Regulatory News
REG-Next PLC Final Results - Part 1Released: 19/03/2008
RNS Number:4234Q
Next PLC
19 March 2008
Date: Embargoed until 07.00am, Wednesday 19 March 2008
Contacts: Simon Wolfson, Chief Executive
David Keens, Group Finance Director
NEXT PLC
Tel: 020 7796 4133 (19/03/08)
Tel: 0844 844 8888 (thereafter)
Alistair Mackinnon-Musson
Nicola Savage
Hudson Sandler
Tel: 020 7796 4133
Email: next@hspr.com
Photographs available: http://www.next.co.uk/press/XX41WPP/?id=belair
NEXT PLC
RESULTS FOR THE YEAR ENDED JANUARY 2008
Highlights
- Group revenue up 1.4% at £3,329m
- Group profit before interest up 5.8% to £537m
- Group profit before tax up 4.1% to £498m
- Buyback 11.5% of share capital for £514m
- Earnings per share up 15.5% to 168.7p
- Total dividend up 12.2% to 55p
CHAIRMAN'S STATEMENT
The year to January 2008 was another successful year for Next, with earnings per
share growth of 15.5% to a new record for the group of 168.7p. These are good
results in a period of economic slow down and are a reflection of the efforts we
have made in building and improving the Next Brand.
The Board is pleased to recommend a final dividend of 37p compared with 33.5p
last year making 55p for the year, an increase of 12.2%. The continued use of
surplus capital to buy back shares has again enabled us to deliver superior
growth in earnings per share, our main financial objective. Despite recent
share price volatility we remain convinced that, in the long term, growth in
earnings per share will deliver growth in value to shareholders. In the last
five years we have returned over £1.3 billion to shareholders in this way.
Trading conditions in the year ahead will continue to be difficult as increased
costs and rising taxes put pressure on our customers. In these circumstances,
we believe that our main strategy of investing in the Next Brand whilst
improving and extending our product ranges will offer us the best protection
against any downturn in the UK economy. Our Directory business, in particular,
gives us a strong and flexible base from which to grow our product offering.
We are also extending the Next Brand into new overseas markets where we believe
there are opportunities to build profitable businesses. If this is successful
it will bring new sources of growth over the longer term.
Derek Netherton will step down from the Board at the AGM in May. Derek has
served on the Board for eleven years during which Next has grown its profit by
over three times, dividend by over four times and earnings per share by over
five times. He has been a wise counsel to both the Board and the executive
team. We owe him many thanks for his help and advice.
During the year Steve Barber joined the Board as a non executive director and he
will take over from Derek as Chairman of the Audit Committee.
We have a robust operating model and strong cash flows, which will stand us in
good stead as we go through what we anticipate will be a difficult trading
period. We will continue to return cash to our shareholders through dividends
and share buybacks. However, our first priority will be to ensure that the
Company protects its strong financial base.
Our strategy of concentrating on the design, quality and value of product,
together with customer service and delivery, will remain the cornerstone of our
success in the future. That success cannot be secured without the commitment
and hard work of our management team, all our staff and the support of our
suppliers. I would like to thank them all for the contribution they have made
in achieving these results.
John Barton
Chairman
CHIEF EXECUTIVE'S REVIEW
PROFIT GROWTH IN A CHALLENGING YEAR
In the year ending January 2008 Next plc increased operating profit by 5.8% in a
worsening retail environment. This was achieved by a robust performance in Next
Directory and good cost control throughout the Group.
Earnings per share have moved forward by more than operating profits as a result
of share buybacks and a lower tax rate, they are 15.5% ahead of last year.
Revenue Profit and
excluding VAT earnings per share
Year to January Year to January
2008 2007 2008 2007
£m £m £m £m
Next Retail 2,255.1 2,255.0 319.9 316.6
Next Directory 799.8 774.5 164.4 143.9
_________ _________ _________ _________
The Next Brand 3,054.9 3,029.5 484.3 460.5 +5.2%
Next International 54.1 49.8 7.1 6.0
Next Sourcing 6.4 6.4 32.8 31.8
Ventura 203.7 190.9 21.5 20.6
Other activities 10.0 7.2 (2.1) (1.1)
Share option charge - - (8.8) (8.3)
Unrealised exchange gain/(loss) - - 2.3 (2.0)
_________ _________ _________ _________
Revenue and operating profit 3,329.1 3,283.8 537.1 507.5 +5.8%
_________ _________
Interest expense (39.0) (29.1)
_________ _________
Profit before tax 498.1 478.4 +4.1%
Taxation (144.2) (146.9)
_________ _________
Profit after tax 353.9 331.5 +6.8%
_________ _________
Basic earnings per share 168.7p 146.1p +15.5%
PROGRESS DURING THE YEAR
At the beginning of 2007 we set ourselves the objective of revitalising the Next
Brand whilst continuing to move profits forward. We have achieved the
following:
- Made our ranges more aspirational, improved our marketing and commenced
the rapid roll out of a new shop fit.
- Improved like for like sales performance in our Mainline stores from -7.0%
last year to -3.2% during the year just ended in the face of a worsening
retail environment. Our trading performance in both Spring Summer and
Autumn Winter was within the guidance we issued for each season.
- More than offset the costs of increased marketing with operational cost
savings and improvements in bought in gross margin, delivering growth in
operating profits despite negative Retail like for like sales.
- Increased earnings per share by significantly more than profits as a
result of our continuing strategy of buying back shares. This, together
with a reduced tax rate, takes the total EPS growth to +15.5%.
Our financial goal remains the delivery of sustainable long term growth in
earnings per share, which we believe to be the engine of long term growth in
shareholder value.
REVITALISING THE NEXT BRAND
The main task last year was the revitalisation of the Next Brand. First and
foremost this involved reminding ourselves what Next stands for, namely:
Exciting, beautifully designed, excellent quality clothing and homeware that
reflect the means and aspirations of our customers.
Put simply our goal has been to put a little of the magic back into the Next
Brand through our product ranges, marketing and shopfit.
PRODUCT
Newness
Throughout last year we increased the levels of newness within our ranges so
that there were more new products for our customers to see every six weeks.
This change has been partly as a result of selecting product closer to season,
but more importantly there has been a determined effort to take more calculated
risks at the time of selection and back new trends with conviction. Hand in
hand with this approach has been an increase in the importance we attach to
design and the speed with which new trends are adopted.
We are comfortable with the levels of newness we are currently achieving and the
emphasis must now shift to maximising the potential of best sellers through the
addition of alternative colour-ways of key lines.
Design and Quality
At the beginning of last year we observed that our customers were trading up our
price architecture, it is these products where we are best able to compete on
design and quality. Whilst our product must be affordable to most people and
great value, it will not necessarily be the cheapest. So we have moved the
emphasis of our ranges away from price starters, increasing the proportion of
items at mid price points and introducing new prices at the top end of our
ranges.
The table below sets out how the average selling prices for our clothing ranges
has changed against the previous year.
__________________________________________________________________________________________________
Average selling price Spring Summer Autumn Winter Spring Summer Autumn Winter
(Sales divided by units) 2008 (E) 2007 2007 2006
__________________________________________________________________________________________________
Womenswear +7% +5% +3% -4%
__________________________________________________________________________________________________
Menswear +3% +5% -1% -3%
__________________________________________________________________________________________________
Childrenswear +5% +4% -5% -5%
__________________________________________________________________________________________________
There are two important points that need to be made in respect of this change in
average selling price:
- We are not raising prices on like for like products, we must remain
vigilant to ensure that our range remains competitive at every level of our
price architecture.
- Average selling prices have only risen as a result of a change in the mix
of product the customer is buying.
We anticipate a less marked upward movement in average selling prices in Autumn
Winter 2008, at between two and four percent, as a result of increased
participation of mid price points and further extensions to the Signature range.
MARKETING
In order to communicate the changes we have made to our ranges we have increased
both the effort and investment we make in marketing the Next Brand. We have
improved the quality of our in-store displays, graphics and windows. In total
we spent an additional £16m on marketing in the year, most of this increase went
into press, billboard and TV advertising and windows.
We do not anticipate a further increase in the marketing budget in the year
ahead and aim to maintain marketing activity at broadly the same level as in the
year just ended.
SHOP FIT
The updating of our shop fit is an integral part of revitalising the Brand. The
aim is that our merchandise is displayed in stores whose interior design
reflects the design and quality of the clothing and homeware. In addition to 39
refits we opened 39 new stores in the new concept, the most important of which
was our 43,000 square feet store in Sheffield, Meadowhall.
A secondary benefit is that many stores experience an uplift in sales as a
result of a refit. However it is important to regard refit expenditure as an
increase in maintenance costs rather than a one off investment with a long term
return, because the sales improvements tend to tail off after a year.
One important lesson has been that if a refit takes too long then it can take a
considerable amount of time for trade to rebuild. As a result we will be doing
less comprehensive refits in stores that are less than six years old. These
will deliver a significant amount of the perceived improvement in less time and
at a much lower cost. These mini-refits are expected to last 6 to 8 weeks
whereas a full refit would take 12 to 16 weeks, the cost being about £22 per
square foot as opposed to £65 per square foot.
In the year ahead we expect to spend in the region of £37m on refitting existing
stores. The table below sets out approximately what we completed during the
year and what we expect in the year ahead. By the end of this year we expect 48
percent of our portfolio (by revenue) will be in the new concept. In addition
we will have redecorated and re-branded a further 24 percent.
_____________________________________________________________________________________________
Year to New Refits Redecoration TOTAL
Sq ft '000 Sq ft '000 Sq ft '000 Sq ft '000
_____________________________________________________________________________________________
January 2008 500 600 800 1,900
January 2009 (E) 500 1,000 600 2,100
_____________________________________________________________________________________________
Total 1,000 1,600 1,400 4,000
Percentage of portfolio 18% 29% 19% 66%
Percentage of revenue 16% 32% 24% 72%
_____________________________________________________________________________________________
NEXT RETAIL
Retail Sales
Retail sales require some additional explanation. Unusually, there was a
significant difference between the performances of Next Mainline and Next
Clearance. Mainline sales finished the year up 0.1% with like for like sales
down -3.2%, this was within the guidance we gave at the start of the year of -1%
to -4% like for like.
Movement in sales:
__________________________________________________________________________
Net sales from new space +3.8%
__________________________________________________________________________
Mainline like for like performance -3.2%
__________________________________________________________________________
Impact of Next Clearance -0.6%
__________________________________________________________________________
Total Retail sales 0.0%
__________________________________________________________________________
The performance of Clearance reflects a significant reduction in the value of
its stock, which was on average -19% down. This reduction was the result of
better clearance and deeper discounts in our end season Mainline Sales. We
expect the performance of Clearance will be closer to Mainline in the year
ahead.
New Space
In the year we opened a net 378,000 square feet of new trading space.
____________________________________________________________________________________________
Jan 2008 Jan 2007 Year Change
____________________________________________________________________________________________
Store numbers 502 480 +22
____________________________________________________________________________________________
Square feet 000's 5,201 4,823 +378
____________________________________________________________________________________________
The forecast payback on net capital invested is comfortably within our 24 month
target at 18.6 months and the net branch contribution of the new stores is
16.5%. Net sales from new space are forecast to be 2.1% below appraised
targets.
In addition to a long standing Home store in Glasgow Braehead we opened stand
alone Home stores in Thurrock Retail Park and on Tottenham Court Road, London.
Sales from the out of town stores have been encouraging and we anticipate
opening at least a further five in the current year. Our Home business
continued to grow throughout the course of 2007 and represents an important
opportunity in a sector where we believe there will be further consolidation.
We currently expect to add a net 400,000 square feet of new space to Retail in
the year ahead.
Retail Profit
Retail profit increased by 1.0% against last year. Net margins moved forwards
slightly from 14.0% to 14.2%. The margin movement is detailed below; the
figures show the change as a percentage of sales for each of our major heads of
cost:
Net operating margin last year 14.0%
Increase in achieved gross margin +1.8%
Increase in branch payroll costs -0.2%
Increase in branch occupancy costs -1.0%
Increase in central overheads -0.4%
________
Net operating margin this year 14.2%
________
The improvement in achieved gross margin of +1.8% is primarily a result of
bought in gross margin improving by +1.4%. This is due to better sourcing
rather than increasing selling prices on like for like product. In Spring
Summer 2008 we expect a further increase in gross margin but little or no
opportunity for similar improvements in Autumn Winter. By 2009 we anticipate
significant inflationary pressures in many important sourcing markets, not least
China. It remains to be seen to what extent potential over capacity in world
manufacturing will compensate for these pressures.
Further gross margin improvements came from fabric write offs being lower than
expected (+0.2%), and settlement of a VAT issue (+0.2%), neither of these one
off gains will be repeated in the year ahead. There was no significant change
in markdown against last year.
Branch wages increased as a result of the cost of living award. Central
overheads increased mainly due to the higher spend on marketing.
Outlook for Retail Costs
In the year ahead we anticipate that occupancy costs will continue to rise as a
percentage of sales because of negative like for likes. In addition there will
be an increase of around £3m in out of town retail parks where our historic rent
is now below the market rate. It is very unlikely that cost savings will
outweigh these increases so we do not anticipate any improvement in the Retail
net operating margin in the year ahead and are forecasting a decline of around
1%.
NEXT DIRECTORY
Directory Sales
Directory sales increased by 3.3%. Improved stock availability and increased
service charge income meant that sales rose faster than underlying demand, which
was up 1.0%.
Sales growth was driven by a 1.2% increase in the average number of active
customers and a 16.5% increase in pages. The majority of the additional pages
went to new and developing product areas. We have continued to extend the
portfolio of Next branded product, particularly in the home furnishings area.
The internet continues to be very important to the development of the Directory
and now accounts for almost 60% of our orders. One of the priorities of the
year ahead will be the improvement of our website functionality where we believe
we have yet to fully exploit the potential for linked sales and search driven
stock selection. We have developed a Euro web-site and are now selling directly
to Spain and Eire.
In March we launched the "Brand Directory" website which will showcase all the
non-Next branded products available in the Next Directory, along with some lines
which we will only sell through this website.
Directory Profit
Directory profit was 14.3% up on last year, a good performance. The profit
growth was mainly as a result of improved operating margins; the table below
shows the change as a percentage of sales for each of our major heads of cost:
Net operating margin last year 18.6%
Increase in achieved gross margin +0.1%
Reduction in bad debt +2.7%
Increase in service charge income +0.4%
Increase in central overheads -1.2%
_______
Net operating margin this year 20.6%
_______
Achieved gross margin increased by 0.1%. The bought in gross margin increased
by 0.8%, this was eroded by -0.5% as a result of increased markdown and -0.2%
from other provisions. The bought in gross margin in Directory did not grow as
much as Retail as a result of the addition of lower margin non-Next branded
product.
In July 2006 we began to prepare for a worsening consumer debt market and made
significant changes to the credit vetting of new applicants for the Next
Directory, the effects of which began to be felt in January 2007 and continued
through the year. Whilst these restrictions inhibited the growth of our
customer base the benefit has been a very significant drop in bad debt. This
increased the net operating margins of Directory by +2.7%. At the same time,
service charge income rose faster than sales adding +0.4% to margin.
Cost increases in catalogue production (-0.5%) and systems (-0.2%) were offset
by savings in warehousing and distribution (+0.7%). The 1.2% increase in
central overheads is therefore a result of increased marketing spend.
Outlook for Directory
It is difficult to forecast the performance of the Next Directory in the year
ahead as there are contradictory market trends, these are set out in the table
below.
_________________________________________________________________________________________________________
Positive Negative
_________________________________________________________________________________________________________
General growth of internet based shopping favours General pressure on consumer spending
Directory, which offers a market leading service and
a broad offer
_________________________________________________________________________________________________________
Stricter entry rules and credit control have Increased online competition from other high
annualised so they are no longer a drag on street clothing retailers
recruitment
_________________________________________________________________________________________________________
Opportunity to move into new Next branded products
and sell non-Next branded product
_________________________________________________________________________________________________________
We anticipate Directory sales will be up between 0% and 2% in the first half.
Net operating margins in Directory are forecast to be broadly neutral. A
reduction in markdown and some further bad debt savings are likely to be offset
by increased printing and warehousing costs, together with lower gross margins
on new products.
NEXT INTERNATIONAL
Sales to our franchise partners and through our Chinese joint venture grew by 9%
to £54m. Our partners' own sales rose by 17% to approximately £127m. A year ago
sales to our partners increased faster than profits due to a difference between
product shipments and partner sales, this has now corrected and profits grew 18%
to £7.1m.
During the year 28 additional stores were opened, making 158 in total. Whilst
our overseas business will not make a significant contribution to the Group in
the short term we now believe it presents an important opportunity in the long
term. This business is developing into the three models detailed below.
Traditional franchise
The majority of territories will remain traditional franchises, where we supply
product to a third party and take either a mark up on the product cost or a
royalty on sales. This is very low risk, requires no capital investment but is
relatively low margin.
Wholly owned - Continental Europe
We intend to develop a wholly owned business in Central Europe and Scandinavia.
These stores will be operated in essentially the same way as those in the
Republic of Ireland. Stock will be picked and despatched from our warehouses in
the UK to a hub where it can be sorted and delivered to store on smaller
vehicles.
We already have one store in Denmark and have learnt much in the past few years
about how to operate in this region. The store is now profitable and growing on
last year. We intend to open at least two more stores in Scandinavia over the
coming year.
In Central Europe we have agreed to acquire our franchise partner's business in
the region consisting of eight stores in the Czech Republic, two stores in
Hungary and two stores in Slovakia turning over £12m. This business will be
purchased on a multiple of 3.2 times historical EBITDA for £4m. We believe
there is significant opportunity to grow our business in this region and to
improve the profitability of the operation.
Joint Venture - China
Last year we opened our first store in China, located in Shanghai. Our retail
business in China is in partnership with a Chinese manufacturing and retail
group who own 25% of the business. Over the next two years we aim to open up to
ten stores in order to build a stable business model for the Chinese market.
The first task will be to ensure that local (Far East) product can be dispatched
to Chinese stores direct from manufacturers. We believe that it will take at
least two years to develop and test our business before we undertake a
significant roll out of any concept.
NEXT SOURCING (NSL)
NSL is our overseas sourcing operation which has offices in several countries
including China, Hong Kong, India, Sri Lanka, Turkey and the UK. NSL charges a
commission on the product it sources and during the year it supplied
approximately 55% by value of Next Retail and Directory product purchases.
Total sales increased to £620m and profits increased by 3.3% to £32.8m. This
was slightly below expectations due to shipments for the Autumn Winter season
being less than originally planned. We expect that profits for the coming year
will be in the region of £31m.
VENTURA
Ventura started the year strongly and increased its turnover to £204m. Full year
profits of £21.5m were 4.3% ahead of the previous year. However, the fourth
quarter became progressively more difficult as the volume of telephone traffic
with one of its major clients, Northern Rock, reduced substantially. Replacing
this business in the year ahead will be a priority. Coupled with volume and
pricing pressures generally in consumer facing businesses, we expect that
profits for the coming year will be in the region of £16m.
Ventura has traditionally focused on call centre and back office work for its
clients. This year we have launched an important addition to its portfolio
through offering warehousing and distribution services to third parties. This
will leverage the facilities and skills of the Next group and we have already
won three clients.
OTHER ACTIVITIES
The Other Activities net charge was £2.1m including Central Costs of £7.2m.
Other Activities also includes profits from our Property Management Division,
Choice (an associated company which operates sixteen discount stores) and Cotton
Traders (an associated company which sells its own brand products). We expect
that the net charge for the coming year will be in the region of £3m.
INTEREST AND TAXATION
The interest charge of £39m was higher than last year due to the financing of
cash outflows in respect of share buybacks, we expect a charge of approximately
£45m for the year ahead. The tax rate was 29% and we expect a similar rate
going forward.
BALANCE SHEET AND CASH FLOW
Cash flow from operations was again very strong and we achieved a cash inflow of
£217m before share buybacks. The increase in net debt after buybacks of £513m
was £296m.
Net borrowings at the year end were £740m. This debt is financed by long term
bonds and committed bank facilities. As can be seen from the graph below, our
financing is well structured with £550m of ten year bonds which matures in 2013
and 2016. We have two committed bank facilities the first of which matures in
September 2009, our intention is to refinance this facility during the current
year.
_____________________
| |
| |
| |
| |
| £300m Bank |
| 2009 |
| |
| |------------- ____________________
|_____________________| | |
| | | |
| £150m Bank | | |
| 2010 | | |
| | | £740m |
|_____________________| | Year end |
| | | net debt |
| | | |
| | | |
| | | |
| £300m Bond | | |
| 2013 | | |
| | | |
| | | |
|_____________________| | |
| | | |
| | | |
| £250m Bond | | |
| 2016 | | |
| | | |
| | | |
|_____________________| |____________________|
Finance facilities January 2008
Going into a difficult year we have modelled our prospective cash flows at
different levels of sales performance. Working with Retail like for likes of
-5% we believe that net cash generation after £54m of committed share buybacks
would be around £105m and with like for likes of -7.5% net cash generation would
be around £72m. Even in the very unlikely event that Retail like for like sales
were 10% down and Directory 2% down, we believe we would still generate around
£38m of net cash flow.
Capital expenditure of £180m included £122m on stores and £43m on warehousing.
We expect this year's expenditure will be in the region of £135m. Year end
stock levels at £319m were 13% up on last year, correcting the unusually low
position reported at January 2007. Debtors of £605m included £438m of Directory
customer account balances, which increased in line with Directory sales.
SHARE BUYBACKS
During the year we purchased a further 26 million shares for cancellation at an
average price of 1974p and a cash cost of £513m. This was 11.5% of the shares in
issue at the beginning of the year. Resolutions to renew buyback authorities
will be put to shareholders at the AGM in May.
Despite recent share price volatility, we believe the return of surplus capital
through this route is the right strategy in pursuit of our primary financial
objective, which is to maximise sustainable growth in earnings per share. It is
our belief that delivery of long term growth in earnings per share will create
value for shareholders.
Over the course of the last eight years we have bought in 46% of the issued
share capital at an average price of 1125p.
DIVIDEND
The Directors are recommending a final dividend of 37p against 33.5p last year,
bringing the total for the year to 55p compared with 49p, an increase of 12.2%.
The dividend remains covered 3 times by earnings per share of 168.7p.
2008 TRADING STATEMENTS
In our November Interim Management Statement we set out the dates and contents
for future statements. The next two will be in early May and early August
covering the first and second quarters of 2008. As a result we will not be
giving a current trading statement at this time.
The table below gives the sales performances that would have been announced had
we made quarterly statements last year.
As can be seen, the first quarter presents much tougher comparatives than the
second quarter. Last year we experienced some very strong weeks in March and
over Easter as a result of unseasonably warm weather. In contrast May, June and
July were all very disappointing as a result of very poor weather (floods etc).
We, therefore, anticipate a significant difference in the sales growth which
will be reported in our first and second quarters, with the second being better
than the first.
________________________________________________________________________________
Sales 1st Quarter 2007 2nd Quarter 2007
________________________________________________________________________________
Brand total +3.7% -2.3%
________________________________________________________________________________
Retail total +3.0% -3.2%
________________________________________________________________________________
Directory total +5.5% +0.5%
________________________________________________________________________________
Retail Mainline full price
like for like -1.3% -6.6%
________________________________________________________________________________
2008 OUTLOOK
Retail Economy
We can see no reason why there should be any recovery in consumer spending
during the year ahead. Recent base rate cuts will do little to reduce the
overall burden of mortgage repayments as they will be partially offset by the
expiry of fixed rate mortgages which were set at lower rates than those
prevailing today. This combined with increases in fuel, tax and other essential
household costs mean that it will be at least twelve months before the consumer
has a stable year on year cost base.
The Next customer profile is dominated by ABC1 25-45 year olds, who are likely
to be hit hardest as their exposure to the costs of debt are high.
Outlook for Next
Against a downbeat economic outlook we are more positive about the health of the
underlying Next business. We believe our ranges have made good progress and
that the Next Brand is in much better shape than at the same time last year. As
a result we are basing our internal budgets for the first half on Retail like
for like sales of between -4% and -7% and Directory sales of between 0% and +2%.
PRIORITIES FOR THE YEAR AHEAD
In facing a challenging year we are very clear what our priorities must be:
- Maintain very conservative sales expectations. It is tempting to start a
retail budget at the bottom line and build back to the sales "required". We
have been very careful to begin our budgets with what we believe the likely
top line sales will be.
- Control stocks. The most important part of stock control is setting a
realistic sales budget. In addition we are placing much greater emphasis,
and have developed new systems, to improve our control of stock in season.
- Identify further cost savings within the Group.
- Continue to invest in the Brand through improving the design and quality
of our ranges, our marketing and our shop fit.
Next has always positioned itself at the aspirational end of the mass market.
Long term this is the part of the market likely to grow fastest as economic
growth enables more people to become affluent. In a downturn it is also likely
to be the part of the market that suffers most. It would be all too easy for us
to surrender our market position by chasing business outside of our core
customer, this could destroy our brand - we will not do this.
Our objective is to manage the business through this difficult period and
maintain the financial stability of the Group. We are well placed to weather a
downturn with healthy net margins, sound financing and strong cash flows. In
the meantime we will focus on improving our brand so that Next is better placed
to prosper when the retail economy recovers.
Simon Wolfson
Chief Executive
19 March 2008
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