High street fashion chain Next (LSE: NXT) released its first-half results on Wednesday. The market likes them, and the next share price rises 4%. At the time of writing, Next is leading FTSE 100, Humbly in positive territory itself. The latter has now grown 33% in the last two years.
In the six months to July 2021, performance has shown growth across the board. And it compares to the performance of pre-epidemic 2019, not the blight year of 2020. Total Next brand full-price sales increased by .8. %% compared to the figure for 2019-2019. Oh, and they’ve grown 62% compared to 2020, though that doesn’t mean much.
The increase in sales is pleasing, but I have accepted more because of the change in sales channels. Sales endemic retail sales fell 38% in two years, online sales rose 52%. The recent year is still suffering from lockdown limitations, so the direction of change was inevitable. I was a little surprised to see the level of change.
I will be interested to see how much online migration is maintained over the next 12 months. But I don’t think it would be a good bit irreversible, because that’s actually the way the sector is going.
Changes in profits
There were more significant changes in terms of profits. Retail actually suffered, while online profits rose 74%. The net result is a 5.9% increase in pre-tax profit compared to July 2019. And has resulted in an 11% gain per share
It plans to return in January 2023 next year to pay the general dividend. Meanwhile, the company plans to pay a special dividend by the end of January 2022 to distribute the surplus cash. It comes in addition to the special of 110p per share already paid on 3 September. We need to hear more in the next Christmas Trading Update.
Next share price outlook
The next general, William Slim, was quoted as saying:In war, there is nothing as good or bad as the first provocative report. “The agency gives an account of the observation.”It would be very helpful for those who are running the business through the epidemic. ”
At the worst of the epidemic crisis, the initial pessimistic outlook was over, and things weren’t as bad as they had feared. But the company warns that “It is almost certain that the underlying conditions are not as good as they currently appear. ”
The demand for paint-ups has led to short-term improvements, which may not inevitably be sustainable. But Next believes that its long-term outlook is better than some time.
I can’t help thinking of the next lesson from General Slim that we can apply to the larger investment world. Yes, disaster, panic and market crashes will come along. But no, they certainly won’t be as bad as our worst fears. They are rarely there. So when the stock market crashes, the evidence of history suggests that it will be excessive. And cracking bargains will be bought.
Anyway, will I buy Next now? The next share price puts it at a high valuation at the moment. And I think there is better shopping out there. But Next is still on my long-term candidate list.
Alan Oscroft has no position on any of the shares mentioned. Motley Flower owns the UK’s shares and recommends Next. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.