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Shares in Next (NXT) are suffering from Q4’s mild weather with the retailer revealing in-store Christmas sales -0.5% as shoppers held off from splashing out on higher priced winter garments such as coats, Directory sales were impacted by poor stock availability from October, and surprise, surprise, online competition remains as fierce as ever. Full price sales growth below guidance has resulted in full-year expectations being revised down to just above the low-end of October’s communicated range while next year’s profits are seen growing no faster than sales as margins remain under pressure. Holders will be happy to receive another 60p special dividend, planned for Feb (ex-div 14 Jan) thanks to good cash-flow, but sceptics might not like a worse net debt position and what amounts to a challenging environment in which to be a retailer. Shares in Marks & Spencer (MKS) also suffering from the negative read-across, continuing their break down below 438p ahead if the retailer’s own Christmas update on Thursday. Prepare for a similar message and outlook?
Mike van Dulken, Head of Research
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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