Clothing retailer Next (LSE: NXT) has long been a favourite of long-term investors. Those who bought the stock at its nadir in the early 1990s (the share price fell as low as 7p in December 1990) and somehow had the nerve and gumption to hang on, would have made many, many multiples of their money. Even in the past five years alone, the stock has returned nearly 250%, including reinvested dividends.
However, the company rattled investors last week as the chief executive, Simon Wolfson, warned that 2016 was shaping up to be its toughest year since 2008. The share price fell by more than 10% during the day, while rival retailers such as Marks & Spencer and Debenhams slipped as well. Next cut its sales and profit guidance "for the second time in three months", noted Reuters, with a "worst-case scenario" of a 4.5% fall in profit and a 1% drop in sales.
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