Next's shares have jumped seven per cent in trading this morning, despite the company posting its first drop in profits since the financial crisis.
So what do investors know that the casual onlooker might not?
Neil Wilson, senior market analyst, said that Next's results were "not a pretty set of figures" but were not worse than the market was expecting after the company warned on profits in January. In addition, the group remains "strongly cash generative".
"The online business is doing a lot better – profits rose nearly 10 per cent to £444m as net margins rose above 25 per cent – which makes one wonder if the future of Next lies more as an online business," he said.
George Salmon, equity analyst at Hargreaves Lansdown, said:
It’s worth remembering the group’s management has an excellent long term track record, and the business still earns impressive margins. The fact the shares are trading at a near 20 per cent discount to their historic average price to earnings ratio will not go unnoticed by those who believe in its long term prospects.
Alistair Davies, analyst at Investec, said the results demonstrate the challenges Next is facing and that the company's retail performance was "disappointing".
"Pressure on margins from operational gearing is likely to remain a feature, albeit costs are being managed appropriately," Davies said.
Russ Mould, investment director at AJ Bell, pointed out that Next is "still churning out dollops of surplus cash" and that its plans for special dividends this year are proving to be a big draw.
Next ended increases in its ordinary dividend in 2016, and said it would be giving a total pay-out of 158p. However, the retailer intends to hand out 45p per share this year in special dividends in addition to its ordinary dividend.
“Assuming that is again left at 158p, then a 338p-a-share total distribution equates to a dividend yield of eight per cent on the £42 share price, a sum which will exceed every stock in the FTSE 100 bar National Grid, once taking into account special dividends," said Mould.