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Next (first-half earnings 25 September)
First-half earnings are expected to see Next report a 3.4% rise in earnings, to 430p per share, while revenue rises 3.1% to £4.2 billion. The firm has beaten earnings in seven of the last eight reports, but missed revenue in five of the last eight.
The lack of real sales growth despite a better environment for consumer spending raises the prospect that it will have to cut store numbers to reduce costs in the longer term. A push to larger stores has not had the desired effect and, as so often, it is the online arm that provides the positive investment case and a measure of protection against downturns in high street sales. It still looks the best in class among the traditional retailers, and its size gives it the ability to compete against ASOS and others.
At 11.9 times forward earnings it is below the five-year average of 13.8, and a healthier operating margin of 18% versus a comparable peer average of 8.7% provides a positive story. However, sales growth over the next three years is expected to be 3.9% versus 15.3% for its peers.
Next shares find themselves at the bottom of the rising channel from the June 2017 lows. This channel has been respected several times since then, most notably in June and July, when the price neared £62.00 and then dropped back. If the channel holds then a rebound may well commence, with £56.15 and £57.60 as the first areas to watch. A break lower targets £51.00 and then £50.05 in the near term.