Next Plc · LSE:NXT

Next — FY2014 Earnings Presentation

57 slides from Next's earnings presentation, January 2014

  1. Slide 1: Next January 2014

  2. Slide 2: Income Statement

    Income Statement £m (underlying) 2014 2013 Full Price Revenue 3,740 3,548 + 5.4% + 6.7% Operating profit 723 650 + 11.2% Interest (28) (28) Profit before tax 695 622 Taxation (142) (149) Profit after tax 553 473 + 16.9% EPS (underlying) 366.1p 297.7p + 23% Dividend per share 129p 105p + 23%

  3. Slide 3: Cash Flow

    Cash Flow £m 2014 2013 Profit before tax (underlying) 695 622 Depreciation / disposals 134 127 Capital expenditure (105) (82) Working capital / other (80) 33 Dividends paid (165) (148) Tax paid (152) (148) ESOT (55) (80) Share buybacks (296) (242) Net cash flow (24) 82

  4. Slide 4: Cash Flow

    Cash Flow £m 2014 2013 Profit before tax (underlying) 695 622 Depreciation / disposals 134 127 Capital expenditure (105) (82) Working capital / other Jan 2015(e) (80) 33 Full Yearpaid Dividends £115m £105m (165) £82m (148) Tax paid £38m (152) £22m (148) Warehouse & other ESOT £5m (55) £13m (80) Refu

  5. Slide 5: Cash Flow

    Cash Flow £m 2014 2013 Profit before tax (underlying) 695 622 Depreciation / disposals 134 127 Capital expenditure (105) (82) Working capital / other Jan 2015(e) (80) 33 Full Yearpaid Dividends £115m (165) (148) HQ Tax paid £38m (152) £6m (148) Warehouse & other Warehouse ESOT £5m (55) Systems £18m(

  6. Slide 6: Balance Sheet

    Balance Sheet £m 2014 2013 Fixed assets 517 545 Goodwill and intangibles 44 45 Stock 386 332 Debtors 808 718 Creditors (869) (859) Dividend payable (74) - Pension surplus 70 66 Derivatives (21) 17 Buyback / ESOT commitment (58) (85) Net debt (517) (493) Net assets 286 286

  7. Slide 7: Balance Sheet

    Balance Sheet £m 2014 2013 Fixed assets 517 545 Goodwill and intangibles 44 45 Stock 386 332 + 16.2% Debtors 808 718 + 12.5% Creditors (869) Directory Debtors (859) Dividend payable (74) Jan 2014 Jan 2013 - Pension surplus 70 +13% 66 Derivatives £682m(21) £601m 17 Buyback / ESOT commitment (58) Sale

  8. Slide 8: Full Year Debt, Cash Flow and Buybacks

    Full Year Debt, Cash Flow and Buybacks 700 Jan 2013 Jan 2014 600 493 489 517 500 Extra ESOT 400 Share buybacks £28m £296m 300 Operational £300m 200 £m 193

  9. Slide 9: Full Year Debt, Cash Flow and Buybacks

    Full Year Debt, Cash Flow and Buybacks 700 Jan 2014 Jan 2015(e) 600 517 517 500 Special 400 367 dividends/ buybacks Operational Special £150m 300 dividends £300m+ paid/declared 200 £150m 217 £m

  10. Slide 10: Equivalent Rate of Return (ERR)

    Equivalent Rate of Return (ERR) ERR: Return required from an alternative investment to produce the same earnings enhancement as the proposed buyback.

  11. Slide 11: Equivalent Rate of Return (ERR)

    Equivalent Rate of Return (ERR) 9.5% 9% PBT £750m(e) 8.5% PBT £695m 8% 7.5% 7% £58 £62.45 6.5% 6% £54 £56 £58 £60 £62 £64 £66 £68 Share Price

  12. Slide 12: Retail

    Camberley Retail

  13. Slide 13: Retail: Sales Analysis

    Retail : Sales Analysis £m 2014 2013 Total Full Price Markdown Revenue (statutory sales) 2,227.6 2,190.9 + 1.7% + 3% - 11% Operating profit 347.7 331.1 Sales from new space Average net space growth (sq. ft.) 4.2% Sales growth from net space 3.1% Return on space 72%

  14. Slide 14: Retail: Profit Analysis

    Retail : Profit Analysis £m 2014 2013 Full Price Markdown Revenue (statutory sales) 2,227.6 2,190.9 + 1.7% + 3% - 11% Operating profit 347.7 331.1 + 5.0% % to revenue 15.6% 15.1% Lower stock Margin movement for Sale Markdown + 0.8% Bought-in gross margin + 0.0% -15% Freight, fabric & stock loss + 0.

  15. Slide 15: Retail: Profit Analysis

    Retail : Profit Analysis £m 2014 2013 Revenue (statutory sales) 2,227.6 2,190.9 + 1.7% Operating profit 347.7 331.1 + 5.0% % to revenue 15.6% 15.1% Margin movement Achieved gross margin + 1.3% Store payroll + 0.1% Store occupancy - 0.7% Other overheads - 0.2% Margin movement + 0.5%

  16. Slide 16: Directory

    Directory

  17. Slide 17: Directory: Sales Analysis

    Directory : Sales Analysis £m 2014 2013 Total Full Price Markdown Revenue (statutory sales) 1,341.0 1,192.6 + 12.4% + 14% 0% Operating profit 358.5 302.1 Sales analysis Contribution to growth UK + 8.5% International + 3.9% Sales growth + 12.4%

  18. Slide 18: Directory: Sales Analysis

    Directory : Sales Analysis £m 2014 2013 Revenue (statutory sales) 1,341.0 1,192.6 + 12.4% Operating profit 358.5 302.1 Sales drivers Increase on Contribution to last year customer growth UK credit 2,800k + 100k 3% UK cash 630k + 140k 4% International 270k + 120k 4% Active customers 3.7m + 360k + 11%

  19. Slide 19: Directory: Profit Analysis

    Directory : Profit Analysis £m 2014 2013 Full Price Markdown Revenue (statutory sales) 1,341.0 1,192.6 + 12.4% + 14% 0% Operating profit 358.5 302.1 + 18.7% % to revenue 26.7% 25.3% Lower stock Margin movement for Sale Markdown + 1.8% Bought-in gross margin + 0.2% -9% Freight, fabric and stock loss

  20. Slide 20: Directory: Profit Analysis

    Directory : Profit Analysis £m 2014 2013 Revenue (statutory sales) 1,341.0 1,192.6 + 12.4% Operating profit 358.5 302.1 + 18.7% % to revenue 26.7% 25.3% Margin movement Achieved gross margin + 2.2% Catalogue production + 0.2% Warehouse and distribution - 0.5% Service charge and bad debt - 0.4% Centr

  21. Slide 21: NEXT PLC Objectives

    NEXT PLC Objectives Operational Financial Develop the Next brand To deliver: Grow retail space Long term, Develop our online business Sustainable growth in Improve service Total Shareholder Returns Control costs = EPS growth + dividend yield

  22. Slide 22: Retail Space

    Ipswich Retail Space

  23. Slide 23: 2013/14 Retail Space

    2013/14 Retail Space 2013/14 sq. ft. Stores Jan 2013 540 New 11 +280,000 Resites 8 Home Fashion 40% Extensions 13 60% Closed -10 Stores Jan 2014 541

  24. Slide 24: 2013/14 Retail Space

    2013/14 Retail Space Total sq. ft. Stores Jan 2013 540 New 11 7,000,000 Home Resites 8 Fashion 25% Extensions 13 75% Closed -10 Stores Jan 2014 541

  25. Slide 25: 2013/14 Retail Space: New space performance

    2013/14 Retail Space New space performance * Sales Payback Store Company avg. v target (months) profit % store profit % Fashion + 4.4% 19 22% 23% Large Home format + 3.5% 22 21% 20% Total + 4.3% 19 22% 23% * Forecast for stores opened or extended in the last 12 months

  26. Slide 26: Pipeline Sq. Ft. 2014-2016

    Pipeline Sq. Ft. 2014 - 2016 Net of closures 400k 360k 350k Current guidance 40% large store format 1.1m 2014/15 2015/16 2016/17

  27. Slide 27: 2014/15 Large Store Openings

    2014/15 Large Store Openings York April Hedge End August Maidstone December

  28. Slide 28: Store format cost per sq. ft.

    2006 Uniform lighting Tiled ceiling £127/sq. ft. @ 2013 prices Monotone walls £149/sq. ft Dull fixtures Bland floor

  29. Slide 29: 2013/14 £141/sq. ft.

    2013/14 £141/sq. ft.

  30. Slide 30: 2013/14 £141/sq. ft.

    2013/14 £141/sq. ft.

  31. Slide 31: Product

    % Product

  32. Slide 32: Great

    ~ GREAT NAUGHT TUN

  33. Slide 33: Spring/Summer Autumn/Winter phases

    10 Year Average Temperature 4 0 12 0 16 0 80 Phase Phase Phase Phase Phase Phase Phase Phase Phase 1 2 3 4 5 1 2 3 4 Spring/Summer Autumn/Winter

  34. Slide 34: More appropriate stock, more change/newness

    More appropriate stock More change/newness Spring Spring Summer Summer Summer Autumn Autumn Winter Winter 1 2 1 2 3 1 2 1 2 Spring Summer Autumn Winter

  35. Slide 35: Service

    Service

  36. Slide 36: % rating service outstanding/very good/good

    % rating service ‘outstanding/very good/good’ Source: Simpson Carpenter, June 2013 Retailer Retailer 95% 92% Retailer Retailer Retailer 88% 86% 85% Next Retailer Retailer Retailer Retailer Retailer 82% 77% 76% 75% 75% 75% 1 2 3 4 5 6 7 8 9 10 11

  37. Slide 37: % rating service outstanding/very good

    % rating service ‘outstanding/very good’ Retailer Source: Simpson Carpenter, June 2013 68% Retailer 62% Retailer Retailer Retailer 57% 54% 53% Next 46% Retailer Retailer Retailer 40% 39% 39% Retailer Retailer 35% 35% 1 2 3 4 5 6 7 8 9 10 11

  38. Slide 38: Change for Better Service

    Change For Better Service Recruit for Attitude New Recruitment Process Four Star Appraisal System Train for Skill Shift Market Place

  39. Slide 39: Online International

    Online International

  40. Slide 40: International

    International 2011/12 2012/13 2013/14 2014/15(e) £150m+ £101m £54m £33m Profit £7m £10m £18m £27m Margin 21% 19% 18% 18%

  41. Slide 41: International 2013/14

    International 2013/14 282011/12 2012/13 price reductions 2013/14 52014/15(e) currency conversions Austria Kazakhstan Qatar £150m+ Hong Kong HK$ Belgium Kuwait Russia Israel ILS Chile Luxembourg Singapore Kazakhstan KZT Czech Republic Malaysia South Africa South Africa ZAR France Mexico Spain £101m T

  42. Slide 42: International 2014/15

    International 2014/15 11 new territories 2011/12 11 currency2012/13 conversions 2013/14 2014/15(e)5 price reductions 6 new languages Azerbaijan Bulgaria BGN Arabic £150m+ Belgium Belarus Croatia HRK French Luxembourg Brazil Denmark DKK Hebrew Netherlands China India INR Polish Slovakia Cyprus Lithua

  43. Slide 43: Outlook

    Outlook • The Economy • Full Year Sales & Profit

  44. Slide 44: Economy improving… but risks remain

    Economy improving… but risks remain • Credit sustainable? • Housing bubble? • Interest rates?

  45. Slide 45: Brand Sales Growth

    Brand Sales Growth 2013/14 2014/15(e) 12% 10% +11.5% 8% +8% 6% Q1- Q 3 4% +3% +4% 2% +2.5% +4.3% +2.2% 0% Q1 Q2 Q3 Q4

  46. Slide 46: Sales and Profit Guidance 2014/15

    Sales and Profit Guidance 2014/15 Full Year Brand Sales + 4% Mid Point to + 6% + 8% 2013/14 2014/15(e) £695m £750m 30 640 650 660 670 680 690 700 710 720 730 740 750 76 RETAIL LFLs COST INCREASES - £12m - £44m DIRECTORY NEW SPACE + £49m COST SAVINGS + £15m + £47m

  47. Slide 47: Sales and Profit Guidance 2014/15

    Sales and Profit Guidance 2014/15 Full Year Brand Sales + 4% to + 8% Profit before tax £730m to £770m Growth in profit and EPS + 5% to + 11% Ordinary dividend yield* ~ +2% Special dividend yield* ~ +3% TSR underlying (at constant PE ratio) + 10% to + 16% * Based on a share price of £65

  48. Slide 48: Long Term TSR

    Long Term TSR Assuming constant PE ratio 25% inc tax enhancement Dividend Yield EPS Enhancement 21% 20% 20% Profit Growth 18% 16% 15% 9% 10% 0% 2010/11 2011/12 2012/13 2013/14 2014/15(e)

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  52. Slide 52: Next

    Next

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    Mi |

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