In key news on UK stocks, fashion retailer Next PLC (GB:NXT) delivered 5.7% growth in its full-price sales for the first quarter of FY24/25 (thirteen weeks to April 27, 2024), exceeding its guidance of a 5% growth. The top-line growth also marked a notable improvement compared to the 0.7% decline in the full-price sales in Q1 FY23/24 due to bad weather. NXT shares were down slightly as of writing, as the retailer kept its full-year guidance intact despite upbeat Q1 numbers.
Next is often considered the bellwether of the UK retail sector. NXT shares have rallied more than 39% over the past year. The company’s impressive performance in the previous Fiscal Year helped in boost the share price.
Key Insights from Next’s Q1 Trading Update
Next’s Q1 full-price sales were mainly driven by the strength in the company’s online business, which offset the weakness in the retail stores. In particular, the company’s Online full-price sales grew 8.8% year-over-year while Retail top-line growth remained flat.
Despite the upbeat Q1 performance, Next maintained its full-year guidance, as it anticipates that sales in the second quarter will be weaker than the first quarter. It projects a 0.3% decline in Q2 full-price sales followed by 2.5% growth in both Q3 and Q4.
The company attributed the expected weakness in the Q2 sales to tough comparisons with the comparable period of the previous year, which gained from warm weather.
Overall, Next expects its full-year full-price sales to rise 2.5% to £4.9 billion and pre-tax profit to increase 4.6% to £960 million.
Is NXT Stock a Good Buy?
Next stock has a Hold consensus rating based on a Hold recommendation from all the eight analysts who reviewed it over the past three months. The average NXT share price target of 8,987.50p indicates that the stock could be range-bound over the near term.
