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Next: Analyst Reaction

As Next reports a 2.7% increase in sales in its third quarter, Drapers takes a look at what city analysts make of the retailer’s results.

Next’s third quarter results have generated a consensus among analysts who are broadly recommending no change to previous forecasts - although all have warned that the drop in directory business could yet provide trouble.

Espirito Santo analyst Caroline Gulliver said: “The main surprise was the dramatic slowdown of directory sales growth to only 5.6%. To be more bullish we would need to see directory resume its double digit growth rate, which would require Next International online sales to become meaningful.

“We think that’s unlikely and are comfortable with our 5% Directory sales growth forecast for FY14, hence we remain neutral.”

Investec analyst Bethany Hocking added: “Given that directory had seen double-digit sales growth for six consecutive quarters, we expect this to slightly disappoint,” she said.

“We remain long-term fans of Next but continue to see few near-term catalysts. We moved to hold at the interims and reiterate this recommendation now.”

Independent analyst Nick Bubb said Next’s directory performance was “a bit below par” but overall the retailer’s results were “reassuring”, especially in light of chief executive Simon Wolfson’s caution over slow August trading when the retailer reported its half-year results.

“There is no great surprise in the news that September and October saw a strong pick-up, thanks to the much more helpful weather,” he said.

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