Income Statement. -2.2% -1.2% -9.8% + 2m -9.5% -7.8% EPS (underlying) 176.9p 188.6p -6.2% Ordinary dividends per share 53.0p 53.0p.

Transcription

1 Income Statement m July 2017 July 2016 Total sales 1,914 1,957 Operating profit Interest (16) (18) Profit before tax Taxation (57) (69) Profit after tax % -1.2% -9.8% + 2m -9.5% -7.8% Brand Full Price EPS (underlying) 176.9p 188.6p -6.2% Ordinary dividends per share 53.0p 53.0p

2 Cash Flow m Profit before tax Depreciation / disposals Capital expenditure Working capital / other Tax paid ESOT Cash flow before distribution July (54) (14) (48) (25) 231 July (77) (70) (71) (15) 168

3 Cash Flow m July 2017 July 2016 Capital expenditure Profit before tax (54) 309 (77) 342 Depreciation / disposals Jan 2018 (e) Jan 2018 (e) 130m 122m Warehouse Head Office infrastructure Systems Cosmetic refits Stores Stated at March m 5m 7m 19m 83m Latest estimate 13m 6m 9m 21m 73m 145 sq. ft.

4 Cash Flow m Profit before tax Depreciation / disposals Capital expenditure Working capital / other Tax paid ESOT Special dividends paid Share buybacks Net cash flow July 2017 July (54) (77) (14) (70) (48) (71) (25) (15) (64) (88) 0 (176) 167 (96)

5 Balance Sheet m July 2017 July 2016 Fixed assets and investments Goodwill and intangibles Stock Debtors Creditors / derivatives ,126 (964) ,077 (854) Dividends payable (213) (150) Pension surplus / (deficit) Net debt Net assets 65 (692) 430 (35) (946) 186

6 Balance Sheet m July 2017 July 2016 Fixed assets and investments Goodwill and intangibles Stock Debtors Creditors / derivatives Dividends payable Directory debtors Pension surplus / (deficit) Net debt Net assets Credit sales ,126 1,077 (964) (854) July 2017 July 2016 (213) (150) 997m + 5% 953m 65 (35) (692) (946) July % July % + 49m + 44m

7 Balance Sheet m July 2017 July 2016 Fixed assets and investments Goodwill and intangibles Stock Debtors Creditors / derivatives ,126 (964) ,077 (854) Dividends payable (213) (150) Pension surplus / (deficit) Net debt Net assets 65 (692) 430 (35) (946) 186

8 Full Year Debt and Cash Flow ( m) Jan Jan (e) Special dividends 260 (e) Buybacks 50 (e) 600 Operational 310 (e) 500

9 Retail Hull Kingswood

10 Retail : Sales Analysis m July 2017 July 2016 Total sales 993 1,084 Operating profit % Full Price -7.7% Sales from new space + 2.5% Performance of new space Extensions & refits New & resites All* Sales v target Payback (months) Store profit -7% -3% % -5% % * Forecast for stores opened or extended in the last 12 months %

11 Birmingham Bullring Before

12 Birmingham Bullring After

13 Birmingham Bullring Cosmetic Spend Total company spend Last 5 years 11m Next 5 years 16m

14 Retail : Store Openings and Closures January 2017 New / resites (12) Extensions (4), resite (1) Closed (13), resites (15) January 2018 Stores (28) Sq. ft. 000 s 7, (278) 8, (e) (e)

15 Retail : Store Openings and Closures Closed Lease end Sublet Redevelopment Stores NBC 2.9m 1.9m 0.2m 0.8m

16 Retail : Store Openings and Closures 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Remaining lease commitment (years)

17 Retail : Profit Analysis m July 2017 July 2016 Total sales 993 1,084 Operating profit % to sales 9.0% 12.4% -8.3% - 33% Full Price -7.7% Margin movement Bought-in gross margin - 0.1% Markdown - 0.5% Achieved gross margin -0.6% Sale stock Markdown sales -6% -14%

18 Retail : Profit Analysis m July 2017 July 2016 Total sales 993 1,084 Operating profit % to sales 9.0% 12.4% -8.3% - 33% Full Price -7.7% Achieved gross margin -0.6% Store payroll + 0.2% Store occupancy - 2.2% Warehousing and distribution - 0.3% Central overheads - 0.5% Margin movement -3.4% Full year margin circa 11.8% (e) Last year 14.7%

19 Directory

20 Directory : Sales Analysis m July 2017 July 2016 Total sales Operating profit % Full Price + 7.4% Full price sales analysis NEXT Directory UK - 21m LABEL + 40m Directory UK total + 19m Increase on last year -4% + 41% + 3% Q1-7% + 31% -1% Q2-1% + 50% + 7%

21 Directory : Sales Analysis m July 2017 July 2016 Total sales Operating profit % Full Price + 7.4% Full price sales analysis Increase on last year Avg. customers Directory UK total + 19m + 3% Directory overseas + 34m + 31% Directory total + 53m + 7% * + 3% + 6% + 4% * Directory overseas at constant currency +13%

22 Directory : Sales Analysis m July 2017 July 2016 Total sales Operating profit % Full Price + 7.4% Full price sales analysis Increase on last year Avg. customers UK credit + 17m + 3% UK cash + 2m + 2% Directory UK total + 19m + 3% 0% + 11% + 3%

23 Directory : Profit Analysis m July 2017 July 2016 Full Price Total sales % + 7.4% Operating profit % % to sales 25.0% 24.9% Margin movement Bought-in gross margin - 0.8% Markdown + 0.2% Achieved gross margin - 0.6% Sale stock Markdown sales + 1% -4%

24 Directory : Profit Analysis m July 2017 July 2016 Full Price Total sales % + 7.4% Operating profit % % to sales 25.0% 24.9% Achieved gross margin - 0.6% Interest income - 0.2% Warehouse and distribution + 0.3% Photography and catalogues + 0.4% Systems and marketing - 0.4% Central overheads + 0.6% Margin movement + 0.1% Full year margin circa 25% (e)

25 Retail Profitability Directory Modernisation Consumer Environment

26 Retail An asset or a liability? Hull Kingswood

27 Retail An asset YES Declining in financial value Increasing value to Directory Hull Kingswood

28 Retail Store Portfolio Stress Test* Branch contribution 20% Assumptions 1. No new store openings 2. Unprofitable stores are closed on lease expiry 3. Profitable stores are held over on lease expiry 70% of leases expire within 10 years LFL scenario -2%pa -4%pa -6%pa 19% 15% 10% 100m * Mainline stores excluding clearance stores

29 Store Portfolio 10 Year Stress Test 515m LFL scenario - 6% pa Forecast overheads 230m 100m * Mainline stores excluding clearance stores

30 Store Portfolio Overheads 10 Year Projection Marketing 2017/18 230m 40m Sales over 10 years -57% pa LFL scenario - 6% pa Warehousing 50m Distribution 60m Systems, Product, Other 80m

31 Store Portfolio Overheads 10 Year Projection (Indexed) Marketing Warehousing 2017/18 100% Variable cost savings -20% Shared costs * - 22% Further cost savings -6% Sales over 10 years -57% pa 2026/27 52% LFL scenario - 6% pa Distribution Systems, Product, Other * Assuming Brand sales are flat

32 Store Portfolio 10 Year Stress Test 515m Sales over 10 years -57% pa LFL scenario - 6% pa 230m 120m 100m * Mainline stores excluding clearance stores

33 Store Portfolio 10 Year Stress Test 515m Net Cash 1bn (e) Sales over 10 years -57% pa LFL scenario - 6% pa 300m 230m 200m 120m 100m 100m 0m * Mainline stores excluding clearance stores

34 Store Portfolio 10 Year Stress Test Net Cash 1bn (e) to 2bn (e) LFL scenario -2% pa 300m Excludes new store openings Excludes rental reduction Sales over 10 years -57% pa LFL scenario - 6% pa 200m 100m 0m * Mainline stores excluding clearance stores

35 New Store 10 Year Example 1,000 Net cash inflow 500k New store openings Capex 1m Payback 24 mths Cash k 0 Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Total cash 2.5m IRR LFL scenario 34% - 1,000 1m - 6% pa

36 Rent Renewals Opportunities 8 renewals in SS17 Rent Before 2.9m After 2.2m Net rent to sales 9.5% 7.0%

37 Rent Renewals Opportunities 8 renewals in SS17 Rent Concession Net rent to sales Before 2.9m 9.5% After 2.2m - 175k 2.0m 6.5% Average lease length 7 years Average profit 23%

38 Rent Renewals Opportunities Concession CAFÉ STATIONERY PROSECCO BAR HAIRDRESSER GYM RESTAURANT LIPSY & CO.

39 Rent Renewals Opportunities Concession Estimated annual profit share 300k Two restaurant trial

40 Increasing Value to Directory Edinburgh Straiton

41 Increasing Value to Directory >40% >50% 80% 15% of Directory orders (by volume) value) are picked up from store of Directory returns are returned via our store network of new Directory customers opened an account via our store network

42 Directory Modernisation

43 SS17 Brand Full Price Sales Variance vs 2016 Jan Feb Mar & Apr * May Jun Jul * March and April have been added together to account for the change in timing of Easter

44 SS17 Brand Full Price Sales Variance vs 2016 Retail Directory Jan Feb Mar & Apr * May Jun Jul Jan Feb Mar & Apr May Jun Jul Growth trend line * March and April have been added together to account for the change in timing of Easter

45 Directory Modernisation Investment Software Web Merchandising System Analytics and Segmentation Content Management System Data Management Platform Security and Testing New Credit Platform WMS SAS CMS DMP SEC NCP 5.5m

46 Directory Modernisation Investment Software WMS SAS CMS DMP SEC NCP People New heads Development and Testing 51 Data and Marketing 21 Content design 19 UX design 10 Security and other m Software 6.5m People 12.0m Total

47 Directory Modernisation Usability MOBILE Mobile Jan 2016 July 2017 Orders Pn 27% 38% Conversion rate 4.2% 5.3% + 26%

48 Directory Modernisation Usability MOBILE NEXT UNLIMITED Next Unlimited Unlimited deliveries to home for 20 per year 5m cost >10% of all orders delivered free to home >50% of all orders delivered free to store >60% FREE DELIVERY

49 Directory Modernisation Usability MOBILE nextpay NEXT UNLIMITED + 0.2% NEXTPAY Jan 2016 Jan % Active Credit Customers - 1% - 2% - 3% - 4% - 5% - 6% - 6%* * Prior year active customers have been restated July 2017

50 Directory Modernisation Personalisation MOBILE Personalised home pages NEXT UNLIMITED NEXTPAY PERSONALISED HOME PAGES ~ 1% increase in sales Offered to 40% of customers

51 Directory Modernisation Personalisation MOBILE NEXT UNLIMITED NEXTPAY PERSONALISED HOME PAGES INTELLIGENT RECOMMENDATIONS Intelligent recommendations

52 Directory Modernisation Personalisation MOBILE NEXT UNLIMITED NEXTPAY PERSONALISED HOME PAGES INTELLIGENT RECOMMENDATIONS BAGS ACROSS DEVICES Bags across devices

53 Directory Modernisation Personalisation MOBILE Abandoned basket reminders NEXT UNLIMITED NEXTPAY PERSONALISED HOME PAGES INTELLIGENT RECOMMENDATIONS BAGS ACROSS DEVICES ABANDONED BASKET REMINDERS ~ 2% fewer abandoned baskets

54 Directory Modernisation MOBILE NEXT UNLIMITED NEXTPAY PERSONALISED HOME PAGES INTELLIGENT RECOMMENDATIONS BAGS ACROSS DEVICES ABANDONED BASKET REMINDERS Next UK Overseas

55 Directory Modernisation Future developments MOBILE NEXT UNLIMITED Coming soon NEXTPAY PERSONALISED HOME PAGES ABANDONED BASKET REMINDERS FAST REGISTRATION TARGETED S Fast checkout INTELLIGENT RECOMMENDATIONS BAGS ACROSS DEVICES FAST CHECKOUT Fast registration Targeted s Targeted ads TARGETED ADS

56 Directory Modernisation Future developments MOBILE NEXT UNLIMITED Coming soon FAST CHECKOUT FAST REGISTRATION NEXTPAY TARGETED S PERSONALISED HOME PAGES TARGETED ADS INTELLIGENT RECOMMENDATIONS BAGS ACROSS DEVICES ABANDONED BASKET REMINDERS New search engine NEW SEARCH ENGINE

57 Consumer Environment

58 More experience, less stuff Entertainment spend grew by 9.4% Pub spend grew by 9.2% Restaurant spend grew by 12.4% On the High Street Womens Clothing spend fell by Source: Barclaycard August 2017 Report UK - 2.3%

59 CPI and UK Average Weekly Earnings Avg. weekly earnings ONS, 13 th September % 3% Sectorial Shift CPI ONS, 12 th September 2017 UK Employment + 1.2% ONS UK Labour Market Release, 13 th September CPI forecast BoE, 3 rd August % 1% Jan 2015 Jan 2016 Jan 2017 Jan

60 Average Selling Price Increases LY Currency rates $ TY +/- ASP annual increase Sectorial Shift SS % + 4% AW % SS % (e) AW % + 4% + 2% Flat (e) (e) Average Earnings

61 General Environment Sectorial Shift Average Earnings Next Pricing 2017/18 + 4%

62 Next Ranges Heartland product Easy to wear Power Programs at mid price points

63 Sales Outlook 2017/18 (e) -1.2% + 0.7%?? + 2% + 1% 0% -1% -3.0% Brand Full Price including interest income v previous year -2% -3% -4%

64 Sales Outlook 2017/18 (e) -1.2% + 0.7% -2.8% to + 3.8% New guidance + 2% + 1% 0% -1% -3.0% Brand Full Price including interest income v previous year -2% -3% -4%

65 Sales Outlook 2017/18 (e) -1.2% + 0.7% Midpoint new guidance + 0.5% + 2% + 1% 0% -1% -3.0% Brand Full Price including interest income v previous year -2% -3% -4%

66 Sales Outlook 2017/18 (e) + 2% + 0.7% % + 1% 0% To Christmas Eve -1% -2% -3.0% Brand Full Price including interest income v previous year -3.5% -3% -4%

67 J U L Y The UK economy remains challenging Our stores are an asset Encouraging signs in Directory

68 Sales and Profit Guidance 2017/18(e) Sales - 3.5% - 1.5% Trading statement, May %

69 Sales and Profit Guidance 2017/18(e) Sales - 2.0% - 0.3% Current guidance + 1.5%

70 Profit Scenario 2017/18(e) If FP sales are - 0.3% Cost increases LFL sales 29m 90m 2017/18(e) 2016/17 736m 790m New space Cost savings 31m 9m Directory + 25m Spring Summer Clearance rates 11m

71 Profit Scenario 2017/18(e) If FP sales are - 0.3% 2017/18(e) 2016/17 717m 790m Cost increases LFL sales 29m 90m New space Cost savings 31m 9m Directory + 25m Full Year Clearance rates 19m

72 Sales and Profit Guidance 2017/18(e) Full year Brand full price sales - 2.0% to + 1.5% Profit before tax 687m to 747m Growth in profit % to - 5.5% Growth in EPS % to - 3.1% Ordinary dividend yield* 4.1% Special dividend yield* 4.7% TSR underlying (at constant PE ratio) * Based on a share price of 38.64, the average share price during February % to + 5.7%

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