High-street chain Next (NXT) is still battling to maintain its place in a modern – not to mention highly competitive – retail market. The shares have risen more than 43 per cent in the past 12 months, which suggests many are happy with the group’s progress so far. But the release of second-quarter figures prompted a sudden sell-off in the stock, with the shares down 7 per cent on the day of the update.
Given the recent re-rating, it wouldn’t be surprising if the share price fall was simply indicative of some well-timed profit-taking. Alternatively, it could suggest that some investors are growing nervous about the future of the group’s traditional retail arm. Full-price sales across stores fell 5.9 per cent during the second quarter, compared with a comparable 12.5 per cent rise online. And while strong digital growth may have offset reported declines in retail, a 2.8 per cent improvement in total branded sales over the same period came in a touch below expectations.
Overall, management said it was pleased with this performance, but admitted that the recent heatwave likely acted as a drag on summer sales. It may have gone unsaid, but if the hot temperatures continue there could be subdued demand for autumn/winter ranges. Full-year guidance was therefore left unchanged, which might have left some investors disappointed.
