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Next Share Discussion Threads
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Are you having that sinking feeling ?
Professor Pugwash (NXT) 08 Jan 2017 - 17:49:54
I'll be topping up my holding in the morning to around 1500 shares.
Hopefully I'll be able to pick them up around £41 or so.
Professor Pugwash (NXT) 05 Jan 2017 - 08:36:09
And a further 494 just now at £40.21.
Professor Pugwash (NXT) 05 Jan 2017 - 08:28:47
Just picked up 250 at £39.99.|
|I guess council tax rises and future utility bill increases will not put more money in customers pockets either :)|
|Another factor is sharp increases to business rates
Plus the weak pound
Plus expected food price inflation will hit consumers disposable income|
|From a historical perspective, NEXT has a lot of competitive advantages.
1. Earning 20% in operating margins and has never fallen below 10% in 18 years.
They beat BOOHOO and ASOS of which its margins are between 4% and 7%, respectively. And beat luxury retailer Burberry’s 17% margins.
All three businesses have higher P/S and P/E numbers than NEXT!
2. Okay, I grant that ASOS and BOOHOO are growing faster, but regarding the PEG ratio, NEXT is lower on 0.61, compared with BOOHOO’s 0.93 and ASOS’s 5.04.
3. Don’t over worry about Debt to Equity of 300%+ because NEXT can pay off its debts in two years because free cash flow of circa. £450m would cover £900m of total debt in two years, provided NEXT can continue to produce those numbers!
4. NEXT PLC online division is earning 25% net margin helped by interest income fees from their credit card services, which accounts for 50% of online earnings and 33% of total group earnings.
5. NEXT PLC has done so much share buyback (bought back 65% of all total share issue since 1999) that a new share price low is equivalent to double that of its 2008’s share price low.
6. Unlike some businesses, NEXT has to deliver the goods to justify its valuation where the EPS doubled from £2.21/share in 2011 to £4.42/share in 2016.
For the not so positive things about NEXT PLC.
NEXT’s management is right to be realistic (whether this reflect an optimism or a pessimistic view), this relate to the rise in input costs of 5% or specifically £29m from
A. National Living Wage;
B. Energy taxes;
C. Wage Inflation;
D. Website improvements.
Other adverse points of NEXT PLC are:
1. NEXT PLC’s consistently record NEGATIVE like-for-like sales but still manage to earn extraordinary operating margins.
2. This leads to the company’s retail division reporting declining revenue per SQ. Ft. from £1,000 to £650, while tripling in sizes.
3. Despite the large dividends give away, the company cash balance is under £70m, therefore NEXT need to churn out exceptional results year after year.
Where are we now
On a historical valuation basis, NEXT looks undervalue from the latest financial numbers. Future results for 2017 and especially 2018 will see if this market is right to justify today’s valuation.
To read more of this analysis, the full post here: http://bit.ly/2ljTHtm|
|Wolfson has a massive vested interest in Next so I doubt that nothing is going on behind the scenes. I do imagine that changing the direction of a retail giant like Next is not going to happen overnight or even over the course of a fashion season. Changes to products, contracts, leases, recruitment, systems, etc. are going to take time.
Assuming that things are underway to take more advantage of their online channels and reduce the cost of their high street presence, can Next stay in the race whilst this takes place?|
|Lord Wolfson seems like a thoroughly decent bloke and has done an excellent job at Next. He does though have a reputation for commenting pessimistically on the fortunes of Next – and that was fine when things were actually going rather well.
He gives the impression now of sitting back rather passively and commenting interestedly on the macro economic gales that are assaulting Next - rather than actually doing anything about it.
Until this is addressed the shares will continue to languish
Next is a well resourced company and the directors (maybe a change of directors) need to get busy and work out what they need to do to adapt and take advantage of changing market conditions.|
|Yes saw that article earlier and think it's a more than a fair assessment.
No dividend is guaranteed, and the special may be adjusted if trading takes
another downward lurch, the picture for 2017 should be a lot clearer following
the next update imv.|
|ganthorpe that is certainly my understanding which is very nice as that is more than I paid for the shares in the mid-90s.
Although the trading statement says
"We therefore intend to return surplus cash to shareholders by way of four quarterly special dividends of 45p each...this plan is subject to the outlook remaining in line with our forecast ranges and no significant changes to market conditions."
If there is subsequently any suggestion that they might have to renege on that intention for whatever reason then the share price will, in my opinion, tank.|
|GBP supportive is £ strength continues imv.|
|I may be wrong , but I reckon that NEXT are planning to pay out 338P in divis over the next year if they maintain their regular Interim and Final Dividends at last year's level.
Regular Final 105PJuly 2017
Reg Interim 53P Jan 2018
Specials $X45P=180P starting May 2017 then quarterly
Total 338P - about 8.75%
With their strong cash flow they should be able to afford it?
That should support the present share price|
|The trend is your fiend.|
|The trend is certainly not a friend with this one. Still watching and waiting to buy|
|£36 COMING AND WILL GO LOWER.|
|Chart is all you need to know. Add car and spe|
|adding this week.|
|Lots of vacancies at Next right now hxxps://careers.next.co.uk/.
Many of them in Digital Marketing and IT. Does that provide any clues as to their direction?
Gone are the days when a large store portfolio provided a competitive advantage for delivery/returns. Most retailers can deliver/return using my corner shop.
Next also used to have an advantage with its next day delivery but most competitors can now offer the same.
Next still seems to be a very well-run and cash generative business but where is the growth? According to the half year results Label/Lipsy and Directory Overseas are growing but they aren’t a big enough part of the business yet from what I can see.
As more and more people are comfortable with buying clothes online (even us silver surfers) I struggle to see their massive retail presence being anything other than a drag on their profitability in the current landscape.
Hopefully Wolfson and his team will deliver but I have my doubts.
I already hold a very long term position (over two decades) which I should have dumped at £80 (as should we all) but I’m now hanging on to them for that juicy yield. I may consider buying more if they hit the low £30s unless that is accompanied by some bad news in which case it will be farewell to my Next position.|
|M, that is correct and often overlooked- the money they make on the loan book.
Clothing retail is in an incredible state of flux atm, it appears that 2016
saw a step change in migration to online orders for the sector.
Can NEXT navigate this changing landscape while operating an extensive store
portfolio, with the costs that involves? - that is the key imv.|
|Shout out to Essential: Thanks for making me cautious on trying to buy in at the bottom. Resisted buying yesterday... Still dropping?|
|i may join you if they stay below 3800p|
|Yes, that's the difficult bit! Where is the bottom?
May buy a small tranche before close.|
|below 3800p now.
what a crash.
min wage, low £, uncertain retail environment.|
|The other thing that seems to be overlooked is that Next makes a great deal of money on providing financing to clients. Unsecured debt is a concern going forward but there is evidence to suggest that this concern is overdone - which I agree with. For that reason I am increasing holdings in Next and Provident Financial.
The other thing that is overlooked is Next Home. All those new properties will need curtains, fixtures and fittings, soft furnishings, whatever.. This division of Next does have this opportunity to perform well over the next decade if managed/marketed appropriately.|