Fashion retailer Next's (NXT) inexorable rise continues, with a strong third quarter trading update sending the shares 6.3% higher to £55.35 on Wednesday. Investors bid up the stock as the FTSE 100 retail star raises its full-year profits guidance.
In today's chipper update, the £8.2 billion cap clothing-to-home products retailer reports Next Brand sales up 4.3% for the quarter to 26 October, ahead of previous second half guidance for growth of between 1% and 4%. Driving the performance in a volatile quarter was Next Directory, the thriving online business which consistently outperforms. Third quarter sales via the home delivery service skipped 10.7% higher to take the year-to-date growth rate to 9.2%.
Next Directory, a sophisticated and established multi-channel platform, represents a useful hedge against unpredictable UK weather patterns and increased sales volatility. Next has previously noted that hard-pressed consumers are spending closer to the point at which they need new clothing.
Guided by CEO Simon Wolfson, Next continues to invest in profitable new selling space through physical store expansion, though retail revenues edged up just 0.4% in Q3. Wolfson sees particularly good opportunities to grow Next's home products division, a likely beneficiary of an improving housing market.
Buoyed by a strong opening three quarters of the year, the High Street star turn has upped guidance for full-year profits and earnings per share and raised its share buyback estimate. Investors can now expect profit before tax growth of between 4.6% and 9.4%, up from September's 2.2% to 8.6% forecast range and driving the upper end earnings growth estimate from 19% to 21%.
Strongly cash generative and making good progress in its core business, Next's key financial objective is the delivery of sustainable long term growth in earnings per share. The retailer says its earnings this year will be boosted by as much as £350 million of share buybacks, having already splashed out £295 million on its own equity year-to-date and with another £50 million splurge under consideration, 'depending upon the prevailing share price'.