Newspaper article The Evening Standard (London, England)

Next out of Fashion on Growth Worries

Newspaper article The Evening Standard (London, England)

Next out of Fashion on Growth Worries

Article excerpt


HIGH STREET favourite Next took a hammering today on concern over growth prospects.

Next, which reports half-year results on Tuesday, plunged 28p to 1638p after a major broker said the fashion chain may have to choose between lower-return growth in the UK and riskier expansion abroad.

Although Next has outperformed the FTSE All-share index by 10% in the past three months, analysts at ING warned that the next 12 months could prove very challenging.

They said Next has generated very high returns from opening new shops, but future new-store opportunities would become less attractive. In a note to clients, the broker demoted the group to hold from buy, pointing out that the shares are currently trading on just a 7% discount to implied fair value.

ING is not the only broker to turn negative on the stock. Also bucking the generally positive vibe is Numis Securities, which earlier this month advised clients to sell.

Better-than-expected profits for a handful of heavyweights helped pushed the FTSE 100 up 21.3 points to 5857.3. In New York the Dow Jones slipped 21.60 points to 11,047.60 in response to fears about a new spike in oil prices and weaker than expected durable goods orders.

Media conglomerate WPP topped the blue-chip winners, rising 441/2p to 6631/2p after a 36% rise in full-year profits. Lloyds TSB, the second most traded stock of the day, soared to 570p, up 29p, prompting some analysts to say the response to the 4% profit rise had been overdone. "There is nothing in the numbers to show this bank has turned the corner, nor that it is doing anything that will allow it to outperform its peers," said one.

Capita, up 151/2p at 4701/2p, enjoyed a second day of steep rises thanks to an upgrade to buy from neutral by UBS. It has raised its earnings forecast for this year by 6% and for next year by 4%.

National Grid's $42a-share bid for US utility KeySpan fired up interest in the energy sector, with bid favourite Centrica 23/4p higher at 2881/2p. Even if Russia's Gazprom doesn't make a move, the chances are increasing that someone else will. …

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