Berenberg ups Next to 'hold' after trading update

"The year ahead for Next is difficult to predict, with upside risk following an annus horribilis for UK retail, but downside risk from continued Brexit uncertainty and the ongoing structural shift of sales online," it said.

As a result, Berenberg reckons management’s guidance for 1.7% sales growth and a 1% pre-tax profit decline is reasonable.

In the near term, the bank believes that Next’s third-party products business (LABEL) will continue to benefit from the demise of department store peers. In the longer term, it expects that another year of poor store like-for-like growth will provide further support for its view that a store estate restructuring is required, paired with a shift to free home delivery.

Berenberg cut its FY 2019- 20 earnings per share forecasts by 1-2% and retained its 4,100p price target on the stock.

Next shares rallied on Thursday after the company trimmed its full-year profit guidance to £723m from £727m but posted a 1.5% jump in sales over the key Christmas period.

At 1020 GMT, the shares were up 1.4% to 4,411p.