NEXT plc · LSE:NXT
NEXT — FY2013 Earnings Presentation
64 slides from NEXT's earnings presentation, January 2013
Slide 1: Next January 2013
Next January 2013
Slide 2: March 2012
MARCH 2012
Slide 3: Sales & Profit Scenarios given March 2012
Sales & Profit Scenarios given March 2012 Sales Range 0 1 2 3 4 5 1% to 4% 3.1 Profit Range 540 560 580 600 620 £560m to £610m 622
Slide 4: Profit Drivers
Profit Drivers If Brand Sales + 2.5% 2011/12 202/13 £570m £622m 80 490 500 510 520 530 540 550 560 570 580 590 600 610 620 630 64 RETAIL LFLs COST INCREASES - £29m DIRECTORY - £50m + £40m NEW SPACE COST SAVINGS + £27m + £64m
Slide 5: Income Statement
Income Statement £m 2013 2012 Revenue (underlying) 3,548 3,441 + 3% Operating profit (underlying) 650 598 Interest (28) (28) Profit before tax (underlying) 622 570 + 9% Taxation (149) (143) Profit after tax (underlying) 473 427 + 11% EPS (underlying) 297.7p 255.4p + 17% Dividend per share 105p 90p +
Slide 6: Income Statement
Income Statement £m 2013 2012 Revenue (underlying) 3,548 3,441 + 3% Operating profit (underlying) 650 598 Interest (28) (28) Profit before tax (underlying) 622 570 + 9% Taxation (149) (143) Profit after tax (underlying) 473 427 + 11% Exceptionals/Ventura 35 47 + 17% Total profit 508 474 + 17%
Slide 7: Balance Sheet
Balance Sheet £m 2013 2012 Fixed assets 545 589 Goodwill and intangibles 45 46 Stocks 332 372 Debtors 718 699 Creditors (859) (877) Pension surplus 66 35 Derivatives 17 21 Buyback / ESOT commitment (85) (87) Net debt (493) (575) Net assets 286 223
Slide 8: Balance Sheet
Balance Sheet £m 2013 2012 Fixed assets 545 589 Goodwill and intangibles 45 46 Stocks 332 372 Debtors 718 699 Creditors (859) Directory Debtors (877) Pension surplus 66 Jan 2013 Jan 352012 Derivatives 17 + 5% 21 Buyback / ESOT commitment £601m (85) £574m(87) Net debt Annual (493)Credit Sales Increas
Slide 9: Full Year Debt, Cash Flow and Buybacks
Full Year Debt, Cash Flow and Buybacks 700 ESOT cover Jan 2012 £52m 600 575 Share buybacks £242m Jan 2013 493 500 441 400 39m Stock 25m Profit 300 Operational £376m Boosted by … 25m Capex 200 15m Hepworth House 199 13m Directory debtors £m
Slide 10: Full Year Debt, Cash Flow and Buybacks
Full Year Debt, Cash Flow and Buybacks At Jan 2012 At Jan 2013 At Jan 2014(e) 160 163m Shares -5.2% Net of ESOT 155m -3.6% 150 149m 2014(e) 140 £250m operational cashflow m
Slide 11: Cash Flow
Cash Flow £m 2013 2012 Profit before tax (underlying) 622 570 Depreciation / disposals 127 128 Capital expenditure (82) (126) Ventura sale 2 63 Working capital / other 31 (71) Dividends paid (148) (135) Tax paid (148) (144) ESOT (80) (39) Share buybacks (242) (291) Net cash flow 82 (45)
Slide 12: Cash Flow
Cash Flow £m 2013 2012 Profit before tax (underlying) 622 570 Depreciation / disposals 127 128 Capital expenditure (82) (126) Ventura sale 2014(e) 2 63 Warehouse & other Working capital / other £95m 31 32 (71) Refits paid Dividends (148) (135) 13 23 TaxNew paid& extended 12 21 (148) 81 (144) ESOT 60
Slide 13: Retail
Retail
Slide 14: Retail: Sales Analysis
Retail : Sales Analysis £m 2013 2012 Revenue (statutory sales) 2,190.9 2,191.4 0.0% Operating profit 331.1 323.7 Year to Christmas Eve 0.6% Sales from new space Average net space growth 5.1% Sales growth from net space 3.2% Return on space 61%
Slide 15: Retail: Space Expansion
Retail : Space Expansion Stores Sq. Ft. Jan 2012 536 6.5m New, resites (6) & extensions (9) 5 200k Closed (6) (30k) Home stand-alone 5 80k Jan 2013 540 6.7m + 3.9%
Slide 16: Retail: Space Expansion New store performance
Retail : Space Expansion New store performance Sales Payback Store Company avg. v target (months) profit store profit Fashion + 9% 17 24% 23% Home + 5% 22 19% 17% Total + 8% 19 23% 22%
Slide 17: Retail: Profit Analysis
Retail : Profit Analysis £m 2013 2012 Revenue (statutory sales) 2,190.9 2,191.4 0.0% Operating profit 331.1 323.7 + 2.3% % to revenue 15.1% 14.8% Margin Movement Bought-in gross margin + 0.3% Freight and faulty + 0.3% Achieved gross margin + 0.6%
Slide 18: Retail: Profit Analysis
Retail : Profit Analysis £m 2013 2012 Revenue (statutory sales) 2,190.9 2,191.4 0.0% Operating profit 331.1 323.7 + 2.3% % to revenue 15.1% 14.8% Margin Movement Achieved gross margin + 0.6% Store payroll - 0.1% Store occupancy - 0.4% Other overheads + 0.2% Margin movement + 0.3%
Slide 19: Directory
Directory
Slide 20: Directory: Sales Analysis
Directory : Sales Analysis £m 2013 2012 Revenue (statutory sales) 1,192.6 1,088.7 + 9.5% Operating profit 302.1 262.6 Sales analysis Contribution to growth UK full price + 5.2% UK Clearance tab + 2.3% International online + 2.0% Sales growth + 9.5%
Slide 21: Directory: Sales Analysis
Directory : Sales Analysis £m 2013 2012 Revenue (statutory sales) 1,192.6 1,088.7 + 9.5% Operating profit 302.1 262.6 Sales drivers Contribution to customer growth Credit 2,663 2,557 + 3.5% Cash 641 438 + 6.8% Active customers (000’s) 3,304 2,995 + 10.3%
Slide 22: Directory: Profit Analysis
Directory : Profit Analysis £m 2013 2012 Revenue (statutory sales) 1,192.6 1,088.7 + 9.5% Operating profit 302.1 262.6 + 15.1% % to revenue 25.3% 24.1% Margin movement Bought-in gross margin + 1.0% Freight + 0.2% Markdowns - 0.4% Achieved gross margin + 0.8%
Slide 23: Directory: Profit Analysis
Directory : Profit Analysis £m 2013 2012 Revenue (statutory sales) 1,192.6 1,088.7 + 9.5% Operating profit 302.1 262.6 + 15.1% % to revenue 25.3% 24.1% Margin movement Achieved gross margin + 0.8% Marketing & catalogue + 0.9% Bad debt & service charge + 0.5% Call Centre + 0.3% Warehouse & distributi
Slide 24: Sourcing
Sourcing £m 2013 2012 Intra-group sales 498.4 511.5 - 2.6% Operating profit 30.8 21.1 + 46.3% £m 2012 21.1 Better underlying profit 3.2 Last year provisions 5.0 This year provision releases 1.5 2014(e) 2013 30.8 30.0
Slide 25: The Year Ahead
The Year Ahead
Slide 26: Stable employment
Stable employment 29.8m 29.6m 29.4m 29.2m 29.0m Source: ONS, Feb 13 28.8m Dec Dec Dec Dec Dec Dec 07 08 09 10 11 12
Slide 27: Real income falling
Real income falling 5% CPI Source: ONS, Feb 13 4% CPI Estimate, BoE 3% Jan 13 Nov 12 2% Jan 12 1% Wages 0% 2010 2011 2012 2013 2014
Slide 28: Moving forward in tough times: Retail space growth
Moving forward in tough times Retail space growth
Slide 29: Opening tomorrow at 10am
OPENING TOMORROW AT 10AM 1 {
Slide 30: Women, Men, Children, Home, Costa
| Women | MEN CHILDREN HOME COSTA &
Slide 31: 2007
2007
Slide 32: 2012
2012
Slide 33: Analysis of Space 2007-2012
Analysis of Space 2007-2012 6.7m sq. ft. New 3.7m 4.8m sq. ft. Total expenditure Refits 1.4m £519m Redecorated 0.8m Unchanged 0.8m 2007 2012
Slide 34: Pipeline sq. ft. 2013-15
Pipeline sq. ft. 2013-15 600 750k Possible Total 1.2m sq. ft. 500 400 150k Probable 300 200 300k Definite 100 0 2013-2015 2013 2014 2015
Slide 35: Pipeline sq. ft. 2013-15
Pipeline sq. ft. 2013-15 600 750k Possible Likely openings 850k? 500 400 150k Probable 250k 300k 300k 300 200 300k Definite 100 0 2013-2015 2013 2014 2015
Slide 36: Large Store Development
Large Store Development % sales by department Fashion Mn 65% Home Wm Ch 32% Garden 3% Ling
Slide 37: Out of town?
CONVENIENT GOOD PARKING A GREAT ENVIRONMENT ARCHITECTURAL Out of town?
Slide 38: Convenient, good parking, great environment
CONVENIENT GOOD PARKING A GREAT ENVIRONMENT ARCHITECTURAL
Slide 39: High Wycombe
HIGH WYCOMBE CONVENIENT GOOD PARKING A GREAT ENVIRONMENT ARCHITECTURAL
Slide 40: Handforth Dean
HANDFORTH DEAN CONVENIENT GOOD PARKING A GREAT ENVIRONMENT ARCHITECTURAL
Slide 41: Maidstone
MAIDSTONE CONVENIENT GOOD PARKING A GREAT ENVIRONMENT ARCHITECTURAL
Slide 42: Hedge End
HEDGE END CONVENIENT GOOD PARKING A GREAT ENVIRONMENT ARCHITECTURAL
Slide 43: Burnley – Old Store
BURNLEY – OLD STORE
Slide 44: Burnley – New Site
BURNLEY — NEW SITE Hi
Slide 45: Burnley – New Store
BURNLEY – NEW STORE
Slide 46: What's the big problem?
What’s the big problem?
Slide 47: Planning delays
Planning delays CS ° 125 new jobs -£10m investment
Slide 48: ySeE PACE
ySeE PACE or irgest Next tO | ut ; sa WI pts (gmrtanningretuse 4 f City ‘left behind’ fear after retail giant row Re acta : i ! Reads reac after Next chief erecutve appeals over stor roiortign iy “
Slide 49: Moving forward in tough times: Growth online
Moving forward in tough times Growth online
Slide 50: UK Service Improvements
UK Service Improvements 2012 2013 Next day to home 9pm 10pm 3 day to store Free Free Next day to store £2.99 50p Delivered by 4pm 12.30pm
Slide 51: Directory International
Directory International 2011/12 2012/13 2013/14(e) Countries 48 60 61 Sales £33m £54m £70m to £75m Profit £7m £10m £14m to £15m Profit % 21% 19% 20%
Slide 52: Moving forward in tough times: Cost control
Moving forward in tough times Cost control
Slide 53: Cost Control
Cost Control £17m Cost of living and inflation Increases £15m Delivery service improvements £50m £7m Occupancy inflation £6m Marketing - Brand and International £5m Systems and other
Slide 54: Cost Control
Cost Control Savings £64m £22m Gross margin Increases £19m Retail efficiencies £50m £10m Directory overheads £3m Freight £3m Non-stock contract negotiation £7m Other
Slide 55: September 2011
SEPTEMBER 2011
Slide 56: Imaginary Company Plc model
A B C D E F 1 Imaginary Company Plc 2 3 Jan 12(e) Year 2 Year 5 Year 10 4 PBT (£m) 550 571 638 769 6 Cash Generated (£m) 160 190 214 261 7 8 Shares Acquired (m) 6.8 7.5 6.6 5.2 9 Shares Outstanding (m) 167 160 139 109 10 11 EPS (£) 2.44 2.64 3.41 5.24 12 13 Dividend Declared (£) 0.86 0.93 1.20 1.85
Slide 57: Imaginary Company Plc model
A B C D E F 1 Imaginary Company Plc 2 3 Year 1 Year 2 Year 5 Year 10 4 PBT (£m) 622 646 724 877 6 Cash Generated (£m) 250 280 315 383 7 8 Shares Acquired (m) 6.3 6.5 5.7 4.6 9 Shares Outstanding (m) 160 154 135 109 10 11 EPS (£) 2.98 3.24 4.13 6.20 12 13 Dividend Declared (£) 1.05 1.14 1.45 2.18 14
Slide 58: EPS/Share Price History 1999-2012
EPS/Share Price History 1999-2012 12.7 16.7 16.3 11.1 13.8 13.2 13.3 13.3 8.2 7.0 10.4 9.0 10.3 13.4 £2.98 £40 £2.98 £35 EPS Share price P/E Ratio £2.55 £30 £2.22 £25 £1.88 £1.69 £20 £1.56 £1.46 £1.20 £1.27 £15 94p £10 69p 58p £5 39p 46p 1999 00 01 02 03 04 05 06 07 08 09 10 11 2012
Slide 59: Equivalent Rate of Return (ERR)
Equivalent Rate of Return (ERR) £250m cash Option 1 Option 2 Buybacks Alternative investment £250m 4% x £622m = £25m £6400m £250m EPS enhancement Equivalent Rate of Return 4% 10%
Slide 60: Equivalent Rate of Return (ERR)
Equivalent Rate of Return (ERR) 11% 11% 10.1% ERR 10% 9.6% 10% 9.2% 8.7% 9% 9% 8.4% 8.0% 8% 8% 7% 7% £40 £42 £44 £46 £48 £50 Next Share Price
Slide 61: Rules of Buyback
Rules of Buyback 1. Only surplus cash 2. Healthy ERR 3. Maintain investment grade 4. Maintain dividend growth 5. Consistency 6. Confidence in core business
Slide 62: Outlook for Full Year Sales and Profit
Slide 63: Outlook for 2013/14 - Estimate
Outlook for 2013/14 - Estimate Full Year Brand Sales + 1% to + 4% Profit before tax £615m to £665m Variance to last year - 1% to + 7% Buyback & tax enhancement ~ 5% Growth in EPS + 4% to + 13% Dividend yield ~ 3% TSR (Assuming constant PE ratio) + 7% to + 16%
Slide 64: Next