A US hedge fund has taken a £60m bet against Next as part of its investment strategy, after the retailer admitted losing ground to rivals.
Lone Pine Capital, which controls $27bn (£28.3bn) of assets, has built up a 0.6% short position against the high street chain [when you borrow stock and sell it on because you expect the share price to fall, and you plan to buy it back when it does], as its competition continues to invest heavily in online and gain market share, The Sunday Telegraph reported.
Last month, Next blamed warm weather, poor stock availability and tough online competition for a “disappointing” 0.4% increase in sales over Christmas. Meanwhile, offerings once unique to Next, such as late ordering for next-day delivery, are becoming commonplace.
Next chief executive Lord Wolfson said: “I don’t expect to be able to regain the competitive advantage we had two or three years ago.”
Lone Pine founder and president Stephen Mandel wrote to his investors: “The impact of the internet is resulting in the permanent and ongoing dismantling of longstanding economic models in advertising, media, retailing, technology and travel, among others. This informs a significant portion of our short portfolio.”
Next has also been criticised by investors who claim the company failed to act on a warning that could have prevented it from infringing company law. The business has been forced to call a meeting of shareholders this Wednesday after it paid dividends on four occasions without filing accounts at Companies House.
Next, which will report its reliminary full year results on March 24, admitted the “procedural oversight” but said there was no change to the financial outlook of the company.
Next declined to comment.