Next Share News (NXT)

LONDON (Alliance News) - Next Thursday reported a sixth consecutive year of annual pretax profit growth, as sales increased in its stores and particularly online, but it cut its guidance for the current year as it expressed dissatisfaction with some product lines and warned that international online sales growth will slow due to the crisis in Russia and Ukraine.

Next, which last year overtook big rival Marks and Spencer Group to become the UK's most profitable clothes retailer, reported a pretax profit of GBP794.8 million for the year to January 31, up from GBP695.2 million a year earlier, while excluding a GBP12.6 million gain that included a profit on the sale of its investment in Cotton Traders, pretax profit rose to GBP782.2 million from GBP695.2 million.

Revenue grew 6.9% to GBP4.00 billion, from GBP3.74 billion, with Directory sales up 12.1% and retail sales up 4.8%.

It said GBP13 million of the pretax profit growth came from new retail stores, GBP9 million from existing stores, and GBP35 million from additional online sales. It also made cost savings of GBP42 million, but this was offset by a GBP41 million increase in its cost base as a result of higher wages as well as systems investments and other cost increases.

The British fashion retailer raised its total full year ordinary dividend by 16% to 150 pence from 129 pence; the sixth consecutive year that it has grown by 15% or more.

However, it now expects full-price Next brand sales to grow between 1.5% and 5.5% in the current financial, down from the growth of 2.5% to 7.5% it had predicted in December. At that time, it said it expected profit to grow in line with sales, but Thursday said it now expects pretax profit in the current year to grow between 0.4% and 6.7% to between GBP785 million and GBP835 million.

Next said that while the consumer economy remains benign, it is staying cautious on its sales guidance.

"Whilst we are happy with most of our current product ranges, we recognise that some collections are not as strong as they were at this point last year. In addition, during the Spring and Summer seasons, we face very tough comparative numbers from last year, when sales were assisted by unusually warm weather. There is a potential upside in the second half as the comparative performance last year weakens, particularly in the third quarter," it said.

Next also said it expects international online sales to grow 25% in the current year to about GBP205 million, compared with 61% growth last year. The retailer said this is partly because it has now opened in all its target territories and has limited further opportunities to add local currencies and languages, but also because two of its largest markets, Russia and Ukraine, have both suffered significant currency devaluations. Next has had to increase prices in local currency to maintain profitability in these territories and as a result sales measured in sterling are no longer growing.

Next's shares were trading down 3.9% midday Thursday, the worst-performing stock in the FTSE100 on the day, but the stock had hit an all-time high on Wednesday ahead of the results. Analysts said the results were at the top end of expectations, but expressed surprise at the guidance cut.

Fashion brand Ted Baker also saw its shares drop on Thursday having hit an all-time high initially, even though analysts found nothing wrong with the results or guidance.

The FTSE 250-listed company reported further growth in profit and sales in its last financial year, and said it plans to open more stores in the year ahead.

Pretax profit grew 25.3% to GBP48.8 million in the year ended January 31, from GBP38.9 million a year earlier, as revenue grew 20.4% to GBP387.6 million, from GBP321.9 million. It raised its total dividend for the year to 40.3 pence per share from 33.7p.

The fashion retailer has been having a successful few years, as the brand has continued to expand internationally leveraging its British identity, and has kept its strategy of not discounting its goods and by using word of mouth rather than expensive marketing campaigns to promote itself. Ted Baker currently has 398 stores and concessions worldwide, comprising 183 in the UK, 83 in Europe, 75 in the US and Canada, 50 in the Middle East and Asia and seven in Australasia.

It plans to open two new stores in the UK, four stores and three outlets in the US, one new store in Amsterdam, and further concessions in France, Germany, the Netherlands and Spain during the current year. It is also opening its first street level store in Hong Kong at the end of April and further concessions in China and South Korea.

"The stock, which has risen by over 30% in the last six months, is highly rated and is likely to see some profit taking and a period of consolidation. However, the expected pick up in consumption is likely to underpin earnings, which are expected to grow consistently at 15% per annum over the next three years," Cantor Fitzgerald wrote in a note to clients.

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Markets: London shares are trading higher, with Standard Chartered the best-performing stock in the FTSE 100, as the pound trades at fresh lows after the Bank of England's meeting minutes showed a unanimous decision to keep interest rates on hold in March.

Wall Street is set for a mixed start, with stock futures indicating that the DJIA and S&P 500 will both open down 0.1% and the Nasdaq 100 will open slightly higher.

FTSE 100: up 0.1% at 6,954.68
FTSE 250: up 0.3% at 17,416.85
AIM ALL-SHARE: down 0.1% at 714.90
GBP-USD: down at 1.4890
EUR-USD: down at 1.0693
GOLD: down at USD1,166.30 an ounce
OIL (Brent): down at USD55.02 a barrel
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BHP Billiton said it has priced a five-year AUD1.0 billion note issued under the company's Australian medium-term note programme. It said the Australian dollar notes will pay interest at 3.00% and mature in March 2020. The proceeds will be used for general corporate purposes.
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UK telecoms regulator Ofcom confirmed a new rule requiring BT Group to maintain a sufficient margin between its wholesale and retail superfast broadband prices, although it will not be imposing any changes to BT's prices at this time as it is currently meeting the requirements of the new rule. BT is required to allow other operators to use its network to sell broadband to customers, and the new rule is intended to make sure that competitors can match BT's own broadband prices profitably. However Ofcom's indicative assessment of the market shows BT's margin is sufficient under the new rule, so as such it is considered a "safeguard" to stop BT reducing retail margins in the future, and makes sure that increases in BT's costs are reflected in its prices.
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Sky has announced an unseasonal increase to the price of its television packages, the Financial Times reported, coming just over a month after the broadcaster paid GBP4.2 billion to secure live Premier League rights. The company, which traditionally increases its prices in September, is to increase the average price of packages by GBP2.50 per month, with the cost of a Sport bundle to increase by GBP1 to GBP47 per month.
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Ophir Energy said it swung to a pretax profit in 2014, bolstered by a USD671.7 million gain after the sale of its interest in three blocks in Tanzania. The company said it made a USD288.5 million pretax profit in 2014, compared with a USD280.5 million pretax loss in the prior year. The move into the black was enabled by the sale of its 20% stake in blocks one, three and four in Tanzania, for USD1.29 billion before tax to Pavilion Energy. The gain registered on the farm-out more than offset an increase in exploration expenses to USD333.8 million from USD229.1 million. That was also helped by other operating expenses including administration.
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Property adviser Savills hiked its dividend payout as its pretax profit pushed higher in 2014 on the back of stronger revenue, with the company boosted by a strong London market, a recovery in the UK regional property market and a good performance in the US. Savills said its pretax profit for the year was GBP84.7 million, up from GBP70.1 million a year earlier. On the back of the rise in profit, the company has proposed a hike to its final dividend to 7.25 pence, from 7.00 pence, and said its total dividend payout for the year will be 23 pence per share, up 21% year-on-year, on the back of a further 12 pence supplementary dividend the company will pay based on the underlying performance of its transaction advisory business.
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Luxury shoe and accessories maker Jimmy Choo reported a narrowed pretax loss for 2014 thanks to a debt-for-equity swap deal it did last autumn, and its closely-watched revenue and operating earnings rose as its goods continued to prove popular and it opened more new stores, mainly in China, and renovated others. In its maiden set of annual results as a listed company, Jimmy Choo reported a pretax loss of GBP8.3 million for 2014, compared with the GBP21.4 million loss it posted in 2013, as finance costs dropped by GBP20 million following a debt-for-equity swap that it did last October. That meant its debt stood at GBP125.6 million at the end of 2014, down from GBP582.4 million a year earlier.
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Rentokil Initial said it has expanded its pest control business with the acquisition of US firm Eradico Services Inc and Sagrip SA, which will give the company a presence in the Guatemala and El Salvador markets. The FTSE 250-listed business services company did not provide any financial details on the acquisitions, but said the two businesses produced combined annual revenue of GBP7.3 million in the 12 months prior to the acquisition.
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Housebuilder Crest Nicholson Holdings said it has seen a strong start to the spring selling season and is confident of meeting its targets for the year. In a short statement ahead of the company's annual general meeting, Crest Nicholson Chairman William Rucker said the company's spring selling season has been strong since it published in January its results for the year to the end of October.
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AIM Movers
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Zamano shares are up after it posted a rise in pretax profit for 2014, and indicated it would be exploring acquisitions opportunities in the coming year. Its net cash position more than doubled. Amur Minerals Corp is also up after it said a conceptual pit study carried out at the Kun-Manie nickel-copper-sulphide project in Russia has identified a potential 70% increase to the target inferred resources at the site. Patagonia Gold shares are down after it said the pre-feasibility study conducted on the Cap-Oeste heap leach project in Argentina indicates that the project is not currently economically viable. Patagonia said the initial results from the studies being carried out at the site using the heap-leach process indicate that additional oxide resources will be required to make the project economically robust at current gold and silver prices. The company said it is working to establish these further resources through its exploration programme.
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Other Top Economics And General
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The US Federal Reserve said a hike in its benchmark interest rate "remains unlikely" for the central-bank's April 29 meeting, but said nothing about the following meeting in June. The Fed dropped its recent outlook of being "patient in beginning to normalize" monetary policy from its unprecedented near-zero rate, in place for nearly seven years. The Fed "anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labour market and is reasonably confident that inflation will move back to its 2% objective over the medium term," the statement said. "This change in the forward guidance does not indicate that the (monetary policy) committee has decided on the timing of the initial increase in the target range." In her press conference, Fed Chair Janet Yellen said: "Just because we removed the word patient from the statement doesn't mean we are going to be impatient."
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The Swiss National Bank kept its monetary policy unchanged and projected deep negative inflation this year. The central bank downgraded its growth forecast as the discontinuation of currency ceiling and the subsequent strength of the franc weighed on activity. The SNB maintained the target range for the three-month libor between -1.25% and -0.25%. The interest rate on sight deposits with the SNB remained at -0.75% and the exemption thresholds remained unchanged. The SNB reiterated that the Swiss franc is significantly overvalued and should continue to weaken over time.
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Greek Prime Minister Alexis Tsipras was set to hold crisis talks with top European officials in Brussels, amid fears that his country is running out of cash. The meeting is to be conducted on the margins of an EU summit, following reports that Greece and its creditors have hit an impasse in reform negotiations needed before Athens can access EUR7.2 billion left to its international bailout.
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Japan and China held a top-level security meeting on Thursday, the first in four years, amid soured ties over a territorial spat and differing views of wartime history. Foreign affairs and defence officials of the two countries were expected to discuss a mechanism to avoid unintended clashes at sea. "It can be said that Japan-China relations appear to be advancing gradually," Japanese Deputy Foreign Minister Shinsuke Sugiyama told the meeting in Tokyo, Kyodo News agency reported.
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Russian President Vladimir Putin said Ukrainians and Russians are a single people. "We in Russia always thought that Russians and Ukrainians are one people. And I believe so today," Putin told a rally on Red Square marking the first anniversary of Crimea's "unification" with Russia. Putin argued that Crimea and Russia did not unite for territory or strategic aims, but that the peninsula was "the source of our spirituality and statehood."
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Afternoon Watchlist (all times in GMT)

12:30 US Current Account
12:30 US Jobless Claims
14:00 US CB Leading Indicator
14:00 US Philadelphia Fed Manufacturing Survey
14:30 US EIA Natural Gas Storage change
23:50 Japan BoJ Monetary Policy Meeting Minutes
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Friday's Key UK Corporate Events

Berkeley Group - Interim Management Statement
Investec - Trading Statement
JKX Oil & Gas - Full Year Results
Dunedin Enterprise Investment Trust - Full Year Results
Gamma Communications - Full Year Results
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Friday's Key Economic Events (all times in GMT)

07:00 Germany Producer Price Index
09:00 EU Current Account
09:30 UK Public Sector Net Borrowing
14:20 US Fed's Lockhart speech
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