NEXT plc · LSE:NXT
NEXT — H1 2010 Earnings Presentation
55 slides from NEXT's earnings presentation, July 2010
Slide 1: Half Year End Statement
Half Year End Statement July 2010
Slide 2: Income Statement
Income Statement £m 2010 2009 Revenue 1,587 1,512 + 5% Operating profit 226 200 + 13% Interest (13) (14) Profit before tax 213 186 + 15% Taxation (58) (54) Profit after tax 155 132 EPS 84.5p 68.2p + 24%
Slide 3: Balance Sheet
Balance Sheet £m 2010 2009 Fixed assets 588 600 Goodwill 47 55 Stocks 312 326 - 4% Debtors 601 573 Creditors (850) (822) Pension fund deficit (15) (56) Derivatives (32) (39) Buyback commitments (71) - Net debt (494) (514) Net assets 86 123
Slide 4: Balance Sheet: Directory Debtors
Balance Sheet £m 2010 2009 Fixed assets 588 600 Goodwill 47 55 Stocks 312 326 Debtors 601 573 + 5% Directory Debtors July 2010 July 2009 + 6% £460m £434m Sales Increase + 11%
Slide 5: Cash Flow
Cash Flow £m 2010 2009 Profit before tax 213 185 Depreciation / impairment 64 62 Capital expenditure (69) (46) Working capital / other 10 28 Dividends paid (85) (71) Tax paid (70) (44) Share buybacks (157) - Net cash flow (94) 114
Slide 6: Cash Flow: Capital Expenditure
Cash Flow £m 2010 2009 Profit before tax 213 185 Depreciation / impairment 64 62 Capital expenditure (69) (46) £140m £40m £99m £20m Warehouse / other Full Year Forecast £100m £79m Stores New Ext Refits New Ext Refits £53m £27m £20m £46m £7m £26m Jan 11(e) Jan 10
Slide 7: Retail
Retail
Slide 8: Retail: Sales Analysis
Retail : Sales Analysis £m 2010 2009 Revenue (Stat Sales) 1,026.2 1,004.3 + 2.2% Operating profit 122.9 112.3 + 9.4% % to revenue 12.0% 11.2% Sales Analysis 26 week comparative + 1.3% Timing of 53rd week + 0.9% Reported sales + 2.2%
Slide 9: Retail: Profit Analysis
Retail : Profit Analysis £m 2010 2009 Revenue (Stat Sales) 1,026.2 1,004.3 + 2.2% Operating profit 122.9 112.3 + 9.4% % to revenue 12.0% 11.2% Margin Movement Bought in gross margin + 0.7% Markdowns - 0.3% Achieved gross margin + 0.4%
Slide 10: Retail: Profit Analysis
Retail : Profit Analysis £m 2010 2009 Revenue (Stat Sales) 1,026.2 1,004.3 + 2.2% Operating profit 122.9 112.3 + 9.4% % to revenue 12.0% 11.2% Margin Movement Achieved gross margin + 0.4% Occupancy - 0.1% Branch payroll 0.0% Warehouse & distribution 0.0% Central overheads + 0.5%
Slide 11: Retail: Space Expansion
Retail : Space Expansion Stores Sq Ft (k) Jan 2010 517 5,763 New Mainline 3 22 New Home 5 63 Re-sites (3) - 19 Extensions (21) - 28 Closed (3) (11) SS10 Additions 5 121 New Store Performance Mainline Home Total Sales vs target Level + 31% + 12% Payback (months) 17 15 16 Net branch contribution 19% 2
Slide 12: Retail: Space Expansion
Retail : Space Expansion Stores Sq Ft (k) Jan 2010 517 5,763 SS10 Additions 5 121 AW10 Additions (e) 9 215 2010/11 Increase (e) 14 336
Slide 13: Directory
Directory
Slide 14: Directory
Directory £m 2010 2009 Revenue 422.8 386.2 + 9.5% Operating profit 101.3 83.3 + 21.5% % to revenue 24.0% 21.6% Directory Sales Directory Profit As a % of Brand 28% 42%
Slide 15: Directory: Sales Analysis
Directory : Sales Analysis £m 2010 2009 Revenue 422.8 386.2 + 9.5% Operating profit 101.3 83.3 + 21.5% % to revenue 24.0% 21.6% Sales Analysis Trading statement + 7.8% Timing of 53rd week + 1.7% Total Sales + 9.5%
Slide 16: Directory: Sales Analysis
Directory : Sales Analysis £m 2010 2009 Revenue 422.8 386.2 + 9.5% Operating profit 101.3 83.3 + 21.5% % to revenue 24.0% 21.6% Sales Drivers 2010 2009 Active customers 2.65m 2.39m + 11.2% Printed pages 2,026 1,998 + 1.4%
Slide 17: Directory: Profit Analysis
Directory : Profit Analysis £m 2010 2009 Revenue 422.8 386.2 + 9.5% Operating profit 101.3 83.3 + 21.5% % to revenue 24.0% 21.6% Margin Movement Bought in gross margin + 1.3% Markdowns - 0.1% Achieved gross margin + 1.2%
Slide 18: Directory: Profit Analysis
Directory : Profit Analysis £m 2010 2009 Revenue 422.8 386.2 + 9.5% Operating profit 101.3 83.3 + 21.5% % to revenue 24.0% 21.6% Margin Movement Achieved gross margin + 1.2% Bad debt reduction + 0.2% Service charge - 0.8% Warehouse & distribution + 1.0% Marketing & book creation + 0.4% Central overh
Slide 19: International
International £m 2010 2009 Revenue 30.8 30.0 + 2.5% Operating profit 2.3 3.1 - 26.6% % to revenue 7.5% 10.4% LFL sales - 5.8% Gross sales - 0.8% Impairment charge of £0.5m Full year profit estimate £6m vs £1m LY
Slide 20: International
International pice Wo Wie. WELCOME TO NEXt r new col Revenue £m* 2.3 0.6 « Profitability circa 20% ‘Excluding Eire
Slide 21: Sourcing
Sourcing £m 2010 2009 Intra-group sales 218.6 250.3 - 12.5% Operating profit 12.5 16.2 - 22.6% Increasingly competitive market Lowered commission rate 2010/11(e) profits circa £30m
Slide 22: Ventura
Ventura £m 2010 2009 Revenue 75.5 72.2 + 4.6% Operating profit 3.1 2.1 + 47.3% % to revenue 4.1% 2.9% Positive start to the year New clients added Growth in sales and profit for the full year 2010/11(e) profits circa £7m vs £6m LY
Slide 23: Lipsy
Lipsy £m 2010 2009 Revenue 18.9 11.4 + 66.3% Operating profit 0.3 (0.9) SS10 Year (e) Trading profit 1.1 3.6 Amortisation (0.4) (0.9) Deferred performance payment (0.4) (1.3) Operating profit 0.3 1.4
Slide 24: Lipsy: New Store Performance
Lipsy New Store Performance Number of stores* 17 Sales vs target + 5.1% Payback (months) 17 Net branch contribution 16% * Excluding Brent Cross
Slide 25: Other
Other £m 2010 2009 Property 1.3 0.1 Associates 0.5 0.5 Group / Options / FX (18.5) (17.2) Total (16.7) (16.6)
Slide 26: Full Year Sales and Profit Estimates
Full Year Sales and Profit Estimates
Slide 27: Brand Sales Outlook for 2nd Half
Brand Sales* Outlook for 2nd Half Total Brand (VAT ex) 0% to + 3% Total Retail (VAT ex) - 1.5% to + 1.5% LFL Retail (VAT ex)** - 4.5% to - 1.5% Directory (VAT ex) + 4% to + 8% * All sales shown against the comparative 26 week period last year ** Like for like sales excluding direct sales
Slide 28: Brand Sales Outlook for 2nd Half
Brand Sales Outlook for 2nd Half Total Brand (VAT ex)* 0% to + 3% FY PBT (e) £535m to £560m FY PBT growth (e) + 6% to + 11% EPS growth (e) 13% to 18% * On the comparative 26 week period last year
Slide 29: Outlook
Pricing Consumer Environment Opportunities for Growth Creating Financial Value Outlook
Slide 30: Outlook for Pricing 2011
Outlook for Pricing 2011 100 Cents/lb + 45% Cotton Price 2010 v 2009 75 50 Jan‟08 Aug‟09 Aug‟10
Slide 31: Outlook for Pricing 2011
Outlook for Pricing 2011 Increasing commodity prices Overseas wage inflation Capacity tightening New sources VAT increases Better negotiation Average price increase + 5% to + 8%
Slide 32: Sacrifice Margin or Sales?
Sacrifice Margin or Sales? The choice… an 8% price rise or c£60m profit hit
Slide 33: Sacrifice Margin or Sales?
Sacrifice Margin or Sales? The Thequestion… choice… Will an 8% price rise result in a 9% revenue fall ? i.e. 15% of units ?
Slide 34: Consumer Environment
Consumer Environment “Several years of low LFL growth”
Slide 35: Opportunities for Growth
Opportunities for Growth Opportunities for Growth Home
Slide 36: Home - A Significant Business
Home - A Significant Business Forecast Annual Turnover Home 19% £620m Home Growth - New Space and New Products
Slide 37: Home Stand Alone Statistics
Home Stand Alone Statistics As at July 2010 Company No. of stores 23 Average Avg. sales/sq. ft. £271 £444 Avg. rent/sq. ft.* £18 £31 NBC 18% Payback 16 mths * Measured on net trading sq. ft.
Slide 38: Expansion of Product Ranges
Expansion of Product Ranges £620m(e) GARDEN & OUTDOOR FURNITURE FITTED KITCHEN HOME FRAGRANCE VIDEO GAME SYSTEMS CHRISTMAS LARGE DOMESTIC APPLIANCES TOYS £363m FITTED BEDROOM FOODS & GIFTS FITTED BATHROOM HOME OFFICE SMALL DOMESTIC APPLIANCES SMALL DOMESTIC APPLIANCES TELECOMS DIGITAL PHOTO & ART TE
Slide 39: Home Relocation Example
Proposed stand alone MAT £3.5m To Let Sq. Ft. 13,000 Home Relocation Example Falkirk Retail Park Existing
Slide 40: Home Relocation Example
Home Relocation Example Falkirk Retail Park Sq. ft. Current Proposed % Increase Womenswear 3,500 4,700 36% Menswear inc. Sports 2,300 3,700 66% Childrenswear 1,800 3,000 59% Home 2,600 13,100 406% Total 10,200 24,500 141% Inc. Sq. Ft. Inc. MAT Inc. NBC 14.3k £3m 18%
Slide 41: Home Extension Example
Home Extension Example Lincoln Valentine Retail Park £405/Sq. ft. £679/Sq. ft. Store Appraisal Sq. ft. MAT NBC NBC % Existing Store 12,100 £8.2m £2.3m 28% Extended Store 27,400 £11.1m £2.8m 25% Incremental 15,300 £2.9m £453k 16%
Slide 42: Opportunities for Growth: Directory
Opportunities for Growth Directory
Slide 43: SS10 Recruitment
SS10 Recruitment 268k Cash 96k Credit Cash Credit 2010 2009 Recruitment taking a step forward
Slide 44: 1024 PIXELS
Lingerie (é Spe etal AVERY APPAIR Make the be “1024 PIXELS AuiluMn WiNeeR |} 2010 next }
Slide 45: Next website product page
NeXt Home / Womer Q Zoom D) Video Clothing Tailored Looks 4 Back To The Collection Camel Peacoat More Info Petite sizes 6 - 16 length 24"/61cm Regular sizes 6 - 20 length 26"/66cm Select Regular (738-279-X46) Select Size -- Faux Leather Trim Wide Leg Jeans More Info Read Customer Re’ Regular sizes 6
Slide 46: Next website home page
Home Quckshop MyAcount FrdAStore Heb ex 0 items - £0.00 Next es = en Ba Check Women Men Guts Boys Shoes Branded Sports Home & Furniture Gectricas Howers & Wine Offers —— Search By... Older Girls From £37 From £25 4 SIGN UP NEXT NEWSLETTER AND EXCLUSIVE OFFERS
Slide 47: Delivery Service
Retail and Directory Delivery Options Delivery Service
Slide 48: Retail and Directory Delivery Options
Retail and Directory Delivery Options 2007 2001 Order in store, Order from home, deliver to any address deliver to store
Slide 49: Retail and Directory Delivery Options
Retail and Directory Delivery Options 2nd Half Order from home, deliver to 2010 alternative address
Slide 50: Order cut off times for next day delivery
Order cut off times for next day delivery Oct 10 9pm 2010 7pm 2009 6pm 2008 5pm
Slide 51: Creating Financial Value
NeXt Ie Creating Financial Value
Slide 52: Three to Five Year Scenario
Three to Five Year Scenario …in a World of „New Normal‟ Compound Annual Growth Possible sales growth 2% to 5% Possible operating profit growth 2% to 7% Possible EPS enhancement from cash and buybacks 4% to 5% Possible EPS growth 6% to 12% Plus likely dividend yield* 3% Possible Total Shareholder Ret
Slide 53: Summary
Next Summary
Slide 54: Summary
Excellent first half Low LFL environment Avenues of growth Home & Directory Healthy returns possible
Slide 55: Half Year End Statement
Half Year End Statement July 2010