Next profits up, but AXA Framlington steers clear

Added 3rd August 2016

High street mainstay Next helped prop up the FTSE 100 this morning, having reported a year-on-year 0.3% rise in total sales over three months to end July.

Next profits up, but AXA Framlington steers clear

A long-held bet for UK equity funds from the likes of BlackRock, Franklin, JOHCM and Old Mutual, the stock climbed 3.8% this morning.

However, while total sales for the quarter were up – boasted by a 5.7% rise from Next Directory – retail store sales fell by 3.3%, down 4% year to date.

Next’s largely positive results represented a significant turnaround from the 0.9% sales fall reported in the first quarter.

Looking ahead, a possible post-Brexit UK recession remains a serious threat to retailers.

With only a few weeks since the EU referendum, Next stated it would be “unwise to draw any firm conclusions of the effect the decision to leave the EU will have on UK consumer demand, particularly as the week after the referendum was an unusually strong week the previous year”.

“So far, we can see no clear evidence of any appreciable effect on consumer behaviour, apart from the first few days after the vote.”

However, AXA Framlington’s UK equity team has exited positions in retailers and some consumer-facing business.

“We’ve been nervous about the outlook for consumers for a while and there is a very normal pattern of consumer confidence peaking post general elections in the UK somewhere between a nine and 15-month view,” said Jamie Forbes-Wilson, manager of AXA Framlington Blue Chip Equity Income and Distribution funds.

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Gary Shepherd


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Gary joined Last Word Media in 2009, becoming editor of Portfolio Adviser a year later. Previously, he worked at Incisive Media with roles across its Professional Adviser, Investment Week, Bloomberg Money and Mortgage Solutions titles. Gary has been shortlisted for various awards, winning Headline Money Investment Writer of the Year in 2010.



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