Income Statement
£m
Total sales
Operating profit
Interest
Profit before tax
Brand
July 2016
July 2015
1,957
1,907
360
362
(18)
342
Comparable
Weeks
+ 2.6% + 1.8%
Brand
(15)
347
Brand
Income Statement
£m
Total sales
Operating profit
Interest
July 2016
July 2015
1,957
1,907
360
362
(18)
347
Taxation
(69)
(70)
Profit after tax
273
277
EPS (underlying)
188.6p
187.1p
53.0p
53.0p
Ordinary dividends per share
Full Price
+ 0.4% - 0.3%
- 0.4%
(15)
342
Profit before tax
Comparable
Weeks
- 1.5%
+ 0.8%
Brand
Cash Flow
July 2016
July 2015
342
347
59
57
Capital expenditure
(77)
(81)
Working capital / other
(70)
(84)
Tax paid
(71)
(70)
ESOT
(15)
(40)
Cash flow before distribution
168
£m
Profit before tax
Depreciation / disposals
129
Cash Flow
£m
Capital
expenditure
Profit before
tax
Depreciation / disposals
Warehouse
July 2016
(77)
342
July 2015
(81)
347
59
£162m
57
£151m
Jan 2017 (e)
Head Office infrastructure
£30m
Systems
£12m
£7m
£103m
Stores
Jan 2016
£22m
£15m
£13m
£86m
Cosmetic refits
£10m
£15m
Cash Flow
July 2016
July 2015
342
347
59
57
Capital expenditure
(77)
(81)
Working capital / other
(70)
(84)
Tax paid
(71)
(70)
ESOT
(15)
(40)
Special dividends paid
(88)
(163)
£m
Profit before tax
Depreciation / disposals
Share buybacks
Net cash flow
(176)
-
(96)
(34)
Balance Sheet
£m
Fixed assets and investments
Goodwill and intangibles
Stock
Debtors
Creditors / derivatives
Dividends payable
Pension (deficit) / surplus
Net debt
Net assets
July 2016
July 2015
560
43
491
1,077
(854)
(150)
(35)
(946)
530
44
451
926
(896)
(237)
37
(549)
186
306
Balance Sheet
£m
July 2016
560
Fixed assets and investments
Goodwill and intangibles
43
Stock
491
Debtors
1,077
Creditors / derivatives
(854)
July 2016
Directory
Dividends payable
(150) +21%
£953m
debtors
Pension (deficit) / surplus
(35)
Net debt
(946)
Credit
July 2016
0%
sales
Net assets
186
July 2015
530
44
451
926
(896)
July 2015
(237)
£790m
37
(549)
July 2015
306
+ 8.9%
+ £151m
+ £163m
Balance Sheet
£m
Fixed assets and investments
Goodwill and intangibles
Funding Level
Stock
Debtors
Assets
Creditors / derivatives
Liabilities
Dividends payable
Pension (deficit) / surplus
Net debt
Net assets
July 2016
July 2015
560
43
95%
491
1,077
665
(854)
(700)
(150)
(35)
(946)
530
44
107%
451
926
605
(896)
(568)
(237)
37
(549)
186
306
+ 60
- 132
Balance Sheet
£m
Fixed assets and investments
Goodwill and intangibles
Stock
Debtors
Creditors / derivatives
Dividends payable
Pension (deficit) / surplus
Net debt
Net assets
July 2016
July 2015
560
43
491
1,077
(854)
(150)
(35)
(946)
530
44
451
926
(896)
(237)
37
(549)
186
306
Full Year Debt and Cash Flow
1000
900
800
700
600
500
400
300
200
100
£m
699
Jan 2016
Jan 2017(e)
850
859
794
Share buybacks
151
Operational
350(e)
Special dividends
& buybacks
294(e)
Directory debt
65(e)
Funding Requirements
1600
~£1.5bn Investment grade
1400
1200
1000
800
600
400
200
£m
July 2016
Directory Debt
953
Jan 2017(e)
859
Funding Requirements
1600
1.4bn
1400
1200
1000
Bank facility
525
800
600
400
200
£m
Bonds
875
2020
Peak
1.1bn
2021
2021
2026
2028
Jan 2017(e)
859
Retail
Edinburgh Straiton
Opened 26th July 2016
Retail : Sales Analysis
£m
July 2016 July 2015
Total sales
Operating profit
1,084
1,083
134
161
Sales from new space
Comparable
Weeks
Total
Full Price
+ 2.8%
New store performance
Sales v target
Payback (months)
Store profit
+ 5%
22
22%
Forecast for stores opened or extended in the last 12 months
+ 0.1% - 0.7%
- 3.2% - 4.0%
Retail : Profit Analysis
£m
July 2016 July 2015
Total sales
1,084
1,083
134
161
12.4%
14.9%
Operating profit
% to sales
Full Price
- 3.2%
- 16.8%
Margin movement
Bought-in gross margin
+ 0.1%
Markdown
- 1.8%
Achieved gross margin
- 1.7%
Sale stock
+ 37%
Markdown sales
+ 33%
Retail : Profit Analysis
£m
July 2016 July 2015
Total sales
Operating profit
% to sales
1,084
1,083
134
161
12.4%
14.9%
Margin movement
Achieved gross margin
Store payroll
Store occupancy
Warehousing and distribution
Central overheads
Margin movement
- 1.7%
- 0.2%
- 0.8%
- 0.3%
+ 0.5%
- 2.5%
Full Price
- 3.2%
- 16.8%
Full year forecast
margin circa
15%(e)
Directory
Directory : Sales Analysis
£m
Comparable
Weeks
July 2016 July 2015
821
767
204
184
Total sales
Operating profit
Total
Full Price
Full price sales analysis
Increase on last year
+ £1m
+ 0.1%
Label
+ £14m
+ 17.2%
Directory UK total
+ £15m
+ 2.5%
NEXT Directory UK
+ 7.1% + 5.4%
+5.5% +4.9%
Directory : Sales Analysis
£m
July 2016 July 2015
821
767
204
184
Total sales
Operating profit
Comparable
Weeks
Full Price
+5.5% +4.9%
Full price sales analysis
Increase on last year
Customers
Directory UK total
+ £15m
+ 2.5%
+ 2.8%
Directory overseas
+ £19m
+ 20.7% *
+ 19.3%
Directory total
+ £34m
+ 4.9%
+ 5.4%
* Directory overseas (constant currency) +27%
Directory : Sales Analysis
£m
July 2016 July 2015
821
767
204
184
Total sales
Operating profit
Comparable
Weeks
Full Price
+5.5% +4.9%
Full price sales analysis
Increase on last year
Customers
UK credit
- £6m
- 1.1%
- 4.0%
UK cash
+ £21m
+ 23.6%
+ 18.6%
Directory UK total
+ £15m
+ 2.5%
+ 2.8%
Directory : Profit Analysis
£m
July 2016 July 2015
Total sales
Operating profit
% to sales
821
767
204
184
24.9%
24.0%
+5.5%
Full Price
+ 10.9%
Margin movement
Bought-in gross margin
+ 0.1%
Markdown
- 1.6%
Achieved gross margin
- 1.5%
Sale stock
+ 14%
Markdown sales
in the first half
+ 42%
Markdown sales
as at September
+ 14%
Directory : Profit Analysis
£m
July 2016 July 2015
Total sales
Operating profit
% to sales
821
767
204
184
24.9%
24.0%
Full Price
+5.5%
+ 10.9%
Margin movement
Achieved gross margin
Interest income
- 1.5%
+ 1.2%
Warehouse and distribution + 0.9%
Marketing and catalogues
+ 0.3%
Margin movement
+ 0.9%
Full year forecast
margin circa
25%(e)
Currency
Currency Rates
USD / GBP Costing Rate
1.63
1.51
- 7%
2015/16
2016/17
1.36(e)
- 10%
2017/18
Currency Rates
USD / GBP Costing Rate
1.63
1.51
- 7%
1.36(e)
- 10%
2015/16 2016/17 2017/18
Currency Participation
Currency Rates
USD / GBP Costing Rate
1.63
1.51
- 7%
1.36(e)
- 10%
2015/16 2016/17 2017/18
Weighted Cost of
Target Currencies
- 5%
- 5%(e)
2015/16 2016/17 2017/18
Currency Rates
Weighted Cost of
Target Currencies
Mitigation 2016
New territories
- 5%
- 5%(e)
Improving territories
Improving efficiency
Commodity prices
2015/16 2016/17 2017/18
Currency Rates
Weighted Cost of
Target Currencies
Mitigation 2017
New territories
- 5%
- 5%(e)
Improving territories
Improving efficiency
SS17 LFL cost prices ≤ 5%?
2015/16 2016/17 2017/18
Currency Rates
Weighted Cost of
Target Currencies
SS17 LFL cost prices ≤ 5%?
Circa 10% of product is LFL
- 5%
- 5%(e)
2015/16 2016/17 2017/18
Retail selling price?
Currency Rates
The choice in 2017…
Increase prices
+ 5%
or
Reduce margin
- £80m
Currency Rates
The choice in 2017…
Increase prices
Elasticity
Likely LFL sales
+ 5%
~ 1.1
- 0.5% to - 1.0%
The UK Economy
NEXT July Bounce?
+ 15%
+ 10%
Total NEXT Sales Growth
+ 5%
0%
- 5%
- 10%
- 15%
Full Price
Sales Growth
May
Jun
Jul
UK GDP, Avg. Earnings & CPI Growth | Year on Year %
+ 8%
+ 6%
+ 4%
GDP
+ 2%
Average Earnings
0%
CPI
- 2%
Jan
2015
Mar
May
Jul
Sep
Nov
Jan
2016
Source; ONS: CPI (Sept) / GDP (Aug) / Ave. Wkly Earnings (Sept)
Mar
May
BoE: CPI Forecast (Aug)
Jul
Sep
Nov
Jan
2017
Avg. Earnings & Consumer Spend Growth | Year on Year %
+ 8%
+ 6%
+ 4%
Consumer
Spend
+ 2%
Average Earnings
0%
- 2%
Jan
2015
Mar
May
Jul
Sep
Nov
Jan
2016
Source; ONS: Consumer Spend - GDP Data: Q1 National Accts. (Jun) / Avg. Wkly. Earnings (Sept)
Mar
May
Jul
Retail Sales & Clothing/Footwear Growth | Year on Year %
+ 8%
Clothing/Footwear Sales (sector)
+ 6%
Consumer
Spend
+ 4%
+ 2%
Hotels
Restaurants
Going out
Retail Sales
(sector)
0%
- 2%
Jan
2015
Mar
May
Jul
Sep
Source; ONS: Retail Sales Index Reference tables, 3 month average (Aug)
Nov
Jan
2016
Mar
May
Jul
Outlook Summary
History
• July anomaly
Consumer
Outlook
• GDP remains subdued
Clothing
Outlook
• Risk to real earnings
• Oct/Nov onwards – weaker comps
Full Price Sales Outlook | 2016/17(e)
Full Year Estimate
- 2.5%
to
+ 2.5%
Full Price Sales Outlook | 2016/17(e)
- 2.5% to + 2.5%
Full Price Sales Growth by Quarter v Previous Year
+ 6%
+ 4%
+ 2%
0%
2015/16
+ 3.2%
2016/17
+ 3.9%
?
+ 0.4%
+ 0.3%
- 0.9%
- 2%
- 4%
+ 6.0%
Q1
Q2
?
Q4 up to Christmas Eve
Q3
Q4
Priorities for 2016/17
Retail Space
Improving Directory
Improving Product
Why expand into a downturn?
Store Rent Analysis
Closing
at Jan 2016
Opening
during 2016(e)
7.6m
610k
Annual rent*
£173m
£9m
Rent / Sq. ft.
£22.67
£14.40
6%
4%
Sq. ft.
Rent / Sales
* Rent shown net of capital contribution releases and sub-let income
-36%
Store Performance | 2008 to 2015
145
140
135
130
125
120
Sq. ft.
Profit
Rent
Sales
115
110
105
100
95
2008
2009
2010
2011
2012
2013
2014
2015
Store Performance | 2008 to 2015
110
If… sq. ft. had remained flat
105
100
95
90
85
80
75
Profit
Sq. ft.
Sales
70
65
60
2008
2009
2010
2011
2012
2013
2014
2015
Store Performance | 2008 to 2015
145
140
135
130
Average lease expiry
Profit
7 years
125
120
115
110
105
100
95
2008
2009
2010
2011
2012
2013
2014
2015
Priorities for 2016/17
Retail Space
Improving Directory
Improving Product
Improving Directory Performance
+ 14%
+ 13%
Full Price Sales
+ 12%
+ 10%
Directory growth vs Retail growth
+ 9%
+ 9%
+ 8%
+ 8%
+ 7%
+ 7%
+ 6%
+ 4%
+ 2%
+ 2%
0%
SS
2013
AW
2013
SS
2014
AW
2014
SS
2015
AW
2015
SS
2016
Directory | Improvements in 2016
Stock Availability
Online Personalisation
Mobile / Apps
Catalogue Distribution
Customer Recruitment
Delivery
Directory | Improvements in 2016
Stock Availability
Mobile / Apps
Stock available for next day delivery
75%
Customer Recruitment
66%
AW14
SS15
65%
AW15
71%
?
Stock
Systems
SS16
AW16
Directory | Improvements in 2016
2016
Stock Availability
Mobile / Apps
Customer Recruitment
•
•
•
•
Conversion rate
Before
New iPhone & new iPad Apps 5%
UK M.Site
Payment & Account Management
Catalogue view
After
6%
Directory | Improvements in 2016
2016
Stock Availability
Mobile / Apps
Customer Recruitment
•
•
•
•
New iPhone & new iPad Apps
UK M.Site
Payment & Account Management
Catalogue view
2017
• Baskets across devices
• Website convergence
• International M.site
Directory | Improvements in 2016
2016
Stock Availability
Mobile / Apps
Customer Recruitment
• Display ads
Additional UK recruitment
Additional customers
67k
Additional spend
£3.1m
Cost per addition
£47
IRR
53%
Overseas IRR < 10%
Directory | Improvements in 2016
2016
Stock Availability
Mobile / Apps
Customer Recruitment
• Display ads
2017
• Personalised ads
• Abandoned bags
Priorities for 2016/17
Retail Space
Improving Directory
Improving Product
A Better Way of Buying
Systems
Processes
Culture
Sales & Profit Guidance
Profit Scenario | 2016/17(e)
If…
Full Price
sales are
720
2016/17(e)
+ 0%
£805m
740
760
780
2015/16
£821m - 2%
800
Cost increases
820
Retail LFL
- £48m
- £62m
Cost savings and interest income
£70m
New space
£14m
Directory
£10m
Sales and Profit Guidance | 2016/17(e)
Full year Brand full price sales
- 2.5%
to
+ 2.5%
Profit before tax
£775m
to
£845m
Growth in profit
- 5.6%
to
+ 2.9%
2.3%
Ordinary dividend yield*
circa 3.0%
Special dividend yield / buybacks*
TSR underlying (at constant PE ratio)
- 0.3%
* Based on a share price of £67.66, the average share price during the first month of 2016/17
to
+ 8.2%
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