Bernstein has reshuffled its UK retail recommendations, upgrading clothing chain Next while cutting Associated British Foods to market-perform. The move reflects a broader shift in analyst sentiment toward companies with clearer earnings visibility in a challenging consumer environment. Next’s upgrade stems from Bernstein's view that it represents a 'flight to quality' within European apparel.

The brokerage set a £160 price target, forecasting 8.5% EPS growth and a total shareholder return of 13-14% annually. Bernstein expects Next to outperform consensus profit forecasts through FY27. Conversely, Associated British Foods faces headwinds.

Bernstein cited deteriorating demand at Primark across the UK, US, and Europe, alongside weak sugar prices and soft US grocery demand. The brokerage noted ABF is 16% behind consensus earnings estimates for FY26 and lacks short-term catalysts. Bernstein maintained its outperform rating on JD Sports but expressed caution due to consumer spending pressure.

The firm also reiterated a preference for Tesco over Sainsbury’s in food retail.