NEXT plc · LSE:NXT
NEXT — FY2012 Earnings Presentation
68 slides from NEXT's earnings presentation, January 2012
Slide 1: January 2012
January 2012
Slide 2: Income Statement (exc Ventura)
Income Statement (exc Ventura) £m 2012 2011 VAT exc VAT inc Revenue 3,441 3,298 + 4.3% + 5.6% Operating profit 598 567 + 5.6% Interest (28) (24) Profit before tax 570 543 + 5.0% Taxation (143) (150) Profit after tax 427 393 + 8.7% EPS (underlying) 255.4p 221.9p + 15.1% Dividend per share 90p 78p + 1
Slide 3: Long Term TSR
Long Term TSR Assuming dividend at 3% and constant PE ratio Dividend Yield 21% EPS Enhancement 18% Profit Growth 15% Sept 2010 12.5% 9% 3.5% 0% 2010/11 2011/12 2012/13 2013/14 2014/15
Slide 4: Balance Sheet
Balance Sheet Exc Ventura Inc Ventura £m 2012 2011 2011 Fixed assets 589 588 599 Goodwill 46 47 47 Stocks 372 368 368 Debtors 699 608 645 Creditors (877) (866) (906) Pension surplus 35 56 56 Derivatives 21 2 2 Buyback / ESOT commitment (87) * (49) (49) Net debt (575) (530) (530) Net assets 223 224 2
Slide 5: Balance Sheet
Balance Sheet £m 2012 2011 Fixed assets 589 588 Goodwill 46 47 Stocks 372 368 +1% Debtors 699 608 +15% Creditors (877) Directory Debtors (866) Pension surplus 35 Jan 2012 Jan 56 2011 Derivatives 21 + 15% 2 Buyback / ESOT commitment £574m (87) £500m(49) Net debt (575) Credit Sales Increase(530) Net a
Slide 6: Net Debt and Cash Flow
Net Debt and Cash Flow 700 Jan 2012 600 Jan 2011 575 530 500 Operational Ventura ESOT* Share buybacks £204m £63m £21m £291m 400 326 284 300 263 * ESOT – step change in shares held £m
Slide 7: Cash Flow
Cash Flow £m 2012 2011 Profit before tax 582 551 Depreciation / impairment 128 130 Capital expenditure (126) (144) Ventura sale 63 - Working capital / other (122) (133) Pension - (40) Dividends paid (135) (130) Tax paid (144) (142) Share buybacks (291) (222) Net cash flow (45) (130)
Slide 8: Cash Flow
Cash Flow £m 2012 2011 Profit before tax 582 551 Depreciation / impairment 128 130 Capital expenditure (126) (144) Ventura sale New stores 2013(e) 63 2012 - 2011 Working capital / other (122) (133) Extensions Pension - (40) Refits 56 37 Dividends paid (135) (130) Warehouse Tax paid 24 115 126 62 32
Slide 9: Shares in issue
Shares in issue Gross Net of ESOT Jan 2011 181m 175m Jan 2012 169m 163m Year on year - 6.9% - 6.7% Jan 2013(e) 162m 156m Year on year - 4.2% - 4.1%
Slide 10: Retail
Retail
Slide 11: Retail: Sales Analysis
Retail : Sales Analysis £m 2012 2011 Revenue (statutory sales) 2,191.4 2,222.1 - 1.4% Operating profit 323.7 328.8 Sales from new space Average space growth 6.6% Sales growth from net space 4.3% Return on space 65%
Slide 12: Retail Space Expansion
Retail Space Expansion Stores Sq. Ft. 000’s Jan 2011 525 6,073 New 12 177 Closed (15) (83) Re-sites (9) - 71 Extensions (18) - 34 Home stand alone 14 203 Jan 2012 536 6,475 + 6.6%
Slide 13: Retail Space Expansion
Retail Space Expansion New store performance Sales Payback Store v Target (months) profit Mainline + 8% 18 22% Home + 1% 23 19% Total + 6% 20 21%
Slide 14: Retail: Profit Analysis
Retail : Profit Analysis £m 2012 2011 Revenue (statutory sales) 2,191.4 2,222.1 - 1.4% Operating profit 323.7 328.8 - 1.6% % to revenue 14.8% 14.8% Margin Movement Bought in gross margin + 0.3% Markdowns + 0.4% Branch payroll + 0.3% Occupancy – 0.4% Warehouse and distribution – 0.3% Central overhead
Slide 15: Directory
Directory
Slide 16: Directory: Sales Analysis
Directory : Sales Analysis £m 2012 2011 Revenue (statutory sales) 1,088.7 935.5 + 16.4% Operating profit 262.6 221.9 Sales analysis Vat Exc UK full price + 8.4% International online + 2.4% UK offers tab + 2.5% Increased end of season sale + 3.1% Total sales + 16.4%
Slide 17: Directory: Sales Analysis
Directory : Sales Analysis £m 2012 2011 Revenue (statutory sales) 1,088.7 935.5 + 16.4% Operating profit 262.6 221.9 Sales drivers Contribution to customer growth Credit 2,557 2,464 + 3.4% Cash 438 267 + 6.2% Active customers (000’s) 2,995 2,731 + 9.6% Printed pages 4,180 4,084 + 2%
Slide 18: Directory: Profit Analysis
Directory : Profit Analysis £m 2012 2011 Revenue (statutory sales) 1,088.7 935.5 + 16.4% Operating profit 262.6 221.9 + 18.3% % to revenue 24.1% 23.7% Margin movement Bought in gross margin + 0.6% Markdowns + 0.2% Bad debt reduction + 0.4% Service charge – 0.9% Warehouse & distribution – 0.7% Market
Slide 19: Retail Overseas
Retail Overseas £m 2012 2011 Wholly owned 17.6 17.4 + 1% Franchise income 58.7 49.9 + 18% Total revenue 76.3 67.3 + 13% Wholly owned 17.6 17.4 + 1% Partner sales 141.4 129.4 + 9% Retail sales 159.0 146.8 + 8% Operating profit 7.9 5.8 + 37%
Slide 20: Sourcing
Sourcing £m 2012 2011 Intra-group sales 511.5 505.7 + 1% Operating profit 21.1 26.7 - 21% Commission £2.3m lower Stock write-off £3m Profit forecast 2012/13(e) £25m
Slide 21: Other
Other £m 2012 2011 Lipsy 1.3 1.0 Property 5.6 2.3 Unrealised FX (1.1) 2.2 Associates 1.5 1.8 Pension credit 6.7 1.2 Group / share incentives (30.6) (24.9) (16.6) (16.4)
Slide 22: The Year Ahead
The Year Ahead
Slide 23: Consumer inflation, Eurozone crisis, VAT effect
Consumer inflation Eurozone ‘crisis’ VAT effect Credit squeeze Stable input prices Employment stalling?
Slide 24: Consumer inflation
Consumer inflation 5% Inflation Bank of England, Mar’12 4% Wage Inflation ONS, Mar’12 3% Bank of England Central Estimate 2% Jan’12 1% 2009 2010 2011 2012(e) 2013(e) 2014(e)
Slide 25: Employment stalling?
Employment stalling? Employment Credit squeeze stalling? UK 16+ Employment ONS, Mar 12 29.4m 29.2m 29.0m 28.8m Jan’10 Apr’11 Jan’12
Slide 26: Managing for a Challenging Season
Managing for a Challenging Season 1. Set Realistic Targets SS12 Total Retail sales - 3% to 0% 2. Control Costs 3. Grow Retail Space Sales from new space circa 4% 4. Develop Directory SS12 Directory sales + 9% to + 12% 5. Share Buybacks SS12 Brand sales + 1% to + 4%
Slide 27: Grow Retail Space
Grow Retail Space Jan 12 Jan 13(e) Jan 14(e) No. of projects 53 30 20 30 Sq. ft. (000s) 402 300 300 450 Annualised turnover £103m £70m £65m £95m Home £48m £30m Retail £55m £40m
Slide 28: Profitable Growth
Profitable Growth Profitable Portfolio Example Great Deals Number of stores 42 Shopfit cost £7.2m NBC % 21% Landlord contribution £3.5m Payback (months) 20 Rent per sq. ft. £25
Slide 29: UK Housing Transactions
UK Housing Transactions Source: HM Treasury Databank £640m 1.8m 3% 1.6m 1.4m Brand Home Sales 1.2m £220m Next Home 1.0m Market Share 1% 0.8m 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
Slide 30: Home: improving the ranges
Home – improving the ranges More newness Better quality More design Ph1 Ph3 SS12 45% 20% SS11 35% 12%
Slide 31: Shoreham
Shoreham
Slide 32: Shoreham-type Wish List
Shoreham-type Wish List i. “ees » SS, Fe *
Slide 33: Customers See One Brand
Customers See One Brand Directory 59% £440m Returns of all returns Directory 20% £350m Collections of all parcels Directory Recruitment 20% through store
Slide 34: Customers See One Brand
Customers See One Brand Retail store portfolio Profitability % of turnover > 20% 73% > 15% 90% > 10% 97% > 5% 99% > 0% 99.7%
Slide 35: Develop Directory
Develop Directory UK service improvements International expansion Infrastructure
Slide 36: UK service improvements
UK service improvements Within 24 months 80% of the UK Sunday Evening 10pm Same Day Deliveries Deliveries Cutoff Deliveries
Slide 37: International Turnover
International Turnover £50m Profit ~20% £33m £10m £5m 2009/10 2010/11 2011/12 2012/13(e)
Slide 38: International Delivery
International Delivery >
Slide 39: Warehousing & Distribution
Warehousing & Distribution Directory Delivery Network 5 warehouses 23 depots 536 stores 7,500+ couriers
Slide 40: Warehousing & Distribution
_ Warehousing & Distribution Ye : Pe IS a eT 5 Palletised
Slide 41: Warehousing: Boxed & Hanging
Warehousing : Boxed & Hanging High bay 80% stock Forward picking 20% stock 40% floor 60% floor
Slide 42: Optimised boxed picking process
Optimised Pick process boxed picking process £25 million AUTO AUTO AUTO AUTO SORTER SORTER SORTER SORTER Peak pick capacity 800k units/day
Slide 43: Warehousing: Returns
Warehousing : Returns 6-7 day turnaround
Slide 44: Warehouse capacity
Warehouse capacity Boxed Hanging Palletised Returns Total Operating sq. ft. 2.3m 1.2m 2.0m 0.3m 5.8m Storage (units) 45m 6m 27m - 78m Investment £152m £59m £51m £8m £270m % of capacity 74% 58% 43% 76%
Slide 45: Warehouse Capex 1995-2020(e)
Warehouse Capex 1995-2020(e) £60m £50m £40m £30m £20m £10m 0 1995 2000 2005 2010 2015(e) 2020(e)
Slide 46: Outlook for full year sales and profit
Outlook for full year sales and profit
Slide 47: Profit Scenarios
Profit Scenarios 2011/12 £570m If Brand Sales + 2.5% 2012/13 £585m RETAIL LFLs - £43m COST INCREASES - £36m COST SAVINGS £28m RETAIL SPACE £32m DIRECTORY £34m
Slide 48: Profit Scenarios
Profit Scenarios 2011/12 £570m Brand Sales + 1% to + 4% 2012/13 2012/13 £560m £610m
Slide 49: Brand Outlook for 2012/13 - Estimate
Brand Outlook for 2012/13 - Estimate Full Year Brand Sales + 1% to + 4% Profit before tax £560m to £610m Variance to last year - 2% to + 7% Buyback enhancement + 5% Growth in EPS + 3% to + 12% Dividend yield + 3% TSR (Assuming constant PE ratio) + 6% to + 15%
Slide 50: Long Term TSR
Long Term TSR Assuming dividend at 3% and constant PE ratio Dividend Yield 21% EPS Enhancement 18% 15% Profit Growth 15% 9% 6% 0% 2010/11 2011/12 2012/13 2013/14 2014/15
Slide 51: In summary
In summary Another challenging year Opportunities for growth Further buybacks Continued EPS growth
Slide 52: January 2012
January 2012
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