Next Plc · LSE:NXT
Next — H1 2011 Earnings Presentation
57 slides from Next's earnings presentation, July 2011
Slide 1: July 2011
July 2011
Slide 2: Income Statement
Income Statement £m 2011 2010 Revenue 1,565 1,512 Operating profit 241 222 Interest (13) (12) Profit before tax 228 210 Taxation (60) (58) Profit after tax 168 152 +10.7% Profit from Ventura 41 3 Profit including Ventura 209 155
Slide 3: Income Statement (exc Ventura)
Income Statement (exc Ventura) £m 2011 2010 Revenue 1,565 1,512 Operating profit 241 222 Interest (13) (12) Profit before tax 228 210 Taxation (60) (58) Profit after tax 168 152 +10.7% EPS (exc Ventura) 98.3p 82.9p +18.6% Dividend per share 27.5p 25.0p
Slide 4: Balance Sheet
Balance Sheet Exc Ventura Inc Ventura £m 2011 2010 2010 Fixed assets 582 576 588 Goodwill 46 47 47 Stocks 391 312 312 Debtors 608 565 601 Creditors (832) (807) (850) Pension surplus / (deficit) 48 (15) (15) Derivatives 15 (32) (32) Buyback/ESOT commitment (105) (71) (71) Net debt (640) (507) (494) N
Slide 5: Balance Sheet
Balance Sheet £m 2011 2010 Fixed assets 582 576 Goodwill 46 47 Stocks 391 312 +25% Debtors 608 565 Creditors (832) (807) Pension surplus / (deficit) 48 (15) Derivatives 15 (32) Buyback/ESOT Current season commitment 338 (105) 259 (71) Net debt (640) (507) Net assets Prior seasons 53 113 53 68
Slide 6: Balance Sheet
Balance Sheet £m 2011 2010 Fixed assets 582 576 Goodwill 46 47 Stocks 391 312 Debtors 608 565 +7.6% Creditors (832) Directory Debtors (807) Pension surplus / (deficit) July 2011 48 (15) July 2010 Derivatives £492m + 7% 15 £460m (32) Buyback/ESOT commitment (105) (71) Net debt Annual Sales(640) Incre
Slide 7: Net Debt & Cash Flow
Net Debt & Cash Flow 1,000 Planned buybacks £160m 900 Ventura buybacks 800 £65m 700 Operational Jan 2012 Jan 2011 £110m(e) £580m 600 £530m Ventura 500 £65m £420m 400 £355m 300 £m
Slide 8: Net Debt & Cash Flow
Net Debt & Cash Flow 1,000 £918m Committed funding 900 2013 £295m Bank 800 Debt Profile Jan 2012 700 £580m 600 2013 £85m Bond 500 2016 £213m Bond 400 300 2021 £325m Bond £m
Slide 9: Cash Flow
Cash Flow £m 2011 2010 Profit before tax 228 210 Depreciation / impairment 64 64 Capital expenditure (57) (69) Ventura sale 63 - Working capital / Other (63) 13 Dividends paid (89) (85) Tax paid (68) (70) Share buybacks (188) (157) Net cash flow (110) (94)
Slide 10: Cash Flow
Cash Flow 28 £m 2011 2010 Profit before tax 228 210 Depreciation / impairment 64 64 Capital expenditure (57) (69) Ventura sale 63 - 2012(e) £144m 2011 £144m Working capital / Other (63) 13 Warehouse & other Dividends paid (89) (85) £37m £28m £58m Tax paid (68) (70) £22m Share buybacks £17m Refit & o
Slide 11: Cash Flow
Cash Flow £m 2011 2010 Profit before tax 228 210 Depreciation / impairment 64 64 Capital expenditure (57) (69) Ventura sale 63 - Working capital / Other (63) 13 Operating Profit Consideration Dividends paid (89) (85) Tax paid £8m (68) £65m(70) Share buybacks 1.4% of Group Profit (188)1.6% of Market
Slide 12: Shares in issue
Shares in issue Gross Net of ESOT July 2010 184m 181m Jan 2011 181m 175m July 2011 173m 167m Year on year - 6.4% - 7.5% Jan 2012(e) 171m 166m Year on year - 5.6% - 5.3%
Slide 13: Retail
HOME AND GARDEN HOME 7 DECORATING By
Slide 14: Retail: Sales Analysis
Retail : Sales Analysis £m 2011 2010 Revenue (statutory sales) 1,008.2 1,026.2 - 1.8% Operating profit 122.5 122.9 - 0.3% % to revenue 12.2% 12.0% Sales from new space Average space growth 5.6% Sales from net space increase 4.0% Return on space 72%
Slide 15: Retail: Profit Analysis
Retail : Profit Analysis £m 2011 2010 Revenue (statutory sales) 1,008.2 1,026.2 - 1.8% Operating profit 122.5 122.9 - 0.3% % to revenue 12.2% 12.0% Margin movement Bought in gross margin + 0.1% Markdowns & other + 0.4% Branch payroll + 0.5% Occupancy - 0.5% Warehouse & distribution - 0.2% Central ov
Slide 16: Directory
Directory
Slide 17: Directory: Sales Analysis
Directory : Sales Analysis £m 2011 2010 Revenue (statutory sales) 486.7 422.8 + 15.1% Operating profit 112.8 101.3 + 11.4% % to revenue 23.2% 24.0% Sales analysis Vat Exc Merchandise sales + 16.6% Service charge - 1.5% Total sales + 15.1%
Slide 18: Directory: Sales Analysis
Directory : Sales Analysis £m 2011 2010 Revenue (statutory sales) 486.7 422.8 + 15.1% Operating profit 112.8 101.3 + 11.4% % to revenue 23.2% 24.0% Sales drivers Credit 2,536 2,443 + 4% Cash 394 213 + 85% Active customers (000’s) 2,930 2,656 + 10% Printed pages 2,122 2,026 + 4.7%
Slide 19: Directory: Profit Analysis
Directory : Profit Analysis £m 2011 2010 Revenue (statutory sales) 486.7 422.8 + 15.1% Operating profit 112.8 101.3 + 11.4% % to revenue 23.2% 24.0% Margin movement Bought in gross margin + 0.2% Markdowns & other 0.0% 3rd party commission - 0.5% Achieved net margin - 0.3%
Slide 20: Directory: Profit Analysis
Directory : Profit Analysis £m 2011 2010 Revenue (statutory sales) 486.7 422.8 + 15.1% Operating profit 112.8 101.3 + 11.4% % to revenue 23.2% 24.0% Margin movement Achieved net margin - 0.3% Bad debt reduction + 1.0% Service charge - 1.1% Warehouse & distribution - 0.8% Central overheads + 1.0% Gen
Slide 21: Sourcing
Sourcing £m 2011 2010 Intra-group sales 225.7 218.6 + 3% Operating profit 10.1 12.5 - 19% Commission £2.3m lower Full year profit forecast £23m
Slide 22: Other
Other £m 2011 2010 Lipsy (0.4) 0.3 Property 3.4 1.3 Unrealised FX (0.3) (6.3) Associates 0.7 0.5 Pension credit 3.5 0.1 Group / share incentives (14.2) (12.3) (7.3) (16.4)
Slide 23: The Perfect Storm
The Perfect Storm Input price inflation Deficit cuts Credit squeeze Household inflation
Slide 24: Weathering the Storm
Weathering the Storm Product Retail space Directory development Share buybacks & TSR
Slide 25: Weathering the Storm: Product
Weathering the Storm Product • Contained price increases • Improved stock availability
Slide 26: Improved Stock Availability
Weathering the storm….Product Improved Stock Availability SS11 Stock Levels (v SS10) 35% 30% Best Sellers 25% 20% 15% Total Stock 10% 5% SS Stock 0% Feb’11 Mar Apr May Jun Jul
Slide 27: Improved Stock Availability
Weathering the storm….Product Improved Stock Availability AW11 Stock Levels (v AW10) 35% 30% 25% Total Stock 20% 15% 10% 5% 0% ul Aug Sep Oct Nov Dec Jan’12
Slide 28: Retail Space Expansion
Weathering the storm….Retail Space Retail Space Expansion Stores Sq. Ft. July 2010 522 5,884 Jan 2011 525 6,073 New 5 52 Closed (4) (10) Re-sites (4) - 34 Extensions (13) - 22 Home stand alone 6 85 July 2011 532 6,256 + 6.3% Jan 2012(e) 534 6,474 + 6.6%
Slide 29: Retail Space Expansion: New store performance
Weathering the storm….Retail Space Retail Space Expansion New store performance Mainline Home Total Sales vs target + 6% + 10% + 7% Payback (months) 18 19 18 Store profit 21% 23% 22%
Slide 30: Is it wise to increase space when the internet is growing?
Weathering the storm….Retail Space Retail Space Expansion Is it wise to increase space when the internet is growing?
Slide 31: Resite: Cheshire Oaks
Weathering the storm….Retail Space 8,000 SQ FT Resite : Cheshire Oaks CLOSED 30,000 SQ FT OPENED
Slide 32: Resite: Macclesfield
Weathering the storm….Retail Space 3,000 SQ FT Resite : Macclesfield CLOSED 10,000 SQ FT OPENED
Slide 33: Focus on architecture
Weathering the storm….Retail Space Focus on architecture Newcastle Eldon Square
Slide 34: Newcastle Eldon Square (before)
Newcastle Eldon Square (before)
Slide 35: Preston (before)
Preston (before)
Slide 36: Preston
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Slide 37: Shoreham
Weathering the storm….Retail Space Shoreham Fashion 21,000 sq. ft. Home 35,000 sq. ft.
Slide 38: Shoreham: Home Sales Only
Weathering the storm….Retail Space Shoreham : Home Sales Only New products Traditional products
Slide 39: Shoreham: New Home Products
Weathering the storm….Retail Space Shoreham : New Home Products DIY ‘Lite’ • Tools • Fixtures and fittings Garden • Furniture • Paint centre • Accessories • Floor coverings • Plants • Kitchen • Bedroom Fitted • Bathroom furniture
Slide 40: Paint
Paint
Slide 41: Screw & Fix
Screw & Fix
Slide 42: Carpet
Carpet
Slide 43: Bathroom
Bathroom
Slide 44: Conservatory
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Slide 45: Indoor plants
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Slide 46: Outdoor room sets
Outdoor room sets
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Slide 48: Retail Space Pipeline 2/13(e)
Weathering the storm….Retail Space Retail Space Pipeline 2012/13(e) 400,000 sq. ft.
Slide 49: Directory Development
Directory Development
Slide 50: Directory Sales Growth
Weathering the storm….Directory Development Directory Sales Growth +15% +3% International +12% UK Increased use of internet Improved service Improved marketing
Slide 51: Directory International
Weathering the storm….Directory Development Directory International 2011/12(e) 2010/11 Revenue £ 32m 10m Profit £ 7m 2m Contribution 22% 24% Directory International is reported in Directory
Slide 52: Directory International: Delivery Promise
Weathering the storm….Directory Development Directory International : Delivery Promise 5-7 days 2-3 days 2-3 days New Countries 7-10 days 4 days
Slide 53: Outlook for Full Year 2011/12
Outlook for Full Year 2011/12 Total Brand Sales (VAT ex) + 2.0% to + 4.5% Profit before tax (e) £545m to £590m PBT growth (e) + 0.4% to + 8.7% EPS growth (e) 7.5% to 16.4%
Slide 54: In summary
In summary Resilient performance in SS11 Increased guidance for sales/profits/EPS Opportunities for growth An improving environment in 2012/13?
Slide 55: July 2011
July 2011
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Slide 57: Slide 57