Income Statement + 2.2% + 7.2% + 3.9% + 14% EPS 142.1p 118.5p + 20% Dividend per share 36.0p 31.0p + 16% Full Price

Transcription

1 July 2013

2 Income Statement m July 2013 July 2012* Revenue 1,677 1,640 Operating profit Interest (13) (15) Profit before tax Taxation (55) (60) Profit after tax % + 7.2% + 14% Full Price + 3.9% EPS 142.1p 118.5p + 20% Dividend per share 36.0p 31.0p + 16% * July 2012 profits and EPS exclude a 5m exceptional pension charge

3 Cash Flow m July 2013 July 2012 Profit before tax Depreciation / disposals 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 (underlying)

4 Cash Flow m Profit before tax (underlying) Depreciation / disposals Capital expenditure Working capital / other Tax paid Full Year ESOT maintenance Warehouse & other July (53) (13) (75) (22) Jan 2014(e) 120m 24m 15m July (38) 1 (72) (20) Jan m ESOT cover increase (41) (17) Refurbishments Share buybacks (170) 81m 21m (112) 10m Net cash flow New & extended (41) 56 51m (underlying)

5 Balance Sheet m Fixed assets Goodwill and intangibles Stock Debtors Creditors Pension surplus Dividends Buyback / ESOT commitment Net debt Net assets July (847) 68 (111) (48) (533) 198 July (842) 41 (100) (96) (519) 155

6 Balance Sheet m Fixed assets Goodwill and intangibles Stock Debtors Creditors Pension surplus Dividends Buyback / ESOT commitment Net debt Net assets July (847) 68 (111) (48) (533) 198 July 2012 Directory Debtors (842) 41 (100) (96) (519) 155 July m + 6% July m Annual Credit Sales Increase July % July % - 4% + 6%

7 Full Year Debt, Cash Flow and Buybacks Jan Operational 250m 543 Share buybacks 300m Jan 2014(e) 563 ESOT cover 20m m

8 Shares in Issue At Jan m Shares Net of ESOT At Jan % 155m A At July % 151m 140 m

9 Equivalent Rate of Return (ERR) 12% 12% 11% 10% 10.5% 10.0% 9.5% 9.1% 8.7% 9% 9% 8% 8% 7% 7% Next Share Price At 12 th September 2013 PBT 642m (Rolling 12 month to July 2013) 8.3% 8.0% 11% 10%

10 West Bromwich Retail

11 Retail : Sales Analysis m July 2013 July 2012 Revenue (statutory sales) 1, , % Operating profit Total Full Price + 0.6% Markdown % Sales from new space Average net space growth (sq. ft.) 4.2% Sales growth from net space 2.7% Return on space 64% Lower stock for Sale -19%

12 Retail : Profit Analysis m July 2013 July 2012 Revenue (statutory sales) 1, ,009.9 Operating profit % to revenue 12.4% 12.2% Margin Movement Bought-in gross margin - 0.1% Markdowns + 1.0% Freight and fabric + 0.5% Achieved gross margin + 1.4% Total - 0.9% + 0.6% + 1.3% Full Price Markdown %

13 Retail : Profit Analysis m July 2013 July 2012 Revenue (statutory sales) 1, ,009.9 Operating profit % to revenue 12.4% 12.2% Margin Movement Achieved gross margin + 1.4% Store payroll + 0.1% Store occupancy - 0.8% Warehouse and distribution - 0.2% Other overheads - 0.3% Margin movement + 0.2% Total - 0.9% + 0.6% + 1.3% Full Price Markdown %

14 Directory

15 Directory : Sales Analysis m July 2013 July 2012 Revenue (statutory sales) Total + 8.3% Full Price % Markdown - 9.0% Operating profit Sales analysis Contribution to growth UK full price + 5.3% UK Clearance Tab + 0.9% International online + 2.9% UK markdown - 0.8% Sales growth + 8.3% Lower stock for Sale -17%

16 Directory : Sales Analysis m July 2013 July 2012 Revenue (statutory sales) Operating profit % Sales drivers Contribution to customer growth UK credit 2,778 2, % UK cash % International % Active customers (000 s) 3,621 3, %

17 Directory : Profit Analysis m July 2013 July 2012 Revenue (statutory sales) % Operating profit % % 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%

18 Directory : Profit Analysis m July 2013 July 2012 Revenue (statutory sales) Operating profit % to revenue % 25.0% + 8.3% % Margin movement Achieved gross margin + 2.2% Catalogue production + 0.4% Marketing - 0.4% Bad debt & service charge + 0.1% Warehouse & distribution - 1.2% Margin movement + 1.1%

19 Focus for the year ahead Economic outlook Retail space Online

20 Economic outlook

21 Employment m 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

22 Housing 20% 15% 10% Mortgage loan approvals Housing transactions 5% 0% -5% -10% Nov 12 % growth v last year based on 3 month rolling averages Jan 13 Mar 13 May 13 Jul 13 Source: HM Treasury Databank, Aug 13

23 Unsecured credit balances bn 180bn 170bn 160bn 150bn Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Source: BOE, Aug 13

24 Movement in unsecured credit bn 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

25 Inflation % 4% 3% CPI July 13 Bank of England estimate, Aug 13 2% 1% Wages NEXT estimate 0% Jan 10 Jan 11 Jan 12 Jan 13 Jan 14(e) Jan 15(e) Source: ONS, Sept 13

26 Economic outlook Outlook remains subdued Spending drag persists Reducing economic pressure with risks Housing bubble Credit sustainability

27 2013/14 Brand sales ranges Estimate 1 st half + 1% to + 4% Actual + 2.3% 2 nd half + 1% to + 4% Full year + 1.5% to + 3.5%

28 Retail space

29 Retail space Stores Sq. Ft. July m Jan m New 6 110k Re-sites & extensions (7) - 70k Closed (5) (40k) July m + 4.7% Jan 2014(e) m + 4.4% + 300k sq. ft.

30 Retail space New store performance* Sales v target Payback (months) Store profit % Company avg. 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

31 1000 Possible 600k Pipeline sq. ft Probable 400k Definite 400k 1.4m sq. ft / / /16

32 1000 Possible 600k Pipeline sq. ft Total 1.4m sq. ft Probable 400k Definite 400k 300k 700k 450k 400k / / /16

33 Pipeline sq. ft Current Guidance 1.2m sq. ft k 450k k / / /16

34 Before Camberley

35 Camberley

36 Large fashion/home stores 4 now open 11 with planning permission 18 under negotiation

37 Planning approach Public exhibitions Facebook campaigns Involving schools Engaging with councillors Directory customers

38 What about town centres?

39 Closed - 0.3m

40 Transformation Leeds Trinity

41 Childrenswear

42 Menswear

43 Menswear shoe room

44 Natural light

45 Shop-fit quality Excellent Very good Good Room for improvement Poor Westfield Bond St. Oxford St. Brent Cross

46 Retail expansion in the internet age A risk? Profitability of space Availability of space Servicing online Better lease terms

47 Lease evolution 30m 25m Annual rent of leases expiring 20m 15m 10m 5m 0 Year

48 Cumulative rental expiry 100% 90% 80% 80% expired by 2022/23 70% 60% 50% 50% expired by 2019/20 40% 30% 20% 10% 0% Year

49 Online

50 Service improvements Directory orders next day to store

51 Service improvements Directory orders next day to store Last year Current

52 Publication changes 30m MAIN BOOK JAN BROCHURE MAR NEW IN MAY MAIN BOOK AUG BROCHURE SEP NEW IN OCT 25m 20m 15m m 5m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

53 Publication changes 30m MAIN BOOK JAN BROCHURE MAR NEW IN MAY MAIN BOOK AUG BROCHURE SEP NEW IN OCT 25m 20m 15m m 5m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

54 Publication changes 30m MAIN BOOK JAN BROCHURE MAR NEW IN MAY MAIN BOOK AUG BROCHURE SEP NEW IN OCT 25m 20m 15m m 5m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

55 International online 90m 54m 10m 33m (e)

56 Impact of price reductions Sales growth index Price reduction - 28% - 15% - 10% International Israel Ukraine Euro countries June 12 Sept 13

57 Price reductions Now in 17 territories 24 EU countries excl. Germany Germany Gibraltar Iceland Israel Japan Kazakhstan Kuwait Mexico New Zealand Norway Qatar Russia Switzerland Plans for 17 more Turkey UAE Ukraine Argentina Belgium Chile Gibraltar France Hong Kong India Luxembourg Malaysia Mexico Netherlands Pakistan Peru Singapore Spain South Africa Thailand Profitability remains greater than 20%

58 Outlook for full year sales and profit

59 Profit guidance 2013/14 Full Year Brand Sales + 1.5% to + 3.5% 2012/13 622m 2013/14(e) 655m At mid point COST INCREASES - 40m COST SAVINGS + 46m RETAIL LFLs - 18m NEW SPACE + 15m DIRECTORY + 30m

60 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%

61 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%

62 Long term TSR Assuming dividend at 2% and constant PE ratio 15% 9% 0% 21% 18% 2010/ /12 20% 16% 9% 21% 14% 2012/ /14 Including tax enhancement Dividend Yield EPS Enhancement Profit Growth

63 July 2013