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Profit Up 14% At NEXT Plc

The share price of NEXT (LSE: NXT) —  the multinational clothing, footwear and home products retailer — is essentially unchanged, following publication of the company’s half-year results, to the end of July 2013.

NEXT reported operating profit up 7.2%, at £285m, and post-tax profit up 13.8%, at £217m, on sales that were up just 2.2%, to £1,1677m. The company explained the marked difference between profit and sales growth as being due to “the differing performance of its full-price business and markdown sales” — improved full price sales, reduced unprofitable markdown sales and tight cost control all combined to raise operating margins in both its retail outlets and and its online Directory.

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Post-tax earnings per share (EPS) grew by 19.9%, to 142p, and the board has proposed a interim dividend of 36p, up 16.1% on 2012.  It’s worth noting that post-tax EPS was enhanced 6% by £170m of share buybacks and also by a lower tax rate. The company also said that it intends to raise the total dividend for the full year by a similar percentage to the growth in earnings per share. 

Summarising the results, CEO Simon Wolfson (aka Lord Wolfson of Aspley Guise) said:

The Group has made good progress in the first half, delivering profits at the upper end of our expectations.  Looking ahead the economy looks set to improve moderately, albeit at a slow pace and with the risk that credit easing may not translate into growth in real earnings. 

“We remain confident that we can deliver growth in sales, profits and earnings per share for the full year.

At the time of writing NEXT’s share price is 5,206p. That’s up 40% so far this year, and 45% on this time in 2012. 

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> Jon doesn’t own shares in Next.

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