Thursday, 20 March 2014

NEXT - Final Results

This FTSE 100 retailer was added to my ISA portfolio last October.

The retail chain was only launched in February 1982 and the first store opened with an exclusive coordinated collection of stylish clothes, shoes and accessories for women. Collections for men, children and the home quickly followed. NEXT clothes are styled by its in-house design team to offer great style, quality and value for money with a contemporary fashion edge.

Today NEXT trades from more than 500 stores in the UK and Eire and almost 200 stores in more than 30 countries overseas. Online shopping was introduced in 1999 and the entire book became available to shop from on the internet, page by page – another first in home shopping in the UK. NEXT Directory now also serves customers in around 60 countries outside the UK.

They have today reported full year results to 31st January 2014. After the last trading statement in January, it is little surprise that profits are at the top end of expectations with pre-tax profits rising 11.8% to £695m (2013 £621m). As a result of 6.2 million share buy backs earlier in the year, earnings have risen 23% to 366p per share supporting a full year dividend of 129p (2013 105p). Dividend cover is a healthy 2.8x earnings and free cashflow cover is 3.1x. This will be the 5th consecutive year that earnings and dividends have increased by more than 15% - quite an achievement.

The share price has advanced some 55% over the year and the board have decided for the time being to suspend share buy-backs and have started to return excess cash to shareholders by way of special dividends - 50p was paid in February and a further 50p has been declared for May. Two further special dividends are expected later in the year.

The outlook for the coming year is very positive with forecast sales revenues of between 4% - 8% and total returns of 10% to 15%.

The results have been well received and when last I checked, the share price was up 1.7% at £66.90.

This is a very well run organisation under the stewardship of CEO, Lord Wolfson. I am happy to continue with this quality company and may look to further add to my holding should there be any share price weakness over the coming 12 months.

As always, please DYOR.

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