7 January 2025
If you are covering Next's latest trading statement, please see the following comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
"Next shared its Q4 trading update this morning, coming in line with what investors had been expecting – a revenue beat and a conservative guide to its FY25 results. This approach is typical for Next, so comes as no surprise.
"Next’s full price sales increased 6%, ahead of both guidance of 3.5% and the consensus expectation of 3.8%. This growth was notably driven by online sales which were up 6.1%, but UK retail sales went into negative territory, falling 2.1%. Meanwhile, its overseas online sales, which has been a key growth area for Next, remained very strong with a 31.4% increase.
"Looking ahead, the company’s trading statement also raised concerns around the UK economy, highlighting that it expects UK growth to be slow and that as employer tax increases, its potential impact on prices and employment will begin to filter through into the economy. This caution was reflected in Next’s initial FY25/26 guidance, which is slightly lower than current consensus. In FY25/26, it expects full price like for like sales to increase by 3.5%, which was acknowledged as being a cautious approach. However, management also noted that operating cost increases are guided to overshadow total cost savings, which is expected to hold back profit performance."
