Financial Trading Blog
Stock of the day 01/08/2016 – Next PLC
There hasn’t really been a glimmer of hope for Next in the last 7 months. On the 2nd day of 2016’s trading it fell 5%, pretty much setting the tone of the rest of the year; at the end of March the stock saw it plunge 15% from £66 to £55, eventually hitting a then-low of £49. A rise across May was then swiftly lost as the referendum results were revealed, Next at one point striking a 3 and a half year nadir of £35.67; it now sits at a current trading price of £50.28 (IT-Finance.com, 01/08/2016).
Barring the Brexit most of Next’s misery has been purely of its own creation. That immediate fall back in January was caused by a dismal fourth quarter, Next blaming unseasonable weather (a recurring theme in 2016) as its high streets sales slipping 0.5% between the end of October and end of December. Things were even worse at the end of March, the company’s full year figures sparking the aforementioned 15% fall as it warned of a ‘challenging 2016’, cancelling out the goodwill garnered by a 5% rise in underlying pre-tax profit to £821.3 million and a 3.7% increase in overall sales.
The one arguable positive in Next’s otherwise awful 2016 came at the start of May as the stock rose 3.%% following its first quarter figures. Yet the Q1 report was still miserable; sales dropped by 0.9% (blamed, once again, on the weather), while Next cut its full year forecasts for the second time, now expecting sales to drop between 3.5% and 3.6%.
Worryingly for Next unseasonable weather seems set to be replaced by the post-Brexit plunge in consumer confidence as its main issue going forwards. In terms of its second quarter figures on Wednesday analysts are expecting Next to post an 8.3% slide in like-for-like sales, while total sales are expecting to drop around 1.5% thanks to a 4% slide at Next Retail countering a 2% rise in Directory sales.
Next PLC has a consensus rating of ‘Hold’ with an average target price of £56.06.
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