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1. Company Snapshot

1.a. Company Description

NEXT plc engages in the retail of clothing, footwear, and home products in the United Kingdom, rest of Europe, the Middle East, Asia, and internationally.The company operates through NEXT Retail, NEXT Online, NEXT Finance, NEXT International Retail, NEXT Sourcing, Lipsy, NENA, and Property Management segments.It operates retail stores; an online retail platform; and 199 franchise stores in 35 countries.


The company also offers consumer credit; NEXT branded products; and women's, men's, children's, homeware, and beauty products under the LABEL and Lipsy's own brand, and other third-party brands.In addition, it provides property management services, including holding and lease of properties.The company was formerly known as J Hepworth & Son and changed its name to NEXT plc in 1986.


NEXT plc was founded in 1864 and is headquartered in Enderby, the United Kingdom.

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1.b. Last Insights on NXT

NEXT plc's recent performance has been positively driven by strong quarterly sales, beating guidance with a 10.5% increase in total full-price sales. Analysts have responded by upgrading their price targets, with Deutsche Bank increasing its target from 10,800 GBp to 11,600 GBp. The company's forward guidance has also been well-received, leading to a slight rise in the consensus analyst price target from £128.16 to £129.56 per share. Additionally, the company is set to pay a dividend of £0.87 per share, demonstrating its commitment to shareholder returns.

1.c. Company Highlights

2. NEXT plc's Strong H1 FY2026 Results: Driven by International Growth and Operational Efficiency

NEXT plc reported a strong first half of fiscal 2026, with total sales up 10.3% and profit before tax up 13.9%. Earnings per share grew by 16.8%, boosted by share buybacks. The interim dividend increased by 16%, and the full-year dividend is expected to rise in line with EPS. The company's cash flow from operations was GBP 62 million, with total surplus cash up GBP 87 million year-on-year.

Publication Date: Sep -20

📋 Highlights
  • Strong H1 Performance:: Total sales rose 10.3% and profit before tax increased 13.9%, driven by 10.9% full price sales growth and 28% overseas sales surge.
  • International Expansion:: International sales now account for 10% of total sales, with 25% H1 growth and 33% international online sales growth fueled by marketing and market expansion.
  • Online Momentum:: UK online sales surged 11% (underlying full-price up 9.2%), while international online profit jumped 36% due to higher commission rates and efficiency.
  • Financial Resilience:: Net debt fell GBP 180 million, net assets rose GBP 340 million, and surplus cash increased GBP 87 million, supporting GBP 400 million shareholder returns via dividends/buybacks.
  • Strategic Brand Diversification:: Non-NEXT brands grew 16%, wholly-owned brands saw nearly 100% overseas growth, and third-party brands expanded through niche and licensed ranges.

Financial Performance

The company's revenue growth was driven by a 10.9% increase in full-price sales, with a 28% growth in overseas sales being a significant positive. UK sales rose by 7.6%, partly attributed to strong summer weather and competitive disruption. The company's profit margin was maintained despite higher labor costs, primarily due to national insurance contributions and minimum wage increases.

Segmental Performance

The retail business saw sales increase by 3.7%, driven by a 5.4% rise in full-price sales. However, profit declined by 1.4% due to higher labor costs. The online business performed strongly, with total sales surging 11% in the U.K. and 33% internationally. Profit soared 17.7% in the U.K. online business and 36% internationally.

Valuation and Outlook

With a P/E Ratio of 27.04 and an ROE of 35.37%, the market appears to have priced in a significant level of growth. The company's guidance for sales growth is projected at 7.5%, with a profit target of £1.1 billion. Analysts estimate next year's revenue growth at 9.5%. The actual EPS came out at '3.21' relative to estimates at '3.25', indicating a slight miss.

Operational Highlights

The company is focused on improving operational efficiency, with investments in mechanization and technology aimed at addressing rising labor costs. International expansion is also a key focus area, with the company seeing significant growth in international online sales. The company's wholly-owned brands and licenses are experiencing strong growth, particularly overseas.

Management Commentary

Simon Wolfson, CEO, highlighted the importance of improving websites and global fashion convergence for sustained international growth. The company is also focused on providing better quality and designs at competitive prices, driven by customer demand. NEXT is developing closer supply sources to reduce lead times and is working on a commission basis with aggregators.

3. NewsRoom

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FTSE 100 Live: London stocks perk up, as banks avoid tax raid

Nov -25

Source: proactiveinvestors.com

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FTSE 100 Live: London and European stocks called lower, easyJet, Next and Kingfisher in focus

Nov -25

Source: proactiveinvestors.com

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Are Retail-Wholesale Stocks Lagging Next (NXGPY) This Year?

Nov -12

Source:

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How Recent Analyst Upgrades Are Shaping the NEXT Investment Story

Nov -08

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Next PLC Lifts Outlook After Quarterly Sales Beat Guidance

Oct -29

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Looking at the Narrative for NEXT After Analyst Upgrades and Guidance Changes

Oct -25

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Estimating The Intrinsic Value Of NEXT plc (LON:NXT)

Oct -09

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NEXT (LON:NXT) Will Pay A Dividend Of £0.87

Sep -21

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.12%)

6. Segments

NEXT Brand

Expected Growth: 5%

NEXT's 5% growth is driven by its strong online presence, with e-commerce sales increasing by 13% in 2020. The brand's focus on quality, stylish, and affordable clothing resonates with customers. Effective inventory management, efficient supply chain, and strategic pricing also contribute to its growth. Additionally, NEXT's investment in digital marketing and loyalty programs helps to retain customers and attract new ones.

Total Platform

Expected Growth: 7%

NEXT plc's Total Platform growth of 7% is driven by increasing online sales, effective marketing strategies, and a strong brand reputation. Additionally, the company's focus on omnichannel retailing, investments in digital capabilities, and efficient supply chain management have contributed to its growth. Furthermore, NEXT's ability to adapt to changing consumer behavior and preferences has enabled it to stay ahead of the competition.

Franchise, Sourcing and Other

Expected Growth: 4%

{'Franchise': 'Strong brand recognition, strategic partnerships, and expansion into new markets drive growth.', 'Sourcing': 'Efficient supply chain management, cost savings from scale, and strategic sourcing initiatives contribute to growth.', 'Other': 'Investment in digital capabilities, effective inventory management, and focus on customer experience drive additional growth.'}

Property Management

Expected Growth: 5%

NEXT plc's Property Management segment growth is driven by increasing demand for retail space, strategic partnerships with landlords, and effective cost management. Additionally, the company's focus on omnichannel integration, investment in digital platforms, and expansion into new markets contribute to its 5% growth.

7. Detailed Products

Women's Clothing

NEXT plc offers a wide range of women's clothing, including dresses, tops, trousers, and outerwear.

Men's Clothing

NEXT plc provides a diverse range of men's clothing, including casual wear, formal wear, and accessories.

Children's Clothing

NEXT plc offers a wide range of clothing for children, including casual wear, formal wear, and accessories.

Home and Furniture

NEXT plc provides a wide range of home and furniture products, including sofas, beds, and decorative items.

Beauty and Fragrances

NEXT plc offers a range of beauty and fragrance products, including skincare, makeup, and perfumes.

8. NEXT plc's Porter Forces

Forces Ranking

Threat Of Substitutes

NEXT plc operates in the retail industry, where substitutes are readily available. However, the company's strong brand reputation and high-quality products reduce the threat of substitutes.

Bargaining Power Of Customers

NEXT plc's customers have a high bargaining power due to the availability of substitutes and the ease of switching to competitors. The company's pricing strategy and customer loyalty programs help to mitigate this threat.

Bargaining Power Of Suppliers

NEXT plc has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's strong relationships with suppliers also help to mitigate this threat.

Threat Of New Entrants

The threat of new entrants in the retail industry is moderate, as it requires significant investment in infrastructure and marketing. NEXT plc's strong brand reputation and established supply chain provide a barrier to entry for new entrants.

Intensity Of Rivalry

The retail industry is highly competitive, with many established players competing for market share. NEXT plc's strong brand reputation, high-quality products, and efficient supply chain help the company to compete effectively in this environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 55.90%
Debt Cost 5.79%
Equity Weight 44.10%
Equity Cost 10.34%
WACC 7.80%
Leverage 126.77%

11. Quality Control: NEXT plc passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
DS Smith

A-Score: 5.7/10

Value: 8.3

Growth: 3.7

Quality: 3.8

Yield: 4.4

Momentum: 8.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
NEXT

A-Score: 5.6/10

Value: 1.8

Growth: 5.7

Quality: 6.7

Yield: 4.4

Momentum: 7.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Redrow

A-Score: 4.9/10

Value: 6.7

Growth: 3.8

Quality: 7.4

Yield: 4.4

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Taylor Wimpey

A-Score: 4.7/10

Value: 4.4

Growth: 1.6

Quality: 5.1

Yield: 8.8

Momentum: 1.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Bellway

A-Score: 4.5/10

Value: 6.2

Growth: 1.6

Quality: 5.9

Yield: 5.6

Momentum: 2.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
On

A-Score: 3.5/10

Value: 0.7

Growth: 9.9

Quality: 6.3

Yield: 0.0

Momentum: 2.5

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

142.3$

Current Price

142.3$

Potential

-0.00%

Expected Cash-Flows