Next has posted weather-busting, expectation-beating results – what do the analysts say?

Next had forecast a decline of 0.3% but the outcome beat its expectations by £42m. Over the first half, sales rose 4% versus guidance of 2.5%.

The retailer’s strong performance reflected growth online overseas, up 21.9%, compared to 0.4% at home through stores and online. Overseas sales online were much better than expected and were up 21.9%. Group sales growth of 8%, including through subsidiaries, was driven by the acquisition of Fat Face and an increase in Next’s stake in Reiss.

Next’s shares were up almost 8%. Here’s what analysts had to say about its expectation-beating performance.

Clive Black, Shore Capital

“We approached Next’s update with a little apprehension as it covered a period where industry-wide revenues have been pretty poor, reflected in Office for National Statistics and retail sales data, noting the tough comparatives, especially in May and June against the very hot 2023 period…

“The update underscores why the firm is held in such high regard by portfolio and wealth managers. No doubt H2 expectations are also cautiously set, which means there could be further nudges up to profits down the line, £1bn of profit before tax is touching distance away.

“We commend Next on its Q2 delivery, we can justify its premium sector rating, and admire the manner in which management is evolving the firm for onward growth given the relative maturity of its UK store platform.”

James Grzinic, Jefferies

“We suspect investors will anticipate further upgrades in the coming months. Once again, Next’s domestic online operations and strong international growth have proved an effective counterfoil to the vagaries of the British weather.

“This is a helpful reminder of the improving quality of the investment proposition (given a broader push across brands and geographies). With this should come a fuller valuation as the just reward to the reducing cyclical nature of the group.”

Emily Salter, GlobalData

“Overseas online had an outstanding quarter and was the driver of growth. Partnerships, like the one it struck with Indian online marketplace Myntra earlier in the year, should boost this growth over the longer term.”

Ben Hunt, Investec

“Another resilient performance and nudge up to guidance, which is typical of Next. Online overseas sales helped drive overall group online growth and offset a subdued retail performance.”

Nick Bubb, independent analyst

“The key Next update is better than expected and there is a £20m upgrade to full-year profit guidance. But £9m of that comes from extra cost savings and purists might sniff at the mix of sales growth with the beat against expectations driven by strong overseas online sales growth.

“Full-price sales in the UK (online up 0.6% and retail down 4.7%) were only slightly ahead of company expectations but overseas sales online were much better than expected.”

Julie Palmer, Begbies Traynor

“While today’s performance has clearly been lifted by the rise in overseas sales online, the easing of inflationary pressures coupled with a notable rise in consumer confidence should provide a welcome boost to sales in the UK and encourage customers to fill their baskets again.

“As many retailers have shown, the current climate is not easy to navigate, especially with less pricing power and ever-changing demand. Next’s ability to strengthen and adapt both its online and bricks-and-mortar operations has meant it continues to thrive as it heads towards another year of record profit.”