Next provides optimism for investors but remain a ‘hold'

As online and catalogue sales boost Next results Sheridan Admans, investment research manager at The Share Centre, explains what this means for investors.

"Next surprised analysts this morning, as sales figures for the retailer rose more than forecast, pushing the share price up 4% in early trades.

"Sales were driven by online and catalogue demand. These results rebuff difficulties in the national retail market, particularly those faced by clothing retailers, from the economic downturn and inclement weather.

"Next has also provided full year guidance and expects brand sales growth of between 2% to 4.5%. Investors should note, Next still intends to buy back £200m of shares this year which will take into account lower corporation tax, and based on sales forecast, could boost earnings per share by 6%.

Although these results provide some optimism that Next can deliver in difficult markets, longer-term the retailer has to tackle the threat of super and hyper-markets taking market share and address the long-term trend of slipping sales at its high street stores.

"The share price is close to an all time high and despite the potential for some relief on the consumers spending power in the later part of 2012, we still have concerns over other drags on sentiment that could impact the consumer and currently list Next as a ‘hold'."