Primark’s parent company Associated British Foods and Next have both cashed in on fresh demand on broker upgrades, according to the Financial Times.
The struggling fashion retailer Next, which saw sales for its first quarter decline by 8.1 per cent last week, saw a 1.7 per cent increase to £44.01 as Investec upgraded the retailer to its “buy” list.
The investors stated that there was a preoccupation with the retailers short term trading which had led to investors ignoring its active estate management.
“Rather than focus on refurbishments, Next has been opening and closing stores to adapt to the changing market, with the result that more than half of Next’s floor space did not exist a decade ago,” Invastec said.
“The well-invested and flexible store estate should translate to a sustainable profit margin even if retail like-for-like sales continue to fall.”
Retailers were among Wednesday’s biggest gainers, with Next and Associated British Foods both in demand on broker upgrades.
Its rival Associated British Foods also saw a 2.4 per cent rise to £28.77 as Citi made a similar move and added Primark to its “buy” list.
Despite the budget fashion retailer’s implied valuation falling 30 per cent in the past 18 months the investor has said that “the downgrade cycle seems to be over and, with double-digit earnings growth set to return, Primark will re-establish itself as a resilient retailer with a proven international business and an expansion programme with room to expand”.