Next Share Discussion Threads

[kmreid] 25/2/2019 21:08

Share buybacks are basically a way of returning value to shareholders, like a dividend. Nothing necessarily wrong with it. It's one of the reasons I like Next, next to it's profitability. That said, I'm not invested - won't be investing in a high street retailer any time soon.

[cluelessbugger] 25/2/2019 12:08

diku - Simon Wolfson explained Next's rationale for share buybacks in the January 2013 year end report which is available here

[diku] 04/2/2019 23:13

Amazing for how long NXT just keeps on buying back shares for cancellation...just over 100 mln shares in issue according to ADVFN stats...flatter the results?...

[cluelessbugger] 04/1/2019 10:37

It will be interesting to see if the year end results show them crossing the threshold into mainly online business with a "few" shops. They weren't far off last year.

However I still think that sector sentiment might drag them lower when we see trading updates from other retailers. Not to mention macroeconic uncertainty.

EssentialInvestor - don't give Simon too much credit. I remeber him saying at an AGM that he didn't think that the internet would ever amount to more than 10% of Next's business. That prejudice can't have helped and they may well have been in an even better position if they'd accepted the changing dynamics of retail sooner.

Presumably he has a good team that persuaded him otherwise.

[essentialinvestor] 03/1/2019 09:41

Indeed Russ, fortunate rather than good fortune.

[russ1983] 03/1/2019 09:35

its more than "fortune" their strategy was to go into online early on and move next directory online and one of the 1st retailers to do next day delivery intitally and continually improved it where you can order late at night and comes next day, whereas M&S or debenhams etc were too slow to adapt and even now struggling online

[spob] 03/1/2019 09:25

Next shares rise despite profit outlook downgrade

Fashion retailer’s Christmas trading gives hope to stressed High Street


Jonathan Eley

FT


Fashion retailer Next kicked off the festive reporting season with a small downgrade to its full-year profit outlook and a forecast of slight reduction in profit next year, but avoided a heftier cut to earnings expectations.

The company, traditionally the first to report on Christmas trading, said full-price sales from October 28 to December 29 were up 1.5 per cent, in line with its previous guidance.

It confirmed the view of others that November sales were disappointing, but said the October half-term had been strong, as were the weeks leading up to Christmas. The sales increase included a contribution from new store space and from finance income.

The reduction in Next’s guidance for full-year profit — from £727m to £723m — was a result of lower margins on beauty products in the run-up to Christmas, plus the higher cost associated with fulfilling online orders. Over half the group’s sales are now made online.

Next’s new guidance was a less drastic reduction than some in the market had feared, lifting its shares by as much as 7 per cent and lending a helping hand to the share prices of rivals Marks and Spencer and Primark-owner Associated British Foods.

Berenberg analyst Michelle Wilson, who recommends selling the shares, said that while the update was better than feared, the drop in store sales was worse than consensus forecasts. “The drag from negative like-for-likes means Next will continue to report profit declines, even if it can generate revenue growth,” she said in a note to clients.

Sales in the group’s 540 stores were down 9.2 per cent, but this was offset by a 15 per cent gain in online sales. Store sales have been falling for several years, but the group has previously said all its stores are still profitable and cash-generative.

Ms Wilson added that the rate of decline in store sales had negative implications for more store-focused retailers such as Marks and Spencer, which is due to update investors on January 10.

However, Liberum analysts described the overall increase as “a very admirable result,” and said the shares looked too cheap. They upgraded their recommendation to buy with a £61 share price target.

Next shares ended 2018 down 10 per cent, mostly because of a steep sell-off in the last two months of the year. That followed comments from Sports Direct founder Mike Ashley about a challenging retail environment, and a profit warning from online fashion retailer Asos.

The profit outlook is still a disappointment compared to last year. This time in 2018, the group raised its profit guidance for the year, helped by cold weather in the run-up to Christmas.

If the forecast £723m of profit is achieved, it will be broadly flat compared with last year, though earnings per share will be higher because of share buybacks. For the year to January 2019, the company said it expected group profit to be £715m, though it cautioned that this forecast comes with a high degree of uncertainty, not least because of Brexit. It could spend up to £300m on share buybacks, which would increase earnings per share by around 3.6 per cent.

Analyst consensus had been for full-year group profit of £725m.

[essentialinvestor] 03/1/2019 09:19

Simon is sharper than an unused scalpel, he's one of the CEO's who create
large shareholder value, there aren't that many!.

[greyingsurfer] 03/1/2019 09:19

Fortunate to have the online business with store sales falling fast.

I wouldn't call it "fortunate". It's not luck, it's a company planning for, and dealing well with, the shift from high street to online. The net result is continued growth.

[spob] 03/1/2019 09:10

I think Next online sales are greater than in store sales

they can close underperforming stores if they want

[essentialinvestor] 03/1/2019 09:00

Fortunate to have the online business with store sales falling fast.

[spob] 03/1/2019 07:51

OUTLOOK FOR SALES, PROFIT, CASH FLOW AND EPS IN THE YEAR AHEAD


Sales

Next year, our central guidance for full price sales growth (including interest income) is +1.7%, in line with the second half performance of the current financial year. In the year ahead, we are assuming a similar economic environment as that experienced in the second half of the current year. Within this guidance, we expect Retail sales to be down ‐8.5% and Online sales to be up +11%.

Any sales forecast made in January comes with a high degree of uncertainty. This year uncertainty around the performance of the UK economy after Brexit makes forecasting particularly difficult. We have not factored into our sales estimates the potential benefits of a smooth transition or the downsides of a disorderly Brexit.


Profit, Cash Flow and EPS

At this level of sales growth, we anticipate Group profit would be £715m2, a decline of 1% on the profit forecast for the current financial year. We anticipate that the Company will remain strongly cash generative and our forecast for capital expenditure in the year ahead remains in line with the guidance given in September. At our central guidance, we estimate surplus cash3 generation of £300m. We intend to continue our policy of returning surplus cash to shareholders through share buybacks
(subject to market conditions). We estimate that the enhancement to Earnings Per Share from £300m of share buybacks would be 4.7% and at our central profit guidance, Earnings Per Share would increase again in the year ahead, by +3.6%.

[spob] 03/1/2019 07:41

no discounts available for next shares today then :(

[spob] 27/12/2018 03:30

Next's Christmas trading to be hit by Brexit and mild weather, says Jefferies

10:28 21 Dec 2018

In a note to investors, titled a “Messy Xmas”, Jefferies maintained a ‘hold’ rating on Next but cut its target price to 4,600p from 5,600p.

Jefferies expects a 3% cut to Next's full year pre-tax profit guidance

Mild weather and a Brexit-induced weakness in consumer confidence are bound to have affected Next PLC’s (LON:NXT) Christmas trading performance, Jefferies said.

In a note to investors, titled a “Messy Xmas”, Jefferies maintained a ‘hold’ rating on Next but cut its target price to 4,600p from 5,600p.

Next will be the first retailer to report its Christmas trading update on January 3.

Jefferies expects a 3% cut to the fashion retailer’s full year pre-tax profit guidance of £727mln, saying recent comments from peers and industry data confirmed the UK apparel market saw a solid October but a weak November.

ASOS PLC (LON:ASOS) issued a profit warning on Monday after a poor trading performance in November, a key month for the online fashion retailer.

The news dented investors’ hopes that Christmas sales would help retailers turn around its sales performance for the year.

Outlook depends on Brexit

"Whilst some big days of December trading are still ahead of us, we don't expect the protracted softness which spilled into December to be recovered," Jefferies said.

"Looking at the early months of 2019, much of the outlook continues to be dictated by what shape the Brexit discourse will take."

The first quarter of 2019 will be compared to last year’s weak performance when the so-called ‘Beast from the East’ meant customers stayed indoors during icy temperatures and heavy snowfall.RE

Jefferies said this makes for “good chances” of a solid transition into spring and summer clothing ranges.

“But whether UK consumers take full advantage of their improved ability to spend (with disposable income growth currently at more than 3%) will depend on politicians steering the Brexit process through calmer waters (the w/c 14 January parliamentary vote being the next big step),” the broker said.
Jefferies cuts profit forecast for Next

Against a tough retail backdrop, Jefferies estimates Next will report a 13% decline in like-for-like sales at its retail stores in the fourth quarter, compared to the 10.2% drop it previously expected. This is expected to be offset by growth in the Directory, Label and international businesses.

“We assume Xmas trading performance slightly softer than that in retail, with full price retail like-for-like -13.5% giving Brand sales of -2.9%.

“Combined with a slightly softer gross margin estimate (given no progress in mix in favour of full price sales in Q4) this sees us cut our full year pre-tax profit forecast from £726mln to £705mln (vs current guidance at £727mln).”

For the 2019/20 financial year, Jefferies expects pre-tax profit of £706mln, supported by full price brand growth of 3.1% (Retail like-for-like -4.7%, Directory +10%).

Jefferies said the recent sell-off has seen the shares de-rate to a FSTE discount of 20%, versus an historic range of -30% to 30%.

The broker currently prefers “more growthy” names like Primark owner Associated British Foods PLC (LON:ABF) and B&M European Value Retail (LON:BME), which have “experienced as extreme a reset in the valuation context”.

[porsche1945] 24/12/2018 17:28

...my 3800 prediction pretty spot on....90 per cent of stock from outside EU, what has that got to do with anything?? sterling has crashed against everything not just euro.
Wolfson should go, can get on with his tory career in politics (trying to sell utter brexit fiasco) these looking very sick, tired brand, possibly semi terminal.
Happy xmas.

[gswredland] 22/12/2018 09:42

Thanks Harris

[harris tweed] 21/12/2018 09:35

FWIW, Shares magazine have Next as one of their "10 fantastic stocks for 2019".

They conclude: "Next is one of the best-run companies on the stock market and that equity rating is an absolute bargain for a business of its calibre. You’re also being paid
an attractive stream of dividends, currently yielding a prospective 4.1%."

[cluelessbugger] 10/12/2018 11:36

I can see this going under £40 due to Brexit sentiment. Maybe sub £30 if (or when?) a major market sell-off coincides with Brexit.

Presumably Next will continue to spend £300m on buyback or special dividends every year unless there is a massive impact to their trade.

Meanwhile the structural change in the transfer of more and more of their business to online seems to continue at a pace.

Label and overseas also growing strong. Interesting section on lease renewals in their half year results shows that they can continue to run profitable retail space.

Obviously I wish I’d sold at £80, or more recently £60 to buyback more shares now or later but I’ve held Next for a very very long time so it doesn’t really matter. I am happy to carry on holding and am considering buying more for the longer term yield opportunity when I think we’re closer to the bottom.

You say sprawling annual report, I say master class in transparency. I’m always confident that I will find the information to answer a question I might have in their reports.

[nickname27] 05/12/2018 13:36

To counterpoint all that: Sterling has been trashed for 2 years already; 90% of stock is from outside the EU so no brexit impact; Online is already taking over from stores with a fairly seamless store/web crossover; they're an anchor tenant in many malls so the landlords will be bending over backwards (or maybe forwards) to keep them in place; people still like to go into (good) shops to buy clothes and they will continue to need clothes whatever channel they use to buy them. Additionally finance is the future of retail imo, though I note that bad debt is expected to rise this year: perhaps an early indication of a post brexit recession.

Personally I'm unconvinced by the homeware stores and would like to see more online Euro revenue (weak sterling should be a major driver here). Also a better organised and less sprawling annual report would be nice.

Of course this was all true 6 months ago too but sentiment towards domestic revenue earners has been hugely bearish, especially from foreigners. Quite a lot of UK companies, including Next, look like bargains, especially if you're looking at them through ultra-strong Dollar tinted glasses with the prospect of tariffs on your domestic retailers. They probably will be hard to resist for some as the US slows down.

I'm not going to guess at prices but it seems like a fairly safe buy at this level.

[porsche1945] 15/11/2018 13:39

Stock all imported and having to be paid for with a trashed currency courtesy of brexit....recession in uk only likely to increase internet buying and UK high St looking pretty sick, Next too much bricks snd mortar exposure, think these have had their day, unless sterling recovers this is back to 3800 ish.

[qantas] 11/11/2018 15:41

No Black Friday.

Please do your own research...

[qantas] 08/11/2018 11:29

Marks and Spencer Christmas 2018 advert



Please do your own research.

[qantas] 08/11/2018 09:09

MKS AI



Please do your own research.

[qantas] 08/11/2018 09:08

MKS AI



Please do your own research.