Aarin Chiekrie, equity analyst at Hargreaves Lansdown, is not-so-low-key bullish about Next (LSE:NXT) after the retailer delivered a stronger-than-expected start to the year that justified a slim upgrade to its full-year profit guidance after first-quarter full-price sales rose 6.2%.
"Next has developed a track record of under‑promising and over‑delivering in recent years," the analyst said in a note.
Chiekrie points to a better UK performance led by double-digit online growth that more than offset a 3.4% decline in store sales, and to continued double-digit international growth, noting Next is a British online and high-street retailer operating through stores, its Directory catalogue and NEXT Online.
He highlights the hit from the Middle East conflict, saying Next had modelled three months of disruption that would have cost £15mn, but has increased the regional cost assumption to £47mn and expects to fully offset that through price rises in the Middle East and cost savings elsewhere while keeping UK price rises to around 0.6%.
Looking ahead, Chiekrie warns UK sales face tough comparables in the second quarter after last year's warm weather and disruption at M&S. and he adds.
