, having given up 1.16 percent to 5,260.00p as of 14:09 BST. The stock is underperforming the broader market rally which has sent the blue-chip FTSE 100 index 1.40 percent higher at 7,470.72 points. The group’s shares have added about five percent to their value over the past year, as compared with about a 2.6-percent gain in the Footsie.
Jefferies flags sales recovery
Jefferies reaffirmed Next as a ‘hold’ today, while trimming its price target on the shares from 6,100p to 5,600p, ahead of the retailer’s half-year results. Proactive Investors reports that the broker has forecast first-half earnings (EBIT) growth of four percent with retail EBIT down 21 percent and its catalogue business Next Directory up 15 percent. It has also flagged pre-tax profit of £320 million for the period with earnings per share having received a seven-percent lift from share buyback activity.
Analysts point to valuation concerns
“On balance, we expect much less volatility around NXT’s earnings expectations, as opposed to what is set to remain a much more wide-ranging valuation debate,” Jefferies said, as quoted by the newswire. “We cannot help but think that the latter will remain hostage of the impending Brexit process, at a time when UK consumers are still reluctant to spend, given a lack of visibility as we approach March 2019.”