Strong profits predicted for Next

Analyst Andrew Hughes said the fashion group’s profit should be “strong” at the retail and Directory divisions.

In its last update, Next reported that first-half sales were down 1.5% on a like-for-like basis with Directory up 7.8%.

Hughes said: “Assuming a modest decline in the interest charge we assume pre-tax profits up 18%.

“We assume the dividend will rise by 11%, although with strong cover the risk is on the upside.”

Although Next has observed a “cooling in retail demand” and warned that product prices may need to increase by between 5% and 8% to cover rising supply chain costs, Hughes said second-half guidance was unlikely to change.

“We broadly assume flat second-half margins and another tight performance on costs,” he said.