Next insider sells as retailer weathers the storm

Francis Salway, senior independent director at Next (NXT), has taken the decision to hive off shares worth £363,860 in the long-established fashion retailer, and it appears to be at a timely juncture.

In problematic times for the UK high street, shares in Next have risen by 16 per cent over the past year – a laudable result given the periodic closure of its physical stores through the period, not to mention the collapse of Sir Philip Green’s Arcadia Group. With both boohoo (BOO) and Asos (ASC) picking over the corpse, prospects for town centre retail look as bleak as they have since the start of the pandemic. Next, along with US hedge fund Davidson Kempner, had been interested in snapping up Topshop, the flagship brand of Arcadia, and you would imagine it would have been a good fit given that both retailers target similar demographics.

But Next may well have dodged a bullet, having been unable to meet price expectations for the chain. Some analysts believe that we will witness a resurgence on the high street once Covid-19 abates to a significant degree. But it is difficult to gauge what conditions Next and other surviving retailers will be faced with once shoppers feel confident enough to return to the high street. Short of meaningful government intervention, it is conceivable that retailers such as Next will benefit from reduced competition in the physical space, as the likes of Topshop and Debenhams disappear from the UK’s shopping precincts. Above all, however, the 36 per cent increase in online sales recorded by Next in the fourth quarter shows the importance of shoring up the business model with a complementary (and effective) e-commerce offering. Buy at 7,936p.

Last IC View: Buy, 6,806p, 19 Nov 2020