Next benefits from death of the high street

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

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LONDON, July 21 (Reuters Breakingviews) - Next (NXT.L) is reaping the rewards of the collapse of its high street neighbours. The 11 billion pound retailer’s shares rose 10% on Wednesday after it raised its pre-tax profit forecast for 2021 by 30 million pounds to 750 million pounds. That was helped by a 19% rise in sales in the 11 weeks to July 17 versus the same period before the pandemic in 2019.

The shrinking high street is working out well for Next Chief Executive Simon Wolfson, whose business has proven more resilient than UK peers because over half its sales were online even before the pandemic. Department stores Debenhams and Topshop owner Arcadia collapsed and Gap (GPS.N) is shuttering its British shops. Next is valued at 15 times 2022 earnings, according to Refinitiv. That’s a discount to European peers, where the retail sector has been less affected by online sales. H&M (HMb.ST), for example, is currently valued on an 18 times multiple. The demise of his rivals will help Wolfson close the valuation gap. (By Aimee Donnellan)

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Editing by Neil Unmack and Oliver Taslic

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