Next ups profit forecast again
NEXT fashioned another profit upgrade today, offering hope for the wider high street and reminding the City that it is one of the best run businesses in the UK.
The clothes giant said full price sales between May and July are up 6.9% on a year ago. While that speaks to resilient consumer confidence it will not encourage economists looking for signs that inflation is easing.
The rising sales allowed Next to up full year profit guidance by £10 million to £845 million.
Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, said:
“Next pulled a rabbit out of the hat on 19 June when it said sales had been much better than expected in the first seven weeks of the year. Since then sales growth has remained robust with Next ending the first half strongly. The group’s end-of-season sale also went better than expected which has led to a modest increase to full year profit guidance.”
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said:
“Next has got into a habit of beating market expectations on the upside lately, and today’s second-quarter trading statement continued the hot streak. End-of-season sales were ahead of group expectations in the period, adding to the positive tailwinds that Next seems to be catching lately. The group still has a strong high street presence too, with sales here also heading in the right direction. Next’s certainly weathering the storm of economic uncertainty admirably, and looks well-placed to prosper further when the cycle turns.“
Next shares rose 24p to 6876p which leaves the business valued at £8.7 billion.
FTSE 100 under pressure, Wizz Air falls 5%
The FTSE 100 index has slumped another 90.14 points to 7471.49, defying expectations for a steadier session after yesterday’s sharp sell-off caused by the US credit rating downgrade.
The fallers board included London Stock Exchange, which dropped 252p to 8034p despite the financial data business nudging up its full-year revenues guidance alongside interim results.
It was a similar story for medical devices firm Smith & Nephew as an increase to sales estimates was met with a fall of 21.5p to 1130p.
Lloyds Banking Group dropped 2% or 0.86p to 42.4p and BT Group lost 5.55p at 113.4p after their shares began trading without the right to forthcoming dividend payments.
The FTSE 250 index fell 0.5% or 91.82 points to 18,721.06, with Wizz Air 5% or 126p cheaper at 2236p in the wake of the low-cost airline’s trading update.
Serco wins another £280 million contract on high immigration demand
Contractor Serco is set to make a further £280 million because of high demand for immigration services, as the Government faces a record backlog in asylum cases.
Serco provides staffing for UK immigration centres among many other services, and it said that an increase in the number of migrants to be processed at these centres led to it securing an extra £280 million worth of work.
The firm made £188 million in profit for the first half of the year, up 52%, as its immigration services, in Australia as well as the UK, helped to offset the reduced need for covid testing.
Its shares are up 2.8% to 159.5p today.
Wizz Air becomes the latest carrier to break records as travellers take back to the skies
Wizz Air, the short-haul carrier, reported a record high in traffic for three months to the end of June, adding to the trend of strong numbers from the sector into the peak summer getaway season.
Over 15 million people took to the skies with the company in the period, helping revenue up 53% to £1.2 billion. It returned to profit in the period, of £61.1 million, up from a loss of over £452 million a year ago.
CEO József Váradi said “Summer is going well operationally and from a revenue perspective.”
Markets steady after US downgrade, China figures boost Hang Seng
European stock markets are set for a steadier session after they fell sharply yesterday on the Fitch downgrade to the US AAA credit rating.
The FTSE 100 index closed 1.4% lower last night, but CMC Markets expects today’s session to start just below the opening mark at 7551.
US markets also experienced heavy selling yesterday as the Nasdaq Composite fell 2.2%, the S&P 500 index by 1.4% and the Dow Jones Industrial Average 1%.
Futures markets are pointing to a flat start to trading in New York this afternoon, despite last night’s negative reaction to figures from companies including PayPal.
The mood has been helped by the latest signs of resilience in the US economy after a stronger-than-expected increase in private payrolls.
Asia markets have experienced a mixed session, with Tokyo’s Nikkei 225 down 1.5% but the Hong Kong-based Hang Seng up 0.5% as it emerged that China’s services activity expanded at a faster pace in July.
Morning refresh: What you need to know to start the day
Good morning from the City desk of the Evening Standard.
City eyes are on the Bank of England today as its Monetary Policy Committee is widely expected to unveil another interest rate rise to curb persistently high UK inflation. But will it be a quarter or a half-point rise, and will this mark the end of a string of consecutive rate hikes? Our reporter Michael Hunter has written a helpful preview here.
PayPal was the stock to watch overnight — the fintech firm’s shares fell as much as 7% in after-market trading on Wall Street after margins were squeezed and provisions for bad debt increased. The firm was once run by Elon Musk, who was ousted as CEO after he unveiled a radical rebrand to change the company’s name to X.com. He finally saw those plans out after rebranding his social media site Twitter last week.
Here’s a summary of our top headlines from yesterday:
This morning we’re also expecting results from The London Stock Exchange Group, Rolls Royce engines and contractor Serco.
