Next share price drops ahead of interim results

Next’s (LON:NXT) share price has retreated in London this morning ahead of the company’s interims due out tomorrow. The update will come after the high street retailer hiked its full-year sales and profit guidance back in July after it saw higher-than-anticipated sales in the second quarter of its financial year.

As of 10:38 BST, Next’s share price had given up 0.85 percent to 6,088.00p. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and standing 0.27 percent higher at 6,088.00 points.

Next results preview

Next is scheduled to update investors on its half-year performance tomorrow and IG reports that the company is expected to report first-half (H1) pre-tax profit of £318 million, down from £411.8 million a year earlier. The high street retailer’s revenue meanwhile is expected to have fallen to £2.02 billion from £2.26 billion last year.

Chris Beauchamp, chief market analyst at IG, commented in a note today that the FTSE 100 group has seen a continued fall in sales in its bricks-and-mortar division, with growth continuing to come from the online division.

“Overseas expansion has become a key growth driver for Next, which should help offset a sustained store closure programme in the UK, which may become unavoidable in coming years if revenue continues to decline at its physical stores,” the analyst pointed out.

Analyst ratings update

HSBC reaffirmed the FTSE 100 company as a ‘buy’ this week, without specifying a target on the Next share price. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average valuation of 5,744.44p.

Credit Suisse hiked its rating on the high street retailer earlier this week, predicting that Next’s Label platform will be a crucial tool with consumers increasingly favouring multi-brand shops.