The Barclays analysts expect Next’s UK stores to contribute just 31% of sales and 14% of underlying earnings (EBIT) by calendar 2022 as the growth of online sales dominates
READ: Next to adopt “slightly more adventurous” styles as it gears up for changes in consumer behaviour
The FTSE 100-listed retailer is also expected to return 8.4% of its market capitalisation to shareholders over the next five years.
“With its online business generating mid-teens percentage sales growth and margins, NEXT offers an interesting mix of growth and cash returns … NEXT has made more progress in this direction than some may appreciate,” the bank’s analysts said in a note to clients.
“The share price has admittedly risen by over 80% since April, but for investors with a longer-term horizon we think the shares still offer attractive upside.”
Next shares added 3% to 6,344p on Tuesday morning, helped too by reports of an upgrade in rating to ‘neutral’ from ‘sell’ by US investment bank Goldman Sachs.