Next takes advantage of the death of the high street

A branch of clothing retailer Next is seen in London, Britain September 30, 2014. REUTERS / Andrew Winning

LONDON, July 21 (Reuters Breakingviews) – Next (NXT.L) is reaping the rewards of its neighbors’ collapse. Shares of the £ 11bn retailer rose 10% on Wednesday after raising its pre-tax profit forecast for 2021 from £ 30m to £ 750m. This was helped by a 19% increase in sales in the 11 weeks leading up to July 17 compared to the same period before the pandemic in 2019.

The main street narrowing is working well for Next Chief Executive Simon Wolfson, whose company has proven to be more resilient than its UK peers as more than half of its sales were online even before the pandemic. Department stores Debenhams and Arcadia, owner of Topshop, have collapsed and Gap (GPS.N) is closing its UK stores. Next is valued at 15 times the profits of 2022, according to Refinitiv. It’s a discount from its European peers, where the retail industry has been less affected by online sales. H&M (HMb.ST), for example, is currently valued at a multiple of 18 times. The disappearance of his rivals will help Wolfson close the valuation gap. (By Aimée Donnellan)

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Editing by Neil Unmack and Oliver Taslic

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