2011 had been another good year for NEXT where company has experienced record profits, earnings per share and bonus. Company’s approach of branding, product differentiation, low cost products, etc., were the most significant to such good profits in the UK retail market. However, there are various factors that affect retail industry as a whole and influence company’s decision making process. Recession in the global market, inflation, unemployment and limited growth in consumer credit are the major challenges that affect consumer surroundings in the industry. Retailers can’t plan for longer term growth or longer sales as industry is uncertain due to changing pattern in technological advancement, economic condition, social responsibilities etc. Though, NEXT can provide vigorous returns for to shareholders, new prospects of growth and innovative approach for cost control, customer satisfaction, etc., are the key elements that createdemands of the company.
In spite of the competitive retail environment in the UK, NEXT has achieved 18% growth in EPS. In addition, dividend was gone up by 18%. Growth in the NEXT Directory Online was prominent. Despite the NEXT Retail like for like sales decline, company’s brand sales were recorded 0.3% growth over the last year sales.
Increase in the VAT has recorded low sales by 1.4% as the year ending January 2010 was a 53 week year. However, company’s brand sales were actually 3.1% higher after adjusting for this 52 week VAT factor. Continous focus on cost savings has resulted in higher operating profits than sales. Profit before tax was recorded at £551million (up to 9% in the last year).
NEXT continues in delivering strong cash flows, generating £92m of surplus cash after capital expenses, interest, tax and dividends. We expect it will inflow to dual in the year ahead. Excess cash has been used to buy again 10 million shares, and the consolidated effect of cash generation and share buybacks (both this year and last) has been to boost EPS by 7.5%. Dividends have risen in line with EPS, up 18% to 78p per share.