Slide 1: July 2013
July 2013
Slide 2: Income Statement
Income Statement £m July 2013 July 2012* Full Price Revenue 1,677 1,640 + 2.2% + 3.9% Operating profit 285 266 + 7.2% Interest (13) (15) Profit before tax 272 251 Taxation (55) (60) Profit after tax 217 191 + 14% EPS 142.1p 118.5p + 20% Dividend per share 36.0p 31.0p + 16% * July 2012 profits and EP
Slide 3: Cash Flow
Cash Flow £m July 2013 July 2012 Profit before tax 272 251 (underlying) Depreciation / disposals 61 63 Capital expenditure (53) (38) Working capital / other (13) 1 Tax paid (75) (72) ESOT maintenance (22) (20) ESOT cover increase (41) (17) Share buybacks (170) (112) Net cash flow (41) 56
Slide 4: Cash Flow
Cash Flow £m July 2013 July 2012 Profit before tax (underlying) 272 251 (underlying) Depreciation / disposals 61 63 Capital expenditure (53) (38) Working capital / other Jan(13) 2014(e) 1 Jan 2013 Tax paid Full Year £120m (75) £82m (72) ESOT maintenance £24m (22) (20) Warehouse & other ESOT cover in
Slide 5: Balance Sheet
Balance Sheet £m July 2013 July 2012 Fixed assets 536 564 Goodwill and intangibles 45 45 Stock 372 388 Debtors 716 674 Creditors (847) (842) Pension surplus 68 41 Dividends (111) (100) Buyback / ESOT commitment (48) (96) Net debt (533) (519) Net assets 198 155
Slide 6: Balance Sheet
Balance Sheet £m July 2013 July 2012 Fixed assets 536 564 - 5% Goodwill and intangibles 45 45 Stock 372 388 - 4% Debtors 716 674 + 6% Creditors (847) Directory Debtors (842) Pension surplus 68 July 2013 41 July 2012 Dividends (111) + 6% (100) Buyback / ESOT commitment £588m (48) £553m (96) Net debt
Slide 7: Full Year Debt, Cash Flow and Buybacks
Full Year Debt, Cash Flow and Buybacks 700 Jan 2014(e) Jan 2013 563 600 543 493 ESOT cover 500 Share buybacks £300m £20m 400 Operational 300 £250m 200 243 £m
Slide 8: Shares in Issue
Shares in Issue At Jan 2012 At Jan 2013 At July 2013 160 163m Shares -5.2% Net of ESOT 155m -2.8% 150 A 151m 140 m
Slide 9: Equivalent Rate of Return (ERR)
Equivalent Rate of Return (ERR) 12% 12% At 12th September 2013 11% 10.5% 11% 10.0% PBT £642m (Rolling 12 month to July 2013) 10% 9.5% 10% 9.1% 9% 8.7% 9% 8.3% 8% 8.0% 8% 7% 7% £40 £42 £44 £46 £48 £50 £52 £54 Next Share Price
Slide 10: Retail
— - — ——# West B i a gE EEA = West Bromwich == aA | =|
Slide 11: Retail: Sales Analysis
Retail : Sales Analysis £m July 2013 July 2012 Total Full Price Markdown Revenue (statutory sales) 1,000.6 1,009.9 - 0.9% + 0.6% - 13.5% Operating profit 124.3 122.7 Lower stock Sales from new space for Sale Average net space growth (sq. ft.) 4.2% Sales growth from net space 2.7% -19% Return on spac
Slide 12: Retail: Profit Analysis
Retail : Profit Analysis £m July 2013 July 2012 Total Full Price Markdown Revenue (statutory sales) 1,000.6 1,009.9 - 0.9% + 0.6% - 13.5% Operating profit 124.3 122.7 + 1.3% % to revenue 12.4% 12.2% Margin Movement Bought-in gross margin - 0.1% Markdowns + 1.0% Freight and fabric + 0.5% Achieved gro
Slide 13: Retail: Profit Analysis
Retail : Profit Analysis £m July 2013 July 2012 Total Full Price Markdown Revenue (statutory sales) 1,000.6 1,009.9 - 0.9% + 0.6% - 13.5% Operating profit 124.3 122.7 + 1.3% % to revenue 12.4% 12.2% Margin Movement Achieved gross margin + 1.4% Store payroll + 0.1% Store occupancy - 0.8% Warehouse an
Slide 14: Directory
Directory
Slide 15: Directory: Sales Analysis
Directory : Sales Analysis £m July 2013 July 2012 Total Full Price Markdown Revenue (statutory sales) 597.6 551.7 + 8.3% + 10.0% - 9.0% Operating profit 156.1 137.7 Lower stock Sales analysis Contribution to growth for Sale UK full price + 5.3% UK Clearance Tab + 0.9% -17% International online + 2.9
Slide 16: Directory: Sales Analysis
Directory : Sales Analysis £m July 2013 July 2012 Revenue (statutory sales) 597.6 551.7 + 8.3% Operating profit 156.1 137.7 Sales drivers Contribution to customer growth UK credit 2,778 2,647 + 4.0% UK cash 620 449 + 5.3% International 223 133 + 2.8% Active customers (000’s) 3,621 3,229 + 12.1%
Slide 17: Directory: Profit Analysis
Directory : Profit Analysis £m July 2013 July 2012 Revenue (statutory sales) 597.6 551.7 + 8.3% Operating profit 156.1 137.7 + 13.4% % to revenue 26.1% 25.0% Margin movement Bought-in gross margin - 0.1% Markdown + 2.0% Freight & fabric + 0.3% Achieved gross margin + 2.2%
Slide 18: Directory: Profit Analysis
Directory : Profit Analysis £m July 2013 July 2012 Revenue (statutory sales) 597.6 551.7 + 8.3% Operating profit 156.1 137.7 + 13.4% % to revenue 26.1% 25.0% Margin movement Achieved gross margin + 2.2% Catalogue production + 0.4% Marketing - 0.4% Bad debt & service charge + 0.1% Warehouse & distrib
Slide 19: Focus for the year ahead
Focus for the year ahead Economic outlook Retail space Online
Slide 20: Economic outlook
— Economic outlook “Ai.
Slide 21: Employment 2010 - 2013
Employment 2010 - 2013 30m 29.8m 29.6m 29.4m 29.2m 29m 28.8m Jan ‘10 Jul ‘10 Jan ‘11 Jul ‘11 Jan ‘12 Jul ‘12 Jan ‘13 Jul ‘13 Source: ONS, Sept’13
Slide 22: Housing
Housing 20% Mortgage loan approvals 15% Housing transactions 10% 5% 0% -5% % growth v last year based on 3 month rolling averages -10% Nov ‘12 Jan ‘13 Mar ‘13 May ‘13 Jul ‘13 Source: HM Treasury Databank, Aug ‘13
Slide 23: Unsecured credit balances 2010 - 2013
Unsecured credit balances 2010 - 2013 £190bn £180bn £170bn £160bn £150bn Jan ‘10 Jul ‘10 Jan ‘11 Jul ‘11 Jan ‘12 Jul ‘12 Jan ‘13 Jul ‘13 Source: BOE, Aug ‘13
Slide 24: Movement in unsecured credit 2010 - 2013
Movement in unsecured credit 2010 - 2013 £3bn £2bn £1bn £0 -£1bn -£2bn -£3bn Jan ‘10 Jul ‘10 Jan ‘11 Jul ‘11 Jan ‘12 Jul ‘12 Jan ‘13 Jul ‘13 Source: BOE, Aug ‘13
Slide 25: Inflation 2010 - 2013
Inflation 2010 - 2013 5% 4% CPI July ‘13 Bank of England estimate, Aug ‘13 3% 2% 1% Wages NEXT estimate 0% Jan ‘10 Jan ‘11 Jan ‘12 Jan ‘13 Jan ‘14(e) Jan ‘15(e) Source: ONS, Sept ‘13
Slide 26: Outlook remains subdued
Economic outlook Outlook remains subdued Spending drag persists Reducing economic pressure… with risks • Housing bubble • Credit sustainability
Slide 27: 2013/14 Brand sales ranges
2013/14 Brand sales ranges Estimate Actual 1st half + 1% to + 4% + 2.3% 2nd half + 1% to + 4% Full year + 1.5% to + 3.5%
Slide 28: Retail space
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Slide 29: Retail space
Retail space Stores Sq. Ft. July 2012 536 6.6m Jan 2013 540 6.7m New 6 110k Re-sites & extensions (7) - 70k Closed (5) (40k) July 2013 541 6.8m + 4.7% Jan 2014(e) 543 7.0m + 4.4% + 300k sq. ft.
Slide 30: Retail space: New store performance
Retail space New store performance* Sales Payback Store Company avg. v target (months) profit % store profit % Fashion + 9% 18 23% 23% Home stores + 6% 24 19% 18% Total + 9% 19 22% 22% * Forecast for stores opened in the last 12 months
Slide 31: Pipeline sq. ft. 2013 - 2015
Pipeline sq. ft. 2013 - 2015 Possible 1000 600k 800 Probable 1.4m sq. ft. 600 400k 400 200 Definite 400k 0 2013 - 2015 2013/14 2013-2015 2014/15 2015/16
Slide 32: Pipeline sq. ft. 2013 - 2015
Pipeline sq. ft. 2013 - 2015 Possible 1000 600k 800 Total 1.4m sq. ft. 700k 600 Probable 400k 450k 400k 400 300k 200 Definite 400k 0 2013 - 2015 2013/14 2013-2015 2014/15 2015/16
Slide 33: Pipeline sq. ft. 2013 - 2015
Pipeline sq. ft. 2013 - 2015 1000 800 Current Guidance 600 1.2m sq. ft. 450k 450k 400 300k 200 0 2013/14 2013-2015 2014/15 2015/16
Slide 34: Camberley: Before
Camberley Before g
Slide 35: Camberley
Camberley
Slide 36: Large fashion/home stores
Large fashion/home stores 4 now open 11 with planning permission 18 under negotiation
Slide 37: Planning approach
Planning approach Public exhibitions Facebook campaigns Involving schools Engaging with councillors Directory customers
Slide 38: What about town centres?
What about town centres? |
Slide 39: Camberley and town centre sales impact
Retail Park “WEA Camberley £2m f5m © % Town Centre Town Centre ¥ Incremental 1£15.7m £0.3m | Camberley new £21me). Sales 7 as = Farnborough 5 Retail Park fom Closed
Slide 40: Transformation
Leeds Trinity Transformation
Slide 41: Childrenswear
a < FS Childrenswear
Slide 42: Menswear
— o @ = 7) = o =
Slide 43: Menswear shoe room
Ss Menswear shoe room A *
Slide 44: Natural light
Natural light
Slide 45: Shop-fit quality
Shop-fit quality Excellent Very good Good Room for improvement Poor Westfield Bond St. Oxford St. Brent Cross
Slide 46: A risk? Retail expansion in the internet age
Retail expansion in the internet age A risk? Profitability of space Availability of space Servicing online Better lease terms
Slide 47: Lease evolution
Lease evolution £30m Annual rent of leases expiring £25m £20m £15m £10m £5m Year 0 5 10 15 0 2013 2018 2023 2028
Slide 48: Cumulative rental expiry
Cumulative rental expiry 100% 90% 80% expired by 2022/23 80% 70% 60% 50% expired by 2019/20 50% 40% 30% 20% 10% Year 0 5 10 15 0% 2013 2018 2023 2028
Slide 49: Online
Online
Slide 50: Service improvements
Service improvements Directory orders next day to store
Slide 51: Service improvements
Service improvements Directory orders next day to store Last year Current
Slide 52: Publication changes
Publication changes £30m MAIN BOOK BROCHURE NEW IN MAIN BOOK BROCHURE NEW IN JAN MAR MAY AUG SEP OCT £25m £20m £15m 2012 £10m £5m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 53: Publication changes
Publication changes £30m MAIN BOOK BROCHURE NEW IN MAIN BOOK BROCHURE NEW IN JAN MAR MAY AUG SEP OCT £25m 2013 £20m £15m 2012 £10m £5m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 54: Publication changes
Publication changes £30m MAIN BOOK BROCHURE NEW IN MAIN BOOK BROCHURE NEW IN JAN MAR MAY AUG SEP OCT £25m 2013 £20m £15m 2012 £10m £5m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 55: International online
International online £90m £54m £33m £10m 2010 2011 2012 2013(e)
Slide 56: Impact of price reductions
Impact of price reductions Price reduction - 28% Israel Sales growth index - 15% Ukraine - 10% Euro countries International June ‘12 Sept ‘13
Slide 57: Price reductions
Price reductions Now in 17 territories 24 EU countries Germany Gibraltar Iceland Israel Japan Kazakhstan Kuwait Mexico excl. Germany New Zealand Norway Qatar Russia Switzerland Turkey UAE Ukraine Plans for 17 more Argentina Belgium Chile Gibraltar France Hong Kong India Luxembourg Malaysia Mexico Ne
Slide 58: Outlook for full year sales and profit
Outlook for full year sales and profit
Slide 59: Profit guidance 2013/14
Profit guidance 2013/14 Full Year Brand Sales + 1.5% to + 3.5% 2012/13 2013/14(e) £622m £655m 40 550 560 570 580 590 600 610 620 630 640 650 660 67 RETAIL LFLs COST INCREASES - £18m At - £40m DIRECTORY mid NEW SPACE + £30m point COST SAVINGS + £15m + £46m
Slide 60: Outlook for 2013/14 - estimate
Outlook for 2013/14 - estimate Full Year Brand Sales + 1.5% to + 3.5% Profit before tax £635m to £675m Variance to last year + 2.2% to + 8.6% Buyback enhancement ~ 5%+ Growth in EPS + 7% to + 14% Dividend yield ~ 2.3% TSR underlying (at constant PE ratio) + 9% to + 16%
Slide 61: Outlook for 2013/14 - estimate
Outlook for 2013/14 - estimate Full Year Brand Sales + 1.5% to + 3.5% Profit before tax £635m to £675m Variance to last year + 2.2% to + 8.6% Buyback enhancement ~ 5%+ Growth in EPS (Including tax enhancement) + 12% to + 19% Dividend yield ~ 2.3% TSR (Including tax enhancement) + 14% to + 21%
Slide 62: Long term TSR
Long term TSR Assuming dividend at 2% and constant PE ratio 21% 21% 20% 18% 16% Including tax enhancement 15% 14% 9% 9% Dividend Yield EPS Enhancement Profit Growth 0% 2010/11 2011/12 2012/13 2013/14
Slide 63: July 2013
July 2013