Next earnings preview: Where next for the Next share price?

When will Next release 2022 earnings?

Fashion and homeware retailer Next is scheduled to release full year results for the year to the end of January 2023 on the morning of Wednesday March 29.

 

Next 2022 earnings consensus

Next is forecast to report a 5% rise in annual sales to £5.1 billion in 2022 and a 4.6% increase in pretax profits to £861.3 million, according to consensus numbers from Bloomberg.

 

Next 2022 earnings preview

Next sales continue to increase in what is proving to be a challenging environment for retailers as consumers are forced to spend more money on necessities in the inflationary environment. Next has won applause for how it has managed inventory and kept full-price sales growing, which is also helping protect profitability.

Next, which is known for under-promising and overdelivering, raised its pretax profit guidance for 2022 to £860 million back in January, with analysts anticipating a slight beat. Earnings per share is forecast to rise 5.8% to around 554p, outpacing the rise in pretax profit thanks to its share buybacks.

Next said it was ‘cautious’ about the year ahead when it released its last trading statement back in January, when it issued preliminary guidance for full price sales to fall 1.5% and for profits to drop 7.6% to £795 million.

Next is aiming to deliver around £77 million in cost savings over the coming year but this will not be enough to offset around £119 million of anticipated cost increases, driven higher wage and energy bills. That, twinned with lower sales, will pressure profit.

That suggests both growth and profits have peaked. Next tends to low-ball its initial view and then upgrade it as it gains more clarity on what lies ahead, although it has said that this may not be the case for the year ahead after warning it is ‘concerned some might look at our forecast for 2023 and again assume we are being over cautious’.

Still, sales and profits are still considerably larger than before the pandemic and yet the share price is still almost 6% below where it sat before the Covid-19 crisis derailed markets back in early 2020. In turn, that has spurred-on a rally in the Next share price, which has popped almost 50% since bottoming-out last October.

 

Where next for the Next share price?

The rally in Next shares has lost steam since they hit their highest level in over a year in early March.

We saw the stock briefly surpass the 6,970p level of resistance when it hit those highs but we can see this has proven a tough ceiling to crack over the past year. This is the first level that needs to be recaptured before that one-year high comes back into play and a move above 7,000p is back on the table. With that in mind, the 25 brokers that cover Next see limited upside from current levels with the average target price sat at 6,873.3p.

The two-month closing-low of 6,630p could provide some support if it comes under renewed pressure, although 6,400p looks like it could be a firmer level of support.

  

How to trade the Next share price