Next Share News (NXT)

LONDON (Alliance News) - Fashion and home goods retailer Next Thursday reported a 19% rise in pretax profit for the first-half of the year, citing a range of factors including the improving UK economy and much better summer weather, but its shares fell as the increase missed market expectations.

Next's pretax profit came in at GBP324.2 million in the six months to the end of July, up from GBP271.8 million a year earlier, as revenue rose to GBP1.85 billion, from GBP1.68 billion. The growth was driven by a 7.5% revenue increase in its stores and 16% growth in its directory business.

However, analysts said the big sales increase in the directories business hadn't translated into an equivalent profit increase in that unit, with margins hit by new customers choosing to pay in cash rather than taking credit. Next also moved more stock online, from its stores.

The retailer kept most of its full-year outlook unchanged having already raised it twice this year. It raised its interim dividend to 50.0 pence, from 26.0p, but said it wouldn't be paying any more special dividends for the time being. It expects to pay a total dividend of 150 pence this financial year, up 16% from last year.

Next shares were Thursday trading 1.8% lower at 7,037.90 pence per share.

Wm Morrison Supermarkets is also down after it posted a further drop in profit in the first-half of its financial year, again hit by dwindling UK sales and waning market share.

Morrisons posted a pretax profit of GBP239 million for the 26 weeks to August 3, compared with GBP344 million a year earlier, as revenue fell to GBP8.50 billion, from GBP8.94 billion, and it invested heavily in deep price cuts as part of its attempts to stave off competition from the likes of Aldi and Lidl. Like-for-like sales declined 7.8%, excluding fuel and VAT, worse than market expectations for a 6.9% decline.

Despite this, the grocer raised its interim dividend by 4.9% to 4.03 pence, and confirmed its commitment to paying a dividend of not less than 13.65 pence for the current financial year.

Some analysts think the dividend commitment is unsustainable given margin pressure and the need to invest heavily in price cuts, especially after Tesco recently slashed its own dividend amidst a profit warning.

However, Chief Executive Dalton Philips was bullish on a call with journalists. "We are six months into the three-year plan that we set out in March and, although it is early days, I am encouraged by the progress we have made," he said.

Investors weren't convinced and Wm Morrison shares are down 0.6% at 175.57 pence.

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Markets: Investors reined in their early optimism Thursday, causing London indices to trade mixed by mid-morning, as RBS and Lloyds announced contingency plans in the event of an independent Scotland.

The US futures indicate a lower open on Wall Street. In the previous session, the Dow rose 0.3%, the Nasdaq advanced 0.8% and the S&P 500 climbed 0.4%.

FTSE 100: down 0.4% at 6,801.28
FTSE 250: down 0.2% at 15,649.87
AIM ALL-SHARE: down 0.03% at 775.40
GBP-USD: up at 1.6248
EUR-USD: flat at 1.2917
GOLD: down at USD1,241.53 an ounce
OIL (Brent): down at USD96.96 a barrel
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Other Top UK Corporate News
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Royal Bank of Scotland Group and Lloyds Banking Group, both based in Scotland, have made contingency plans to move their headquarters to London in the event of the Scottish people voting in favour of a split from the UK at next week's independence referendum. "While the scale of potential change is currently unclear, we have contingency plans in place which include the establishment of new legal entities in England," Lloyds said in a statement. RBS confirmed its own contingency planning and said it believes it will be "necessary" in the event of a 'Yes' vote to re-domicile the bank's holding company and its primary rated operating entity, The Royal Bank of Scotland PLC, to England.
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Ocado Group sounded a note of caution on the UK retail environment as it posted a rise in sales and average orders per week for the third quarter, but said its average order size had shrunk during the period. The FTSE 250 grocery-delivery company said group sales in the 12 weeks to August 10 were up 23% to GBP231.9 million, against GBP189.2 million a year earlier. Retail sales in the period were up 16% to GBP218.5 million against GBP189.2 million last year. Average orders per week increased by 17% to 163,000, against 139,000 last year, but average order size was down by 1.7% to GBP111.64 against GBP113.54 in the corresponding period in 2013.
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DIY and general merchandise retailer Home Retail Group reported a ninth consecutive quarter of like-for-like sales growth for Argos, this time supported by margin growth, but tepid growth at its Homebase DIY unit as sales of seasonal goods fell short of last year. Home Retail said it expects to report a benchmark profit in line with market expectations for the full year, in the range of GBP122 million and GBP135 million, although, as always, this will depend on how Argos performs over the key Christmas trading period. "To meet that target, we need Argos to continue its current run rate, with like-for-like sales broadly around 3% and margins close to flat," Chief Executive John Walden told journalists.
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Dunelm Group raised its full-year dividend by 25% after recording a year of "solid" growth, with rises in pretax profit and revenue supported by the opening of new stores and improvements in its online offering. Pretax profit rose 7.3% to GBP116.0 million in the 52 weeks to June 28, from GBP108.1 million a year earlier, as revenue increased to GBP730.2 million, from GBP677.2 million. The company said Nick Wharton has resigned as chief executive, deciding it is time to seek new challenges, and Will Adderley, currently serving as executive deputy chairman, has been re-appointed CEO with immediate effect.
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The Department for Transport said that it has awarded Go-Ahead's 65%-owned train operating company, Southeastern, a new contract to continue to run the South Eastern franchise until June 2018. Under the terms of the deal, Southeastern will continue to operate services between London, Kent and parts of East Sussex until June 2018, and make major improvements to customer service, passenger satisfaction and train punctuality across the network.
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Ashmore Group reported a 34% drop in full-year pretax profit, pressured by emerging-market volatility, lower performance fees and the strength of the pound. In a statement, the emerging markets asset manager said it made a GBP170.3 million pretax profit in the year ended June 30, compared with GBP257.6 million last year. Ashmore said GBP46.0 million was due to foreign exchange translation, while GBP30.1 million was due to lower performance fees as a consequence of the market sell-off in May and June 2013 and continued volatility throughout the first half of the financial year. Chairman Michael Benson said the remainder is largely explained by a reduction in net management fees, offset by lower operating costs.
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Housebuilding and construction company Galliford Try said it had been appointed to three new contracts worth over GBP100 million combined, in Lincolnshire, Swansea and Northampton.
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AIM MOVERS
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Elektron Technology is trading higher after the company reported an underlying operating profit for the first half of its financial year and said new products and technical capabilities were driving up new business opportunities which should return it to growth and profitability. Aminex and Solo Oil are both up after Aminex said that interpretation of newly acquired seismic data has extended the potential of the Ntorya appraisal area within the Ruvuma license in Tanzania, and it had further increased its resource estimate for the license by combining the Ntorya discovery with the adjacent Likonde prospect. Aminex owns 75% of the Ruvuma license and is its operator, while Solo Oil owns the rest. Patagonia Gold is another gainer after it reported record production from its Lomada de Leiva mine in August, extracting 2,961 ounces at a cash cost of USD625 per ounce. At the other end of the market, shares in Stilo International are down after its pretax profit and revenue fell in the first half, though the company said the fall would be offset in the second half and said it would pay an interim dividend. SpaceandPeople is down after it issued another profit warning for 2014 as a host of its businesses failed to meet performance expectations. Futura Medical has taken a hit after its pretax loss widened to GBP1.6 million in the first half of the year, from GBP1.0 million a year earlier, as revenue fell and administrative and research and development costs rose.
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Top Economics And General
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The house price balance in the UK fell all the way to 40% in August, the Royal Institution of Chartered Surveyors said. That was well shy of forecasts for 47% and down sharply from the downwardly revised 48% in July (originally 49%). In the London area, house prices were higher for a balance of nine percent of agents - slowing from 11% in the previous month.
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Inflation in China slowed more than expected in August and producer prices extended its decline for the 30th consecutive month, providing leeway for the implementation of additional stimulus to offset the weakness in property sector. Consumer price inflation slowed to a four-month low of 2% in August, the National Bureau of Statistics reported Thursday. It was forecast to ease moderately to 2.2% from the 2.3% in July. Inflation remains well below the government's full-year target of 3.5%. During January to August, headline inflation was 2.2%.
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Germany's inflation in August, measured on the consumer price index, held steady as initially estimated, at its lowest level since February 2010, final data from Destatis showed. The consumer price index rose 0.8% year-on-year in August, same as in July. This was the lowest since February 2010, when prices climbed 0.5%. On a monthly basis, consumer prices remained unchanged.
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French inflation slowed as expected in August to the lowest since late 2009, the statistical office Insee showed. Consumer prices rose 0.4% year-on-year, in line with forecast, but slower than the 0.5% increase in July. The 0.4% was last reported in November 2009 and it was the lowest since October 2009, when prices fell 0.2%. Consumer prices were up 0.4% on a monthly basis, which reversed the 0.3% decline in the prior month. The monthly rate also matched economists' expectations.
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US President Barack Obama said the US will lead a broad coalition of nations to take the fight to the Islamic State and vowed to degrade and ultimately destroy the terrorist group. Obama used a prime-time speech Wednesday night to offer a comprehensive and sustained counterterrorism strategy to combat ISIS that includes US military action as well as provide support to Iraqi forces and Syrian rebels that are fighting the terrorists on the ground. The president also said he is sending more US service members to Iraq as part of the strategy.
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Syria's Western-back opposition coalition said it welcomed Obama's announcement that the US would expand airstrikes against the militant Islamic State group into Syria. The Syrian National Coalition called on Congress to approve Obama's plan to strike the al-Qaeda splinter group "wherever they are," along with arming and training moderate Syrian rebels who are battling both the Islamic State and Syrian President Bashar al-Assad's forces. "The Syrian Coalition has long called for this action and has warned time and again of the growing threat of this extremist group," the opposition grouping said in a statement.
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EU member states on Wednesday failed to reach a decision on the implementation of new sanctions against Russia, with ambassadors due to resume talks the following day, according to sources in Brussels. While the measures were formally approved on Monday, there is now disagreement over their implementation, amid indications that a ceasefire in eastern Ukraine is holding, as well as concerns over Russian retaliation.
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The murder trial of South African athlete Oscar Pistorius enters its final phase Thursday, and judge Thokozile Masipa is expected to announce her verdict this week. The judge's analysis of the arguments presented by the prosecution and defence could last until Friday, followed by the announcement of the verdict. Masipa has ruled out a verdict of premeditated murder, "There are just not enough facts to support such a finding." Oscar Pistorius did not intentionally kill Reeva Steenkamp, the judge said. That would also clear him of a murder charge, but he could still be found guilty of manslaughter.
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Afternoon Watchlist (all times British Summer Time)

13:30 US Jobless Claims
15:30 US EIA Natural Gas Storage change
19:00 US Monthly Budget Statement
20:00 EU ECB President Draghi's Speech

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Friday's Key UK Corporate Events

Anite Interim Management Statement
JD Wetherspoon Full Year Results
SThree Interim Management Statement
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Friday's Key Economic Events (all times British Summer Time)

All Day EU Eurogroup meeting
05:30 Japan Industrial Production
07:00 Germany Wholesale Price Index
07:05 Japan Bank of Japan Governor Kuroda Speech
07:45 France Current Account
10:00 EU Employment Change
10:00 EU Industrial Production
13:30 US Import, Export Price Index
13:30 US Retail Sales
14:55 US Reuters/Michigan Consumer Sentiment Index Preliminary
15:00 US Business Inventories
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