Next H1 preview: Where next for the Next share price?
Joshua Warner September 27, 2021 2:50 PM
Next has seen an explosion in sales since it reopened stores in April, prompting it to raise expectations for the rest of the year. We look at what to expect from the earnings and consider how Next shares could react.
When will Next release H1 results?
Next is scheduled to release interim earnings on the morning of Wednesday September 29.
Next H1 earnings preview: what to expect from the results
Next has proven to be one of the most resilient players in what has been a challenging 18 months for retailers, thanks to its omnichannel approach that has allowed it to thrive online whilst stores were closed. However, with stores having reopened in April, analysts are anticipating a strong performance from Next in the first half.
This is demonstrated by the fact full price sales in the second quarter were 18.6% higher than two years earlier, before the pandemic hit – with Next having only expected a mild 3% rise. Next said the stronger-than-expected performance was down to pent-up demand for adult clothing, warmer-than-anticipated weather, increased domestic spending and the fact consumers are flush with money they saved during lockdown.
Analysts are expecting sales to jump to £2.17 billion in the first half from just £1.29 billion the year before, when the pandemic severely hit sales. For more context, that compares to £2.05 billion in the first half of 2019, before the pandemic hit.
Basic EPS is forecast to swing to a profit of 219.18p from the 9.0p loss booked the year before.
Investors will be keeping an eye on Next’s guidance for the full year after bumping-up its targets back in July. The company said it is aiming to deliver 6% full price sales growth rather than its initial target of 3%, and £750 million in pretax profit.
They will also be eagerly watching for any commentary on shareholder returns, having said in July that it intended to distribute around £240 million in surplus cash this year. That includes the £140 million returned through a 110p special payout that was paid in early September. However, ordinary dividends are not set to be reinstated until the next financial year covering the 12 months to the end of January 2023, but some analysts think share buybacks could come back into play in the current financial year after Next decided to repay the business rates relief it received, demonstrating its financial strength.
Next shares have fully recovered the heavy losses booked during the pandemic and trade over 16% higher than before the coronavirus crisis started back in February 2021, which has also seen it surpass the record all-time highs seen back in 2015. The 21 brokers covering Next have an average Buy rating on the stock but the target price of 8,359.1p implies there is only around 1.5% potential upside from the current share price.
Where next for the Next share price?
The Next share price has traded range bound around the all-time high for the past six months capped on the upper band by 8360p and on the lower band by 7680p.
After rebounding off the 200 sma earlier this month, Next share price is extending gains towards the upper band at 8360p.
The RSI is supportive of further gains whilst it remains out of overbought territory.
A move above 8360p could expose 8400p and fresh all-time highs.
Meanwhile, support can be seen at 7970p the 50 sma ahead of 7835p the 200 sma. A break below 7680p the lower band of the channel could see the sellers gain traction.
How to trade Next shares
You can trade Next shares with City Index in just four easy steps:
- Open a City Index account, or log-in if you’re already a customer.
- Search for ‘Next’ in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.