Next Plc (LON: NXT) rallies 9% to 5-year high as provisional Q4 online sales jump

Summary

  • Next Plc shares surged more than 9 per cent on Tuesday after the company reported a considerable uptick in the provisional sales in fourth quarter
  • The stock of Next has touched a 5-year high following the massive spike in the share price 

Shares of Next Plc (LON: NXT) rallied more than 9 per cent on Tuesday, 5 January, topping the pack of FTSE 100 after the Leeds-headquartered diversified apparel maker said its fourth quarter total online sales to 26 December rose by 38 per cent. Next shares sustained the morning gains after witnessing a sharp spike in the early deals reacting to the trading update.

As per the trading update provided, Next saw a 36 per cent increase in the full price online sales in the United Kingdom, while the online overseas sales rose by 43 per cent cumulatively leading to a total growth of 38 per cent. However, the retail offline sales witnessed a drop of 43 per cent certainly due to the store closures and relatively lower footfalls due to the Covid-19 restrictions and weeks-long lockdown in the month of November.

Next Plc shares

The stock of Next Plc advanced as much as 9.46 per cent to a 5-year high of GBX 7,566 from the previous closing price of GBX 6,912. Next share price has largely risen for most of the trading sessions after recognising the yearly closing bottoms in the Covid market crash. In the past nine-month stretch, the stock of Next has amassed a gain of little more than 100 per cent effectively doubling the investors’ wealth.

According to the historical data available with the London Stock Exchange, the stock of Next has soared by as much as 103.89 per cent, barring today’s gain, to GBX 6,912 (4 January) from a market price level of GBX 3,390 apiece as on 3 April 2020.

Next Plc shares (5 January)

(Source: Refinitiv, Thomson Reuters) 

Next Plc shares (5-year performance)

(Source: Refinitiv, Thomson Reuters)

Journey ahead

Next expects that the retail stores will remain shut in the upcoming months of February and March following which the company has provided a profit before tax guidance of £670 million for the fiscal year 2021-22 on the basis of full price sales. Additionally, the company has estimated an annual profit before tax for 2020-21 at £370 million accordingly incorporating expected losses due to store closures in January and the benefit of better sales in November and December.

Next has predicted to reduce the net debt by £487 million to £625 million with the effect of the coronavirus pandemic in the fourth quarter remaining largely similar as it was seen during the year. According to Next, sportswear, children’s wear, home, and loungewear have contributed positively to the full price sales in the recent quarter, while adult clothing designed for parties, going out, and professional wears have performed badly.

Interestingly, Next has said that its customer base has increased significantly in the year-end as the number of online customers jumped 24 per cent as against the comparable period of last year. The newly-added cash customers from overseas locations, as well as from the United Kingdom have added to the growth.

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