NEXT plc Delivered profits exactly in line with the guidance

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NEXT plc (LON:NXT) today announced results for the year ending January 2019.

CHAIRMAN’S STATEMENT

The NEXT Group has delivered profits exactly in line with the guidance we issued in January 2019 and we are maintaining our guidance for the year ahead.

As anticipated, the year to January 2019 was challenging for NEXT as we continued to experience a structural change in our business, with sales continuing to transfer from our stores to online. Despite this, Earnings Per Share for the Group increased by +4.5% to 435.3p. We are proposing a final ordinary dividend of 110p taking the total ordinary dividend for the year to 165p, an increase of +4.4% on last year.

Total1 Group sales were £4.2bn. Full price sales2 were up +3.1%. Online3 full price sales increased by +14.8% and Retail full price sales declined by -7.3%.

Cash flow remained strong and we returned £541m to shareholders through a combination of ordinary dividends (£216m) and share buybacks (£325m). During the year we purchased 6.3m shares at an average price of £51.65 and reduced our shares in issue by 4.3%.

We have continued to invest in the business, spending £129m on stores, warehousing and systems. Net debt increased to £1,096m from £1,002m driven by the sales growth in nextpay, our online credit business. Net debt of £1.1bn remains well within our bond and bank facilities of £1.5bn and broadly aligned to our Online debtor book.

We have had a number of changes to the Board during the year. Michael Law, Group Operations Director who had been with NEXT for 23 years, retired from the Board at the 2018 AGM in May. Richard Papp, who has been with NEXT for 25 years, succeeded Michael on the Board as Group Merchandise and Operations Director.

Caroline Goodall, non-executive director and Chairman of the Remuneration Committee, retired from the Board on 1 January 2019. Tristia Harrison joined our Board in September 2018 as a non-executive director. Tristia is Chief Executive Officer of TalkTalk Telecom Group plc.

The strength of the Group is built on the hard work and dedication of all NEXT’s people. I would like to thank them all for their contribution, especially for the determination and commitment they have shown during this demanding year.

Even though the High Street looks set to remain challenging our Online business continues to increase its contribution to sales and profit of the Group. Our central guidance for the year ahead is for Earnings Per Share to grow by +3.6%. The Board continues to be focused on building shareholder value through the delivery of long term sustainable growth in Earnings Per Share. Our core strategy remains unchanged; focus on our customers, products and profitability, continuing to build on the capabilities of our brand and Online Platform and returning surplus cash to our shareholders.

Michael Roney

Chairman

NEXT Brand full price sales were up +3.1% on last year and total sales5 (including markdown sales) were up +2.6%. In line with the guidance we gave in our January 2019 trading statement, Group profit was £722.9m, down -0.4% on last year and Earnings Per Share (EPS) were up +4.5%.

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TOTAL SALES	Jan 2019 £m	Jan 2018 £m
Retail	1,955.1	2,123.0	– 7.9%
Online	1,918.8	1,672.4	+14.7%
Finance	250.3	223.2	+12.1%
Brand	4,124.2	4,018.6	+2.6%
Other⁶	96.7	98.9
Total Group sales	4,220.9	4,117.5	+2.5%
Statutory revenue	4,167.4	4,090.7⁷

PROFIT and EPS	Jan 2019 £m	Jan 2018⁸ £m
Retail	212.3	268.7	– 21.0%
Online	352.6	309.8	+13.8%
Finance (after funding costs)	121.2	111.9	+8.4%
Brand	686.1	690.4	– 0.6%
Other	35.8	28.9
Recharge of interest to Finance	40.1	40.6
Operating profit	762.0	759.9	+0.3%
Net external interest	(39.1)	(33.8)
Profit before tax	722.9	726.1	– 0.4%
Taxation	(132.5)	(134.3)
Profit after tax	590.4	591.8
Earnings Per Share	435.3p	416.7p	+4.5%
Ordinary dividends per share	165.0p	158.0p	+4.4%

4Full price sales are VAT exclusive sales, excluding items sold in our mid-season, Black Friday, end-of-season Sale events and our Clearance operations.

5Total sales are VAT exclusive sales including the full value of commission based sales (refer to Note 2 of the financial statements). Prior year total sales have been reclassified, refer to Appendix 1.

6Other includes: NEXT Sourcing external sales, Franchise and Lipsy non-NEXT business.

7 Prior year statutory revenue has been restated by £35.2m to reflect the transition to IFRS 15; these IFRS 15 adjustments did not impact total or full price sales, refer to Appendix 1.

8Prior year profit by division has been reclassified, refer to Appendix 1. Group profit remains as reported.