Next share price and full-year earnings results preview

When are Next ’s results expected?

Next PLC, the United Kingdom-based retailer, is set to release its full-year (FY) 2023 results on 29 March 2023. The results are for the full-year ending January 2023.

What is ‘The Street’s’ expectation for the FY results?

‘The Street’ expectations for the upcoming results are as follows:

Revenue of £5,107 billion : +10.40% year-on-year (YoY)
Earnings per Share (EPS) : +559.22 pence : +6.72% (YoY)

Next, a bellwether for the UK clothing retail sector, is likely to have suffered amid the cost-of-living crisis as consumers are spending more on necessities but last year managed its inventory well while keeping full-price sales going, both of which should help protect its bottom line.

The fashion and homeware retailer raised its pre-tax profit guidance for 2022 to £860 million in January but did say that it remained cautious with regards to its outlook for 2023, especially given its high debt level which needs servicing and around £119 million of anticipated cost increases due to higher energy and wage bills. These Next tries to at least partially offset by around £77 million in cost savings over the coming year.

The company, which tends to be conservative when it comes to its forward guidance and then often surprises with better-than-expected earnings, recently stated that this year it may not be able to overdeliver.

Having said that, sales and profits are still considerably larger than before the pandemic while the Next share price remains around 8% below its pre-pandemic high.

How to trade Next into the results

Refinitiv data shows a consensus analyst rating of between ‘buy’ and ‘hold’ for Next – 4 strong buy, 9 buy, 9 hold, 2 sell and 1 strong sell - with the median of estimates suggesting a long-term price target of 7,050 pence for the share, roughly 5% higher than the current price (as of 28 March 2023).

IG sentiment data shows that 64% of clients with open positions on the share (as of 28 March 2023) expect the price to rise over the near term, while 36% of clients expect the price to fall whereas trading activity over this week and month shows 100% and 58% of buys respectively.

Next – technical view

Next’s share price briefly hit a near one-year high at 7,082 pence in early March before it got dragged lower amid other stocks as risk-off sentiment due to the banking crisis globally pushed equities lower. Nonetheless the share managed to recover from around the 200-week simple moving average (SMA) at 6,544p above which it continues to trade for now.

Next Weekly Chart:

The medium-term uptrend for the Next share price remains intact as long as the current March low at 6,422p holds on a daily chart closing basis, together with the late January 6,354p low.

Above this support area the October-to-March uptrend line can be spotted at 6,542p and should act as at least interim support if it were to be revisited.

Next Daily Chart

For the bulls to be back in control a rise and daily chart close above last week’s high at 6,968p needs to be seen, in which case the early March peak at 7,082p is also expected to be overcome with the July 2021 low at 7,214p representing the next upside target.

Were support at 6,422p to 6,354p to give way, however, the December high at 6,036p and the 200-day simple moving average (SMA) at 6,050p would be back in the frame.

Summary

Next is set to release FY 2023 results on 29 March 2023.

Full-year 2023 results are expected to show a 10.40% YoY increase in revenue and a 6.72% YOY increase in EPS to 559.22 pence.

Next, which historically tends to under-promise and then over-deliver in terms of its earnings, recently stated that this might not be the case this year as its energy and wage costs have risen while customer spending has decreased amid the cost-of-living crisis.

Long-term broker consensus suggests the share to currently sit between a ‘buy’ and ‘hold’, with a median price target of 7,050 pence for the share, roughly 5% higher than the current price.

64% of IG’s clients with open positions are long the share but trading activity this week and month shows 100% and 58% of buys respectively.

The Next share price remains medium-term bullish while it stays above support seen at 6,422p to 6,354p. A rise above last week’s high at 6,968p needs to be seen, though, for the bulls to be back in control and for a new one-year high to be reached.