Good morning! It's Paul here.

The big news today for me is the Q1 trading update from Next (LON:NXT) (in which I have a long position) - yes, we all know it's not a small cap, but I cover it here because the guidance is so detailed, and gives all sorts of clues to the overall state of non-food retail.

This is a fascinating time, on a macro level, where the stock market really can't decide where things are going. There's a lot of gloom towards most consumer-facing stocks. There could be some bargains about, but deciding which ones to pick (if any), is our intriguing challenge right now!

Next (LON:NXT)

Share price: 5,632p (up 7.4% today, at 10:13)
No. shares: 141.46m
Market cap: £7,967.0m

(at the time of writing, I hold a long position in this share)

Q1 trading statement

This retail & online fashion (and homewares) bellwether updates us today on the 14 weeks to 7 May 2018.

I had braced myself for a disappointing update this morning, given that poor weather in much of Feb & Mar must have hurt retailers. Also, the BRC reported earlier this week that retail sales had fallen off a cliff in April.

As it turned out, Next somehow managed to trade pretty well overall in Q1, with total sales up 6.0% (against admittedly weak prior year comparatives);


Obviously the stand-out number is the excellent online growth of +18.1%. This supports my view that Next is successfully transitioning to being a predominantly online (in terms of profitability) retailer.

Sales in our Online business were particularly strong and up +18.1%, driven by the growth of NEXT branded stock and third party brands on our UK platform along with continued growth from our overseas business.

What's interesting is that the period of bad weather in the spring doesn't seem to have affected Next much overall. It seems to me that when the weather is bad, Next customers probably switch from visiting the stores, to shopping online.

Note also the spectacular boost from the recent heatwave (see below), which is much greater in magnitude than the impact of the bad weather earlier. NB the figures below combine stores and online sales.

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