Next Shares Fall on Store Weakness Despite Web Growth, Guidance
(Bloomberg) -- Shares of U.K. apparel chain Next Plc fell as its third-quarter retail sales missed estimates, though growth in its online business helped it to maintain its full-year profit guidance.
- Retail sales were down 8 percent, compared with the 6.1 percent decline projected in a consensus compiled by Bloomberg. Online sales rose 13 percent, beating estimates but slowing from the year-to-date pace.
- Next’s report was a mild disappointment for investors after the company boosted its guidance for full-year profit in September. The chain has shown resilience this year after a challenging 2017, but it will need a strong holiday season to meet expectations.
- Next’s decade of steady growth in online sales, now nearly equal to in-store sales, has made it a bright spot in an often bleak British retail sector. Department-store chain Debenhams last week announced plans to close about a third of its stores just months after its competitor House of Fraser was sold out of administration.
- Brexit looms large on the horizon for retailers like Next that source items from the European Union and its tariff-free trading partners. Chief Executive Officer Simon Wolfson said prices could go up by 0.5 percent when the U.K. leaves the EU, depending on the terms of the departure.
The shares fell as much as 5.5 percent in London trading Wednesday. Next shares had been up 17 percent this year, compared with a 14 percent decline in the FTSE All-Share General Retailers Index.