Next achieves 5.4 percent growth in 2013 sales

Thursday, 20 March 2014
REPORT_ In the fiscal year 2013 results, Next has announced that its totals sales grew 5.4 percent and there was 11.8 percent growth in underlying profit before tax. In the year to January 2014, underlying post-tax EPS grew by 23 percent. Total Retail sales were 1.7 percent ahead of last year, of which new space contributed 3.1 percent. Full price sales grew by 2.9 percent. Markdown sales were 11 percent down as a result of stock for sale being 15 percent lower than last year. Underlying earnings per share grew by 23 percent and company proposes to increase full year ordinary dividends by 23 percent in total.

Sales for Next Directory, online and catalogue business grew by 12.4 percent narrowing the gap with Next Retail, which grew by 1.7 percent. Operating margins in both businesses increased during the year. The Group's underlying profit before tax rose 11.8 percent.

“The strength of our Group is built on the hard work and productivity of our management team and all the people who work for Next. The performance gives us a solid platform for 2014. Our strategy remains the same, focused on our products, our profitability and returning cash to our shareholders. Notwithstanding the continued pressure on the UK consumer, we anticipate another year of growth for Next,” opined John Barton, Chairman of Next.

Net margins on overseas business fell from 19 percent to 18 percent, reflecting keener prices and some marketing initiatives. Company expects net margins in the year ahead to remain at 18 percent. Going forward, it expects growth rates to ease a little, as the price adjustments made in 2013 begin to annualise. It is currently forecasting its international online sales to grow by 50 percent.

Next claims that full year sales of 63 million pounds (104.2 million dollars) and operating profit of 5 million pounds (8.2 million dollars), before amortisation and profit share of 2 million pounds (3.3 million dollars), was the best performance in its five years of ownership. Lipsy's retail sales were 20 million pounds (33 million dollars). Online sales, through Lipsy's own site and the Next Directory were 21 million pounds (34.7 million dollars).

Its franchise business, with partners operating 173 stores in 35 countries, continued to grow both sales and profits. The number of directly owned stores has been reduced to sixteen and they broke even for the first time. Eleven stores in Central Europe made a small profit, offset by a small loss in China.

Next expects total Next brand sales growth of between 4 percent and 8 percent in the year ahead, this compares to the 1 percent to 4 percent estimate it gave at this time last year. In the year ahead company expects the fourth quarter to provide tough comparatives and it will be hard to beat. Accordingly it is budgeting very cautiously for the final quarter.

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