Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Next slumps as analysts warn of 'Kodak moment'

Next slumps as analysts warn of 'Kodak moment'

Shares in Next (NXT) have tumbled after analysts at Berenberg branded the retailer a 'sell', warning it faced a 'Kodak moment' as it struggles to adapt to the growth of internet shopping.

Shares in the business fell 4.1% to £42.02, dropping to the bottom of the FTSE 100, which rose 42 points, or 0.6%, to 7,395.

Analyst Michelle Wilson drew parallels between Next's failure to fully adapt to the growth of e-commerce and camera maker Kodak's failure to move into the digital photography market.

'We believe there are significant similarities between Kodak's history and Next's current predicament,' she said.

'While Next was early in recognising the shift to e-commerce and invested in the channel, it has not firmly committed to it. We believe it remains too focused on the profitability of its past business model to adapt to an industry that is going through major structural change.'

Wilson said Next was 'burdened' by a its big estate of stores, which was restricting its ability to invest in its products and home delivery service, for which it charges customers.

'We believe offering free home delivery could reduce earnings by five percentage points in the near term, but is ultimately necessary to maintain market share,' she said.

'Management's current strategy is formulated to maximise short-term returns, rather than adapting to ensure longer-term survival.'

Double upgrade for Standard Life Aberdeen

At the other end of index, shares in Standard Life Aberdeen (SLA) continued to rally in their second day of trading following the merger of Standard Life with Aberdeen Asset management.

The rose 1.4% to 429.8p and are now up 4.7% this week, receiving their latest boost from a double upgrade by analysts at Barclays.

Analyst Daniel Garrod lifted his rating from 'underweight' to 'overweight', pointing to 'attractive' synergies from the merger and a possible turnaround for Standard Life's huge Global Absolute Return Strategies fund and Aberdeen's cross-border Global Emerging Markets fund.

He pointed to improving performance from the Gars fund leading to a slowing of outflows, which hit a net £10.2 billion over the 12 months to the end of June, while outflows from the Aberdeen fund reversed in the first three moths of the year.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

Do not miss the first two minutes of this film as Richard Buxton shares how he has been challenged by a client for owning shares in a certain company.

Play CEO Tapes: the huge opportunities for asset managers

CEO Tapes: the huge opportunities for asset managers

From tech disruption, retirement and poaching, the CEO discuss the opportunities for their businesses in this episode.

Play CEO Tapes: 'we're just a bunch of white dudes sitting here'

CEO Tapes: 'we're just a bunch of white dudes sitting here'

In our brand new series, eight CEOs discuss how the industry could do a better job for female fund managers.

Read More
Your Business: Cover Star Club

Profile: Kevin Doran's formula for success at AJ Bell

Profile: Kevin Doran's formula for success at AJ Bell

From a degree in theoretical physics to teaching and becoming one of the youngest chief investment officers in the UK, Kevin Doran has certainly had an interesting career.

Wealth Manager on Twitter