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Most of the key trends are well represented, Next
17
Sep '10
Next plc announced result for the half year ended July 2010.

Next has delivered a robust set of results in trading conditions that remain testing. Group sales for the first half were up 5%. Costs and margins have been managed carefully and as a result profits in the first half grew by more than sales, up 15% on last year.

Earnings per share (our key measure of financial success) have been enhanced through cash generation and share buybacks, resulting in EPS growth of 24%. We have increased the Interim dividend by 6p to 25p. Financial highlights are as follows:

• Group revenues increased 5% to £1,587m
• Group profit before tax increased 15% to £213m
• Earnings per share rose 24% to 84.5p
• Cash inflow of £63m, before share buyback outflows of £157m
• Net debt of £494m and ample debt facilities of £800m
• Interim dividend increased by 6p to 25p

Chief Executive's ReviewHeadlines

• Sales up 5%
• Profit up 15%
• Earnings per share up 24%
• Dividend up 6p to 25p

Progress: Sales, Profit and Earnings per Share
Next has delivered a robust set of results in trading conditions that remain testinfg. Group sales were up 5%. The continued addition of profitable new space in Next Retail and an excellent performance from the Next Directory more than compensated for retail like for like sales.

Costs and margins have been managed carefully and as a result profit in the first half grew by more than sales, up 15% on last year. Earnings per share (our key measure of financial success) have been enhanced through cash generation and share buybacks, resulting in EPS growth of 24%. We have increased the Interim dividend, by 6p to 25p.

Product

We remain confident that all our ranges reflect the latest trends and remain good value for money. In particular we have been encouraged by the development of our ranges for Children and Home, which now account for around 40% of Next Brand sales.

We are more confident than we have been for some time with the fashion content of our Womenswear ranges, and believe that most of the key trends are well represented. Going forward, there is more we can do to maximise the potential of best selling lines, with more colourways and greater depth of buy on these items.

Retail

Retail Sales
Retail VAT exclusive sales in the first half were up 2.2% on last year. Last year was a 53 week year and as a result the first half started one week later than last year. This timing difference added 0.9% to our underlying sales growth.

As set out in our previous trading statement, like for like sales for the first half were -1.5% (against the directly comparable period last year). Like for like sales have become a little confusing as a measure of performance. Ours would be enhanced by more than 3% if, as is the case with many retailers, they included direct sales. In addition, the increase in VAT means that our reported like for like sales are around 1.4% less than the amount customers actually spent in our stores.

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