|Bid||6,736.00 x 0|
|Ask||6,610.00 x 0|
|Day's Range||6,726.80 - 6,830.00|
|52 Week Range||3,970.00 - 6,976.00|
|Beta (3Y Monthly)||1.34|
|PE Ratio (TTM)||14.95|
|Earnings Date||Sep 19, 2019|
|Forward Dividend & Yield||1.68 (2.52%)|
|1y Target Est||5,337.47|
British retailers endured their worst September since at least the mid-1990s as people spent money on entertainment instead, according to surveys that painted a muted picture of household demand ahead of Brexit. In a potential warning sign for consumer spending, which has helped the economy in the run-up to Brexit, the British Retail Consortium said total retail sales values declined 1.3% in September compared with the same month last year. A separate survey published on Monday by payment card company Barclaycard showed broader consumer spending -- which includes retail sales -- rose by a "modest" 1.6% in annual terms in September.
(Bloomberg Opinion) -- As Britain appears to be careering toward a no-deal Brexit, Next Plc Chief Executive Simon Wolfson is trying to reassure investors that the company should come out largely unscathed. That sounds overly optimistic, but Next has less to fear than most retailers.Wolfson, a Conservative Party peer and well-known Brexit supporter, says that as long as Britain’s ports operate effectively, Next’s operations and profits won’t be significantly impacted.That’s a big if. To be sure, Next doesn’t rely heavily on the Port of Dover, widely expected to face the biggest crunch if the U.K. crashes out of the European Union without a deal. But a disorderly Brexit on Oct. 31 could be a logistical nightmare for retailers because warehouses will be full of Christmas stock, leaving them little room to stockpile other items. A no-deal scenario could also make consumers reluctant to spend, especially if it results in higher inflation, as many expect.The good news is that Next won’t be suddenly facing higher tariffs. It estimates that the U.K. government’s temporary tariff regime that will come into place in the event of a no-deal Brexit will actually reduce the duties on most clothing, saving the company 25 million pounds ($31 million) in the first year. That’s a mere rounding error for a company the size of Next, so not exactly a major boon, but still a plus. With U.K. inflation in August at its lowest rate since 2016 and wages rising, consumers have more spending power. But Next is already facing disappointing sales at the start of the autumn season, which caused shares to fall as much as 5%. The company blamed the warm September weather rather than political turmoil. Even so, it’s a worry ahead of the peak trading season.There’s no doubt that Brexit uncertainty has weighed on consumers’ willingness to spend. British home-improvement retailer Kingfisher Plc said Wednesday that it had affected sales of higher-priced items like kitchens. Overall U.K. sales of household goods fell in August compared with the same period a year earlier. But even in a worst-case scenario of a no-deal, Next is better placed than most retailers. It believes the broader political uncertainty is less likely to impact smaller-ticket purchases such as clothing. And Next has outperformed many of its rivals in what has been a cut-throat retail market. It has developed a strong online business and isn’t saddled with too many stores with long leases or in the wrong places. It’s also been quietly developing Label, through which it sells third-party fashion brands.Next’s clothing lines are now hitting the right notes. After admitting it got too trendy a couple of years ago, the company appears to have found the right balance between style and predictability.The shares have risen almost 55% this year, far outperforming both competitors and the broader FTSE 100 Index. Next trades on a forward price earnings ratio of about 13 times, at a deserved premium to Marks & Spencer Group Plc, whose shares have slumped almost 15% this year after its pricey Ocado deal and subsequent rights issue. All retailers need to worry about the danger of a hard Brexit, but Next should emerge in better shape than most.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Stephanie Baker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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(Bloomberg Opinion) -- Is your company immune to Brexit? With the looming threat of the U.K. leaving the EU without a withdrawal deal and a slim but rising risk of the pound plunging to parity with the dollar, more chief executives are telling investors they can handle any eventuality – however messy.Unfortunately, having a fully fleshed out Brexit contingency plan is a luxury not all firms can afford. Nor does it solve the question of how any company will cope if a no-deal departure crashes the economy.A hunt through Bloomberg’s trove of filings of company financial results throws up six publicly-traded companies that have labeled themselves “Brexit-proof,” or close to it. These are: healthcare facilities provider Primary Health Properties Plc; wealth manager Rathbone Brothers Plc; food producer Cranswick Plc; industrial real estate firm Stenprop Ltd.; Lloyd’s of London and the payments technology provider Net 1 UEPS Technologies Inc.Their confidence stems either from the niche products that they sell, their domestic U.K. supply chains (meaning less exposure to a sudden rise in tariff barriers to trade), or the fact that they’ll keep EU-based hubs that remove the uncertainty of regulatory hurdles.They’re not alone in their messages of comfort. Much of the finance world has had to prepare for the worst, including the likes of Barclays Plc, HSBC Holdings Plc and Royal Bank of Scotland Group Plc. Other industries are joining the fray. “Leaving the EU without a deal is not corporate death for us, but it’s annoying,” the boss of the Volskwagen AG-owned luxury carmaker Bentley said this week. A no-deal scenario means only “mild disruption” for the retailer Next Plc, according to its CEO Simon Wolfson. Is this complacency or just sound planning?There are three big Brexit risks cited frequently by companies: Tariff barriers, non-tariff or regulatory hurdles, and logistical issues such as holdups at ports.On tariffs, the Confederation of British Industry lobby group has offered up some dire warnings, including textile imports from Turkey facing an average charge of 12% post-Brexit and vehicle exports to the EU getting whacked with a 10% levy. But some firms think they can take the pain. Next estimates 20 million pounds ($24 million) in additional input costs from import duties, equivalent to a 0.5% price increase on its clothing products. Chemicals producer Croda International Plc estimates a “mid-to-high single-digit million” impact from tariffs, a cost it would partly absorb and partly pass on to customers. Makers of higher end stuff, such as $200,000 Bentleys, will be confident of getting shoppers to fork out more if their costs go up.On the threat of more regulation and other non-tariff changes, some CEOs are equally sanguine. Croda’s management says it’s ready to re-register its products in the EU in the event of a no-deal departure. Next says there’s no reason why independent testing of its products would stop them being acceptable to Brussels regulators.On the fear about logistical snarl-ups in the immediate aftermath of a sudden U.K.-EU rupture, the more optimistic British bosses point to their stockpiling of goods and securing of alternative supply routes. Several say they’ve amassed six months’ worth of supply usually delivered from Europe. Bentley and Next say they can avoid the crowded Dover-Calais shipping route if it’s disrupted. “I’m much less frightened of no-deal,” says Wolfson.It’s important to remember, however, that all of this preparation costs money (and that Wolfson is a Conservative Party peer and leave voter). A look at Next’s 11-page Brexit contingency plan published last year shows an elaborate new structure to limit the pain. It has set up a German company through which it intends to shift more European sales and an Irish entity to handle orders there.Yet allocating millions to emergency plans means delaying investment or passing on the cost to suppliers or clients. Some companies can swallow this more easily than others. For Westley Group, a small foundry and engineering group, a loss of 2 million pounds in EU orders related to Brexit last year equated to 7% of its revenue. That’s significant.And managing to survive the worst ravages of a hard break with Europe won’t mean much if the U.K. economy is worse off. Investors are certainly betting that way by favoring the big, internationally diversified companies of the FTSE 100 over those that make most of their sales in Britain.The chart above shows a 13% performance gap over the past year between the shares of British exporters (which get most of their revenue overseas) and those of domestically-focused U.K. companies. It’s interesting that the latter group include companies that claim to be fully prepared such as Barclays.One thing CEOs can't control is investors’ own emergency plans.\--With assistance from Mark Gilbert .To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Britain can avoid disorder and chaos in the event of a no-deal Brexit because a step-up in the government's contingency planning meant the economy was better prepared, the boss of clothing retailer Next said on Tuesday. Next chief executive Simon Wolfson, a prominent leave supporter, told the BBC he hoped new Prime Minister Boris Johnson could secure a deal with the European Union before the Oct. 31 exit date.
ING, one of Europe's largest banks, said on Tuedsay it saw a 25 percent chance of a no-deal Brexit and a 40 percent chance of an election in Britain. "Deal or no-deal a general election looks increasingly likely," ING economist James Smith said.
The chief executive of Next Simon Wolfson said a no-deal Brexit would not lead to disorder and chaos as the British government's contingency planning meant the economy was better prepared. "We are a long way from disorder and chaos," Chief Executive Wolfson told the BBC. Wolfson, the boss of one of Britain's biggest clothing retailers, said the government of Theresa May had failed to adequately prepare for a no-deal, a situation he said was now being addressed by Prime Minister Boris Johnson.
A slew of positive corporate earnings and optimistic signs from U.S.-China trade talks propped up European shares on Wednesday as investors braced for what would be the U.S. Federal Reserve's first interest rate cut in more than a decade. The turn of central banks globally towards monetary easing had driven sharp rises in stocks in June and early July but after a mixed earnings season and Tuesday's sell-off, the STOXX index ended the month up just 0.2%.
(Bloomberg Opinion) -- A $69.90 polka dot dress from Zara has become the fashion hit of the summer. Despite little email or social media promotion from the chain, the flowy, universally flattering mid-length frock has become so ubiquitous that someone has created an Instagram account to collect sightings of it out in the fashion wilds – including several that appear to show multiple women wearing it to the same event.The frenzy around the garment epitomizes the ability of the brand’s parent, Inditex SA, to ride a sartorial wave.But the company, founded by Spain’s richest man, Amancio Ortega, is coming under intensified pressure. Rivals in the U.S. and Europe are catching up to its short production lead times. Meanwhile, cheaper upstarts such as Associated British Foods Plc’s Primark and Boohoo Group Plc, are burnishing their fashion credentials.There is no doubt that Inditex’s business model has served it handsomely for more than four decades. But its approach must prove its mettle now more than ever. Otherwise, its advantages risk being gradually whittled away, along with the group’s industry-leading profitability.The retailer, of course, is famous for its fast supply chain. Many competitors order from factories at least six months in advance. But Inditex’s brands, led by Zara, which accounts for about 70% of group sales, produce most of their garments within the current fashion season. About 57% of products are made close to its headquarters in Arteixo, northern Spain, including at facilities in Portugal, Morocco and Turkey. This means Zara clothes can go from design to shop floor within a matter of weeks.Just as important as the tempo is its unique process of developing ideas.It starts with Zara’s army of store managers, who communicate what’s selling and what trends are emerging to the commercial team within Inditex’s sprawling head office. This is not some complex exercise in big data; it’s a conversational approach to absorbing what shoppers want. Designers, who sit nearby, incorporate that feedback into their creations.This has all added up to spectacular growth. But, not only is the company maturing, the competitive landscape has become more difficult. Progress from here will be much harder work.Social media makes it easier for all retailers to see what is hot. Just take those polka dots: Even Topshop, now widely regarded as a bit of a fashion has-been, also managed to produce a stand-out spotty dress. At the same time, retailers from Britain’s Next Plc to Gap Inc. in the U.S. are finally shortening their supply chains. They are still not as speedy as Inditex, but they are narrowing the gap.Another risk is the rise of online shopping. Most stores find that the high cost of fulfilling these sales squeezes profitability. But Inditex’s process is not all that different from what it’s already doing, and that helps shield its margins from the digital onslaught. Store managers telling the head office that they need three puff-sleeve blouses and two pairs of chunky sandals is similar to an individual placing the same order from her laptop. Indeed, Inditex is fond of pointing out that it was a digital company long before the rise of e-commerce.Despite all of its advantages, Inditex’s operating margin has been shrinking for the past six years. Consequently, the group is opening fewer, larger stores, and plans to increase space in prime locations by 5-6% this year. This is the right strategy, but it means that it won't be able to count on large-scale store openings to boost revenue growth. The company is also overhauling its management. Pablo Isla, executive chairman since 2011, will cede his chief executive officer role to Carlos Crespo. By elevating the chief operating officer to the top job, Inditex is clearly trying to wring the maximum benefit from the business model, in order to continue to stay ahead of rivals.At its heart is fashion. We’re at a moment in apparel retailing in which technology is often framed as the lynchpin of any success or turnaround. Investors have been dazzled by newcomers StitchFix Inc. and Revolve Group Inc., which tout their ability to use algorithms to create and buy the right product selection. Executives from the likes of Gap and American Eagle Outfitters Inc. emphasize more personalized digital experiences as a way to win over customers.And while Zara counts on technology, such as by using radio frequency identification to know exactly where every organza halter-neck top and utility boiler suit is, much of its dominance is actually due to something more old-school: it knows how to make clothes that people want – even before they do.Though cost control is always important, what will be crucial for Crespo is ensuring that Zara’s fashion compass stays perfectly calibrated. Putting style at the center of everything the company does is essential, not only to ensure that Zara can continue to charge a premium for the latest looks, but also for ensuring it doesn't emulate rival Hennes & Mauritz AB and end up with a pile of unsold stock.As sales growth has slowed in recent years there have been questions as to whether Inditex has retained its fashion flair, particularly with fewer discernible trends to chase.That polka-dot dress shows that it is still capable of churning out the blockbusters. To stay ahead of increasingly nimble rivals, it must produce a steady stream of equally Instagram-friendly fashion hits.To contact the authors of this story: Andrea Felsted at email@example.comSarah Halzack at firstname.lastname@example.orgTo contact the editor responsible for this story: Jennifer Ryan at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of NEXT plc and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.