Next making a mistake in strategy, Credit Suisse says

That was despite almost a year having passed since the pound weakened post-Brexit and two years since the big falls in the euro-dollar exchange rate, they said.

Price reductions appeared to have run their course, they said, referencing their own price survey for June, but the bunching of prices clearly revealed a lack of pricing power in the face of higher US dollar costs.

That same survey also "seemed to suggest" Next had cut entry level pricing during Spring-Summer, perhaps in reaction to "very poor" first quarter sales (Retail -8.1%, Directory +3.3%).

As for Next's strategy of increasing its UK space, Credit Suisse said management was erring.

"Self-help from Credit, International and Label will diminish, and potentially reverse, over the next two years. With earnings, margins and cash conversion continuing to fall we regard Next as a value trap," analysts Simon Irwin and Pradeep Pratti said.

The two most influential brands continued to be Primark and Zara, the Swiss broker said.

In the same report the broker reiterated an 'underperform' stance on H&M.

Irwin and Pratti cut their target price for Next from 4,250.0p to 4,000.0p.