Slide 1: Le a4 ioe "ae EE VT
Le a4 ioe "ae EE VT
Slide 2: Income Statement
Income Statement Brand £m July 2018 July 2017 Full Price Total sales 1,986 1,914 + 3.8% + 4.5% Operating profit 330 325 + 1.6% Interest (19) (16) - £3m Profit before tax 311 309 + 0.5% Taxation (57) (57) Profit after tax 254 252 + 0.8% EPS (underlying) 185.6p 176.9p + 4.9% Ordinary dividends per sha
Slide 3: Cash Flow
Cash Flow £m July 2018 July 2017 Profit before tax 311 309 Depreciation / disposals 62 63 Capital expenditure (58) (54) Working capital / other (75) (14) Tax paid (69) (48) ESOT (31) (25) Cash flow before distribution 140 231
Slide 4: Cash Flow: capital expenditure
Cash Flow £m July 2018 July 2017 Capital expenditure (58) (54) Profit before tax 311 309 Jan 2019(e) Jan 2018 Depreciation / disposals 62 £130m 63 £104m Warehouse Head Office and Systems £40m Stores £11m £12m £15m £78m £78m Space £66m Space £56m Cosmetic Cosmetic refits £12m refits £22m £141/sq.ft.
Slide 5: Cash Flow: participation of capex
Cash Flow £m July 2018 July 2017 Capital expenditure (58) (54) Participation of capex 100% Warehouse 80% Head Office & systems 60% Retail stores 40% 20% 0% Jan Jan Jan Jan Jan Jan Jan Jan Jan 2007 2009 2011 2013 2015 2017 2019 2021 2023
Slide 6: Cash Flow: capex
Cash Flow £m July 2018 July 2017 Capital expenditure (58) (54) £ capex Warehouse £200m Head Office & systems Retail stores £150m Avg. £120m/pa £100m £50m £0m Jan Jan Jan Jan Jan Jan Jan Jan Jan 2007 2009 2011 2013 2015 2017 2019 2021 2023
Slide 7: Cash Flow
Cash Flow £m July 2018 July 2017 Profit before tax 311 309 Depreciation / disposals 62 63 Capital expenditure (58) (54) Working capital / other (75) (14) Tax paid (69) (48) ESOT (31) (25) Special dividends / buybacks (275) (64) Net cash flow (135) 167
Slide 8: Balance Sheet
Balance Sheet £m July 2018 July 2017 Fixed assets and investments 561 572 Goodwill and intangibles 43 43 Stock 543 493 + 10.1% Debtors 1,282 1,126 + £156m Creditors / derivatives (901) (964) Dividends payableOnline July 2018 (142) + 15% July 2017 (213) + £145m debtors £1,142m £997m Pension surplus 1
Slide 9: Balance Sheet
Balance Sheet £m July 2018 July 2017 Fixed assets and investments 561 572 Goodwill and intangibles 43 43 Stock 543 493 Debtors 1,282 1,126 Creditors / derivatives (901) (964) Dividends payable (142) (213) Pension surplus 163 65 Net debt (1,137) (692) Net assets 412 430
Slide 10: Full Year Debt and Cash Flow Jan 2018 to Jan 2019(e)
Full Year Debt and Cash Flow Jan 2018 to Jan 2019(e) 1600 1400 Jan 2019 1200 Jan 2018 Central 1.1bn(e) 1.0bn Guidance 1000 Operational 977m(e) (e) Online debt 300 90(e) 800 Buybacks 275(e 600 ) 400 200 £m
Slide 11: Funding Requirements
Funding Requirements 1600 1.5bn Peak 2019 1400 Bank facility 1.3bn(e) 2020 1200 625m 2022 1000 Jan 2019 800 1.1bn(e) 2021 Bonds 600 875m 2026 400 200 2028 £m
Slide 12: Divisional Analysis
Divisional Analysis
Slide 13: Divisional Analysis
Divisional Analysis Profit £m July 2017 Retail 90 -5 Change in cost allocation Online 217 Other activities 18 Group EBIT 325
Slide 14: Divisional Analysis
Divisional Analysis Profit £m July 2017 Retail 95 Online 212 - 77 Separate the finance business Finance Other activities 18 Group EBIT 325
Slide 15: Divisional Analysis
Divisional Analysis Profit £m July 2017 Retail 95 Online 135 Finance 77 - 18 Transfer of interest Other activities 18 Group EBIT 325
Slide 16: Divisional Analysis
Divisional Analysis Profit £m July 2018 July 2017 Retail 73 95 Online 163 135 Finance 58 59 Other activities 36 36 and interest recharge Group EBIT 330 325
Slide 17: Divisional Analysis
Divisional Analysis Profit £m July 2018 Finance Other 6% 2% Other Retail 73 11% Retail 22% Online 163 Finance Retail 18% Profit Sales 47% Finance 58 Online Online 45% Other activities 36 49% and interest recharge Group EBIT 330
Slide 18: Retail
Retail Dudley Merry Hill
Slide 19: Retail: Sales Analysis
Retail : Sales Analysis £m July 2018 July 2017 Full Price Total sales 925 993 - 6.9% - 5.3% Operating profit 73 95 Restated Sq. ft. 000’s Total Sales from new space + 0.7% Jan 2018 8,271 New mainline 154 Concessions 64 218
Slide 20: Retail: Sales Analysis
Retail : Sales Analysis £m July 2018 July 2017 Full Price Total sales 925 993 - 6.9% - 5.3% Operating profit 73 95 Restated Sq. ft. 000’s Total Sales from new space + 0.7% Jan 2018 8,271 New mainline 218 Mainline closures (111) Clearance closures (65) Jan 2019 8,313
Slide 21: Retail: Sales Analysis
Retail : Sales Analysis £m July 2018 July 2017 Full Price Total sales 925 993 - 6.9% - 5.3% Operating profit 73 95 Restated Sq. ft. 000’s No. of stores NBC £ NBC % Closed (176) 22 £5.4m 14% Mainline closures (111) 15 £3.2m 13% Clearance closures (65) 7 £2.2m 15%
Slide 22: Retail: Sales Analysis, Transfer of trade
Retail : Sales Analysis Transfer of trade Chester Sales Pre Post Greyhound £4m £0m Others £18m £19m COLISEUM Total sales £22m £19m Transfer of trade >25% GREYHOUND EASTGATE Profit £3.9m £4m BROUGHTON PARK
Slide 23: Retail: Sales Analysis, Transfer of trade
Retail : Sales Analysis Transfer of trade Dumfries Pre Post Sales £1.9m £0m 0% DUMFRIES Transfer of trade 24 miles GRETNA GREEN
Slide 24: Retail: Sales Analysis, Lease Renewals
Retail : Sales Analysis 2018/19(e) Lease Renewals Before After Gross rent (33 stores) £10.0m £7.2m - 28% Concession income - - £0.4m £10.0m £6.8m - 32% Net rent to sales 9.1% 6.2% Average lease length Average profit 5 years 26%
Slide 25: Retail: Profit Analysis
Retail : Profit Analysis £m July 2018 July 2017 Full Price Total sales 925 993 - 6.9% - 5.3% Operating profit 73 95 - 23.0% % to sales 7.9% 9.6% Margin movement Bought-in gross margin + 0.2% Markdown + 1.1% Sale stock - 23% Achieved gross margin + 1.3% Markdown sales - 19%
Slide 26: Retail: Profit Analysis
Retail : Profit Analysis £m July 2018 July 2017 Full Price Total sales 925 993 - 6.9% - 5.3% Operating profit 73 95 - 23.0% % to sales 7.9% 9.6% Achieved gross margin + 1.3% Store payroll + 0.1% Store occupancy - 1.7% Warehousing & distribution - 0.5% Central costs - 0.9% Margin movement - 1.7%
Slide 27: Online
Online
Slide 28: Online: Sales Analysis
Online : Sales Analysis £m July 2018 July 2017 Full Price (Excl. Interest) Total sales 892 764 + 16.8% + 16.0% Operating profit 163 135Restated Full price sales analysis Increase on last year Q2 NEXT Brand UK + £47m + 11% + 7% LABEL + £30m + 24% + 21% UK total + £77m + 14% + 10%
Slide 29: Online: Sales Analysis
Online : Sales Analysis £m July 2018 July 2017 Full Price (Excl. Interest) Total sales 892 764 + 16.8% + 16.0% Operating profit 163 135 Full price sales analysis Increase on last year UK total + £77m + 14% Overseas + £32m + 22% Total + £109m + 16%
Slide 30: Online: Sales Analysis
Online : Sales Analysis £m July 2018 July 2017 Full Price (Excl. Interest) Total sales 892 764 + 16.8% + 16.0% Operating profit 163 135 Full price sales analysis Increase on last year Avg. customers UK total + £77m + 14% + 3% 4.1m Constant Currency Overseas + £32m + 19% + 19% 1.1m Total + £109m + 15
Slide 31: Online: Sales Analysis
Online : Sales Analysis £m July 2018 July 2017 Full Price (Excl. Interest) Total sales 892 764 + 16.8% + 16.0% Operating profit 163 135 Full price sales analysis Increase on last year Avg. customers UK credit + £59m + 13% + 1% UK cash + £18m + 19% + 6% UK total + £77m + 14% + 3%
Slide 32: Online: Profit Analysis
Online : Profit Analysis £m July 2018 July 2017 Full Price (Excl. Interest) Total sales 892 764 + 16.8% + 16.0% Operating profit 163 135 + 21.2% % to sales 18.3% 17.6% Margin movement Bought-in gross margin - 1.1% Markdown + 0.9% Sale stock - 12% Achieved gross margin - 0.2% Markdown sales - 6%
Slide 33: Online: Profit Analysis
Online : Profit Analysis £m July 2018 July 2017 Total sales 892 764 + 16.8% Operating profit 163 135 + 21.2% % to sales 18.3% 17.6% Achieved gross margin - 0.2% Warehouse & distribution - 0.9% Catalogues & photography + 1.4% Full Year Marketing & systems + 0.5% - 0.3% Central costs - 0.1% Margin mov
Slide 34: Online: Focus on…
Online Focus on… • Digital marketing and the website experience • LABEL • Overseas • Warehousing, infrastructure and capex
Slide 35: Digital Marketing
Digital Marketing Full Year 2018(e) UK digital marketing £28m + 125% + £16m Direct mail, TV & other offline £11m - 51% H1 IRR Personnel £11m + 19% >75% Overseas marketing £8m + 17% Total £58m + 13% + £7m Catalogue & creation savings (£11m) Net saving (£4m)
Slide 36: Digital Marketing
Digital Marketing Existing customers Incremental? £840k 500 400 300 200 New customers 100 £210k £k Campaign Cash spend - 100 £1m £200k - 200 SEASON 0 SEASON 1 SEASON 2 SEASON 3 SEASON 4 - 300
Slide 37: Digital Marketing
Digital Marketing 500 400 IRR(NetCashFlow,TimePeriod)=80% 300 200 100 10% £85k £70k £55k £85k £40k £k 40% Campaign - 100 spend £200k - 200 SEASON 0 SEASON 1 SEASON 2 SEASON 3 SEASON 4 - 300
Slide 38: Next Unlimited
Next Unlimited YEAR 1 85% T H E A N N UA L D E L I V E RY PA S S >5% RENEWAL RATE 380,000 customers £ orders £ per order Returns Sales Profit 380,000 customers
Slide 39: Website Experience
Website Experience Next
Slide 40: Website Experience
Website Experience Q3 2017 Q4 2017 Q1 2018 Q2 2018 Product personalisation Fast registration and New search banners - UK Personalised promotions checkout Targeted marketing No order nextpay account Find in store International mobile now 24 countries Save for later – International New search banners
Slide 41: Website Experience
Website Experience next3Step - credit New spreads design Variable next3Step RoW website A.I. search engine Personalised search Guest checkout Enhanced payments - International Personalised home pages A.I. search – International Mobile/tablet redesign New Sale site Search for similar Mobile/tablet re
Slide 42: Online: Focus on…
Online Focus on… • Digital marketing and the website experience • LABEL • Overseas • Warehousing, infrastructure and capex
Slide 43: LABEL
LABEL + 24% Total sales £370m Net profitability + 39% £298m 16% + 15% + 24% £215m + 24% £187m £151m Jan Jan Jan Jan Jan 2015 2016 2017 2018 2019(e) Lipsy sales added into LABEL in 2015
Slide 44: LABEL
LABEL + 24% £370m • New brands • More choice within brands H1 Sales Growth • More Commission brands + 30% + 19% Jan Commission Wholesale 2019(e)
Slide 45: Online: Focus on…
Online Focus on… • Digital marketing and the website experience • LABEL • Overseas • Warehousing, infrastructure and capex
Slide 46: NEXT Overseas Growth Jan 2015 to Jan 2019(e)
NEXT Overseas Growth Jan 2015 to Jan 2019(e) Net profitability Total sales £355m LY 22% £295m LY provision release - 1.5% Product mix - 1.0% £234m China closure - 0.5% £197m Central overheads - 3.0% £163m TY 16% Jan Jan Jan Jan Jan 2015 2016 2017 2018 2019(e)
Slide 47: NEXT Overseas Growth Jan 2015 to Jan 2019(e)
NEXT Overseas Growth Jan 2015 to Jan 2019(e) At constant currency + 20% Total sales + 10% £355m Net profitability + 19% £295m 16% + 41% £234m + 67% £197m £163m Jan Jan Jan Jan Jan 2015 2016 2017 2018 2019(e)
Slide 48: NEXT Overseas Growth Jan 2015 to Jan 2019(e)
NEXT Overseas Growth Jan 2015 to Jan 2019(e) At constant currency + 20% 24 mobile enabled countries + 19% Active 90% of sales Total sales Active customers customers 1.1m Jan Jan Jan Jan Jan 2015 2016 2017 2018 2019(e)
Slide 49: Online: Focus on…
Online Focus on… • Digital marketing and the website experience • LABEL • Overseas • Warehousing, infrastructure and capex
Slide 50: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex 68% 2% 30% Stock holding
Slide 51: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex August 2016
Slide 52: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex August 2018 48 hrs Nov 2018 4 days 4% Best sellers ringfenced T H E N E X T P L A T F O R M
Slide 53: Warehousing, Infrastructure and Capex: 2019 Trial
Warehousing, Infrastructure and Capex 2019 Trial THE NEXT PL ATF ORM
Slide 54: Warehousing, Infrastructure and Capex: 2019 Trial
Warehousing, Infrastructure and Capex 2019 Trial THE NEXT PL ATF ORM
Slide 55: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex THE NEXT PL ATF ORM 5m customers £ 1 .1 b n f i n a n ce b u s i n e ss
Slide 56: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex
Slide 57: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex Reserve 80% Forward 20%
Slide 58: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex Elmsall & Dearne Valley Stadium Doncaster & Dearne Valley Boxed Hanging Palletised RETURNS CENTRE
Slide 59: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex Current 4 year Capacity utilisation capex plan growth Reserve 83% + 43% * Boxed £132m Forward 99% + 123% Reserve 76% + 55% * Hanging £36m Forward 90% + 28% * Reserve 74% + 35% * Palletised £19m Forward 99% + 32% * Other £13m Total £200m * Brand growth
Slide 60: Warehousing, Infrastructure and Capex
Warehousing, Infrastructure and Capex 4 year capex plan Boxed £132m Hanging £36m + £1.5bn sales capacity Palletised £19m Total £200m
Slide 61: Cost of Capital of Warehouse Investment
Cost of Capital of Warehouse Investment Capex Sales/pa £200m £1.5bn £0.13 £1 Twelve Year Depreciation £0.13 £12 1.1% Current 0.8%
Slide 62: Cost of Capital of Warehouse Investment
Cost of Capital of Warehouse Investment Capex Sales/pa £200m £1.5bn £0.13 £1 Average Cash Margin 19% £0.13 £0.19 Profit/pa IRR= >75%
Slide 63: NEXT Finance
NEXT Finance
Slide 64: NEXT Finance: Full Year Sales & Profit Analysis(e)
NEXT Finance : Full Year Sales & Profit Analysis(e) £m Jan 2019(e) Jan 2018 Interest income 252 223 + 12.8% Bad debt (51) (37) Overheads (38) (33) Cost of funding (40) (41) Profit 123 112
Slide 65: NEXT Finance: Full Year Sales & Profit Analysis(e)
NEXT Finance : Full Year Sales & Profit Analysis(e) £m Jan 2019(e) Jan 2018 Interest income 252 223 + 12.8% Bad debt (51) (37) Average balance Overheads + 12.6% (e) (38) (33) Credit sales Cost of funding + 8.0% (e) (40) (41) Profit Payment days + 3.0% (e) 123 112
Slide 66: NEXT Finance: Full Year Sales & Profit Analysis(e)
NEXT Finance : Full Year Sales & Profit Analysis(e) £m Jan 2019(e) Jan 2018 Interest income 252 223 + 12.8% Bad debt (51) (37) Jan 2018 Jul 2018 UK active credit customers + 1.3% Overheads (38) (33) + 0.6% Cost 0% of funding (40) (41) Profit - 1% 123 Jan 2017 112 next3step - 2% - 3% Jan 2016 - 0.8%
Slide 67: NEXT Finance: Full Year Sales & Profit Analysis(e)
NEXT Finance : Full Year Sales & Profit Analysis(e) £m Jan 2019(e) Jan 2018 Interest income 252 223 + 12.8% Bad debt (51) (37) + 36.0% Overheads (38) (33) Increase + £14m Cost of funding (40) (41) Balance growth + £5m Profit 123 112 Bad debt rate + £9m
Slide 68: NEXT Finance: Full Year Sales & Profit Analysis(e)
NEXT Finance : Full Year Sales & Profit Analysis(e) £m Jan 2019(e) Jan 2018 Interest income 252 223 + 12.8% Bad debt (51) (37) + 36.0% Bad debt as a % of average debt balance 9% 8% 8.5% 7% 7.9% 6% 6.6% 5% 4% 4.5% 4.4% 4.3% 3% 3.7% 3.4% 3.7% 3.3% 3.3% 2% 1% 0% Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan
Slide 69: NEXT Finance: Full Year Sales & Profit Analysis(e)
NEXT Finance : Full Year Sales & Profit Analysis(e) £m Jan 2019(e) Jan 2018 Interest income 252 223 + 12.8% Bad debt (51) (37) + 36.0% Overheads (38) (33) Cost of funding (40) (41) - 0.3% Profit 123 112 Average balance £1.1bn £1.0bn Group rate 3.5% 4.0%
Slide 70: NEXT Finance: Full Year Sales & Profit Analysis(e)
NEXT Finance : Full Year Sales & Profit Analysis(e) £m Jan 2019(e) Jan 2018 Interest income 252 223 + 12.8% Bad debt (51) (37) + 36.0% Overheads (38) (33) Cost of funding (40) (41) Profit 123 112 + 9.7% Average balance £1.1bn £1.0bn Return on capital employed 10.7% 11.0%
Slide 71: Outlook
Outlook Economic Clothing Structural Environment Environment Change
Slide 72: Economic Environment
Economic Environment UK Earnings Growth Jan 2017 to Jul 2018 Clothing Environment Structural Change + 2.5% + 2.0% + 1.5% Total real weekly pay + 1.0% + 0.5% 0% Real earnings - 0.5% - 1.0% Jan Jul Jan Jul 2017 2017 2018 2018 Source: ONS EARN01 Average Weekly Earnings (11th September 2018) and ONS EMP
Slide 73: Economic Environment
Economic Environment Total UK Mortgage Balance (Fixed vs. Variable) Total real weekly pay Clothing Structural Environment Change 100% Real earnings 80% Variable 36 60% 64 40% Fixed 73 20% 27 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q2 0% 2008 2009 2010 2011 2012 2013 2014 2015
Slide 74: Clothing Environment
Clothing Environment Economic Exchange Rate Index and Clothing Inflation Structural Environment Change 90 5% UK Clothing and Footwear Inflation 4% 85 3% January 2005 = 100 2% 80 1% 0% 75 GBP Effective - 1% Exchange Rate Index 70 - 2% Jan Jul Jan Jul Jan Jul 2016 2016 2017 2017 2018 2018 Source: BoE,
Slide 75: Clothing Environment
Clothing Environment Economic Environment Costing Rates Structural Change £/USD Strength of £ Average selling Buying season costing rate vs previous year price variance Spring & Summer 2018 $1.26 - 9% + 2% Autumn & Winter 2018 $1.32 + 5% ~ 0% Spring & Summer 2019 $1.35 + 7% ~ 0% Autumn & Winter 2019
Slide 76: Clothing Environment
Clothing Environment Economic Environment Sector Growth 2017 vs 2016 Structural Change + 13.3% + 12.9% + 10.8% On the High Street Entertainment Pubs Restaurant Women’s Clothing Men’s Clothing - 0.6% - 1.0% Source: Average of monthly Barclaycard UK spend data from July 2016 to August 2017
Slide 77: Clothing Environment
Clothing Environment Economic Environment Sector Growth 2018 vs 2017 Structural Change Sector growth 2017 vs 2016 + 10.5% + 9.0% + 9.5% On the High Street + 5.5% Entertainment Pubs Restaurant Women’s Clothing Men’s Clothing - 2.8% Source: Average of monthly Barclaycard UK spend data from July 2016 t
Slide 78: Structural Change
Structural Change Economic Environment Clothing Environment Full Price Sales Movement 2016/17 to 2018/19(e) + 15.5% + 16.0% 15% Online 10% + 7.8% + 3.9% 5% + 2.4% 0% Retail - 5% - 4.0% - 5.2% - 6.4% - 5.3% - 10% - 7.7% H1 H2 H1 H2 H1 H2(e) - 15% 2016 vs 2015 2017 vs 2016 2018vs 2017 Excluding Intere
Slide 79: Structural Change
Structural Change Economic Environment Clothing Environment Full Price Sales Movement 2018/19(e) + 3% 6% 2018/19(e) 4% 2% 0% H2 + 1.7% H2 (e) - 2% 2017/18 ~ +1.5% - 4% Q1 Q2 Q3 Q4 Including Interest Income
Slide 80: Central Guidance | Full Price Sales 2018/19(e)
Central Guidance | Full Price Sales 2018/19(e) Retail Online Brand - £112m + £219m + £107m - 6% + 13% + 3%
Slide 81: Central Guidance | 2018/19(e)
Central Guidance | 2018/19(e) Full year Brand full price sales + 3% Profit performance Margin before FP Sales overheads 2017/18 - £112m £62m Retail lost profit 55% £726m - 7p Next UK + £87m online £42m 48% + £57m Overseas £14m + £75m LABEL £19m Cost savings £43m 2018/19(e) £55m Cost increases £727m
Slide 82: Central Guidance | 2018/19(e)
Central Guidance | 2018/19(e) Full year Brand full price sales + 3.0% Profit before tax + 0.1% £727m Growth in EPS + 5.0% 437.7p Ordinary dividend yield* + 3.4% TSR underlying (at constant PE ratio) + 8.4% * Based on a share price of £48.95, the average share price during February 2018
Slide 83: Brexit? Retail in an Online World, Online Platform, Capital Discipline
J U L Y 2 0 1 8 Brexit? Retail in an Online World NEXT’s Online Platform Capital Discipline and Cash Generation Direction of Travel
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