Broker snap: Singer prefers Next to M&S

21st Jul 2009 12:41

Fashion retailer Next rushed out its interim management statement Tuesday morning to spread the good news about better than expected trading."The warmer weather drove sales of summer clothing, and management estimate that the weather boost was between 2% and 3%. Management were also much happier with the design and fashion content of the current season. The group entered the summer sale with 19% less stock than last year and initial clearance rates have been encouraging," noted Singer Capital Markets, which is a buyer of the stock.Despite management lifting full-year profit guidance by around £30m, the shares fell back after the trading statement. "In the outlook statement, management expect the consumer environment in the second half to be similar to the first. However, they state that given the favourable weather conditions in the first half, LFLs [like for like sales improvements] in H2 [second half] are unlikely to be inline with H1, and at this stage they estimate H2 LFLs in the range of -3.5% to -6.5%," the broker notes.Singer continues to prefer Next to Marks & Spencer and has a price target of 1800p.