(Source: Daily Mail)
By Geoff Foster, Daily Mail, London
March 16--Thank goodness for Next. Shares of the fashion retailer shone like a beacon
amidst the gloom, rising 37p or 2pc to 1905p after High Street guru Tony
Shiret, analyst at Credit Suisse, had positive things to say ahead of annual
results on March 24. Shareholders will be delighted to hear that he has
retained his target price of UKpound30.
Shiret reckons Next plans to take its average selling price down, not up
in Spring/Summer 2011. His examination of almost 20pc of the current women's
range shows average selling prices down by 7pc year-on-year, which he says
makes sense in the current economic climate.
After also analysing the balance of Next's retail profit between Next
Retail (shops) and Next Directory (online and catalogue), he found that
Directory has been more profitable on an underlying basis than people think
and that has supported the profitability of Retail.
Next said in January that full-year pre-tax profits will be in the range
of UKpound540m to UKpound555m. That is after first-half profits rose 15pc to
UKpound213m with Next Directory contributing UKpound101.3m, up from
UKpound83.3m.
There has been some speculation in the past that boss Simon Wolfson, a
Conservative working peer and donor, could possibly one day soon decide to
enhance shareholder value by breaking up the group before moving into politics
full-time. That would involve the UKpound2bn demerger of its highly successful
Directory business, which was launched by George Davis in 1988.
Another old tale recently suggested that Next could acquire rival online
fashion retailer ASOS, UKpound1 lower at 1726p. It has defied the recession,
benefiting from a young core customer base and the migration of spending from
the High Street to the internet.
On the other side of the street, luxury fashion group Burberry was sold
down further to 1030p before rallying to finish 13p cheaper at 1110p. Fears
that the fashion-conscious Japanese will slash consumer spending has sent
investors sprinting for the exit.
Broker Nomura says Burberry has licensing agreements in Japan which
contribute 4pc of group sales and in total they generate 17pc of group EBIT.
Following the Nikkei's further 10.6pc collapse overnight on fears of a
nuclear catastrophe in Japan, dealers in London took evasive action.
They slashed opening prices of all blue chips indiscriminately and before
their City colleagues had a chance to digest their cornflakes, the flagship
Footsie was 100 points lower.