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Next reports Q3 sales growth

Next Home and Garden - Shoreham

Next today cautioned that consumer demand remains volatile although it has edged up its full year sales and profit forecasts after reporting in-line third quarter sales growth.

Britain's second largest clothing retailer, which has around 500 shops in Britain and Ireland as well as a Directory catalogue and internet business, said its full-price sales rose 6.0 per cent in the three months to October 24.

That compared to first half growth of 3.5 per cent, and was around the mid-point of its second half guidance range for growth of up 3.5 per cent to 7.5 per cent

Full price sales rose 5.9 per cent at Next's stores, and they were up 6.2 per cent at its Directory business.

The group’s statement showed that trade in September was strong, but October was relatively subdued.

See the full publication here.

Independent retailing Nick Bubb said: ‘Next delivered a good Q3 overall, but the weekly sales graph they have unveiled today shows that October was not exactly a blow-out, despite weak comps, which may unsettle investors in other Fashion retailers’.

Next edged up its full year pretax profit forecast range to £810million to £845million, from £805million to £845million previously

It also increased its full year sales growth forecast to up 4.0-6.0 per cent, from up 3.5-6.0 per cent previously.

Next has outperformed its peers, including market leader Marks & Spencer, for a decade due to its strong online business, rapid expansion at home and abroad and diversification into new product areas, such as homewares.

Ian Forrest, Investment Research Analyst at The Share Centre, said: ‘These are good figures from Next as they show sales in the upper half of the range previously given, with good momentum across both the high street and catalogue business.

‘Investors may be concerned that there was no further mention of the impact of the new living wage, but that may come with full year results next spring.’

He added: ‘We continue to recommend Next as a “hold” for medium risk investors as the company continues to expand its stores and online presence, but there’s a lot of good news already priced into the stock.

’For investors interested in the sector, we prefer Marks & Spencer due to its more attractive valuation and profit growth potential.’

Next shares on the FSE 100 index were down 50p at 7,895p.

M&S shares fell 3p to 509p, unsettled by news of a glitch on its website.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: ‘With the (Next) share price up 20 per cent plus over the last year compared to a flat wider FTSE-100 index, the valuation is seen as arguably up with events near to medium term.’

Source : Jonathan Hopkins –

28 October 2015

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