Broker UBS retained its buy stance on Next ahead of interim results expected next week.
Analyst Andrew Hughes said the fashion group’s profit should be “strong” at the retail and Directory divisions.
In its last update, Next reported that first-half sales were down 1.5% on a like-for-like basis with Directory up 7.8%.
Hughes said: “Assuming a modest decline in the interest charge we assume pre-tax profits up 18%.
“We assume the dividend will rise by 11%, although with strong cover the risk is on the upside.”
Although Next has observed a “cooling in retail demand” and warned that product prices may need to increase by between 5% and 8% to cover rising supply chain costs, Hughes said second-half guidance was unlikely to change.
“We broadly assume flat second-half margins and another tight performance on costs,” he said.