Is it a good time to invest in Next (LON: NXT) shares?

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Is it a good time to invest in Next (LON: NXT) shares?

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 Is it a good time to invest in Next (LON: NXT) shares?
Image source: bluebay, Shutterstock.com

Highlights

  • Next Plc has announced an exceptionally productive year with a surge of 104% in operating profit.
  • The company’s total group sales were £4,861.8 million, up by 34.1% compared to last year’s total sales.

The high street clothing and footwear retailer Next Plc (LON: NXT) has announced an exceptionally productive year with the company maximizing the opportunities of the online world. The company’s stock witnessed a surge in volume on the London Stock Exchange (LSE) following the announcement of the result for the year ending January 2022.

FTSE 100 listed, Next Plc offers products like clothing, footwear, beauty products, own branded products, and accessories through a network of over 500 retail stores in the UK and another 180 franchise stores in Europe, Asia, and the Middle East countries. The company also provides its services through its e-commerce platform.

Full-year Result 2021-22

Next Plc’s total group sales were at £4,861.8 million, up by 34.1% compared to last year’s total sales (Year-ended January 2021 total sales: £3,625.9 million).

Online sales contributed significantly to total group sales (Online-only sales: £3,103.8 million) as the Covid-19 pandemic led lockdown accelerated sales through the website and online portal. The retail segment sales also jumped by 50.1% to £1,432.4 million, mainly due to higher footfall in stores in the second half of 2021.

The company’s operating profit jumped by 103.7% to £905.4 million, while its profit before tax was at £823.1 million during the period. As a result, the earnings per share were up by 12.1% to 530.8p per share. The overall result indicates that the company has overcome the Covid-19 pandemic that adversely impacted the business growth in the last two years. All the key parameters like revenue and operating profit are now above the pre-pandemic levels.

Next Plc Key Metrics

(Data Source: Refinitiv)

Guidance for 2022/23

The company’s management has a positive outlook for the current financial year. It expects full-price sales to increase by 5%, while total group profit is expected to increase by 3.3% to £850 million. Moreover, the company forecast a rise in new debt to £620 million, which is in line with expected profit. Also, earnings per share is expected to increase by 4.9% to 556.6p.

However, the ongoing war between Russia & Ukraine has led to the closure of the website in Russia, resulting in a moderate impact on the company’s business. As a result, the company expects a negative effect on overall sales guidance and operating profit. But the improved outlook in the UK market might help mitigate the anticipated loss caused by the Russia-Ukraine conflict.

Stock price performance

Next Plc share price

(Image Source: Refinitiv)

The company’s stock witnessed some profit-taking after the announcement of the result,  mainly due to uncertainty around the business growth because of the Russia-Ukraine conflict. The stock price closed at 6,190.84, down by 3.03% on 24 March 2022, with a market cap of £8,168.84 million. However, the stock has given its investors a 52.04% return in the last five years.

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