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Published on 4 Jan 2017
George
Mensah, analyst at Shore Capital (LON:SGR), discusses the share price
drop of Next (LON:NXT) with Proactive Investor after the clothing
retailer cut its 2016 profit forecast and warned of tough conditions
ahead in its 4Q trading update.
"This performance is mainly attributable to the company itself, however, there are other issues looking forward that will affect the wider industry," he says, while pointing out that Black Friday "skewed the retail calendar" and that inflation will start having an impact on disposable incomes this year.
Shore Capital has a 'sell' rating on the stock. "We believe that the company hasn't sufficiently addressed the concerns we have about the business with regards to arresting the decline in trading," Mensah says.
Mensah actually expect Christmas sales to be strong for the retail sector overall, but looking ahead sees challenges linked to inflation and uncertainty over Brexit which he argues will impact employment, earnings' growth, business investment and feed through the retail market.
"This performance is mainly attributable to the company itself, however, there are other issues looking forward that will affect the wider industry," he says, while pointing out that Black Friday "skewed the retail calendar" and that inflation will start having an impact on disposable incomes this year.
Shore Capital has a 'sell' rating on the stock. "We believe that the company hasn't sufficiently addressed the concerns we have about the business with regards to arresting the decline in trading," Mensah says.
Mensah actually expect Christmas sales to be strong for the retail sector overall, but looking ahead sees challenges linked to inflation and uncertainty over Brexit which he argues will impact employment, earnings' growth, business investment and feed through the retail market.
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