Chains emerge as high street winners
Ted Baker and Next defy high street gloom and go for growth
Ted Baker said customers had responded well to its Spring/Summer collections which should help it to build on a solid set of annual trading figures.
The company, which began as a single shirt shop in Glasgow, is now working on store openings in Barcelona, Hong Kong, North America and elsewhere as it builds a bigger presence in regions with long term growth.
Next’s group sales burst through £4 billion for the first time and the company reported another double-digit increase in its dividend. However, its cautionary forecast hit its shares which fell sharply.
Ted Baker’s profit before tax and exceptional items increased by 23.7% to £49.5m (2014: £40.0m) and profit before tax by 25.3% to £48.8m (2014: £38.9m). Group revenue was up 20.4% to £387.6m. The company is proposing a final dividend of 29p bringing the total dividend to 40.3p an increase of 19.6% payable on 19 June.
The e-commerce business performed strongly with sales up by 58.2% to £36.7m (2014: £23.2m).
Ray Kelvin, founder and Chief Executive, said: “This was another excellent year as we continued to develop Ted Baker as a leading lifestyle brand across global markets and distribution channels.
“We continue to invest in the brand as we develop in new markets where we see long term growth. All the while, we remain totally focused on the quality, design and attention to detail which underpins every area of the group.
“Our customers’ reaction to our Spring/Summer collections across markets has been very encouraging and we are excited by our new store openings in the coming months, which include a first store devoted to showcasing our extended licence product range in Spitalfields, London.”
Next had a similarly good year and the company proposes to increase the total full year ordinary dividend by 16% to 150p. This is the sixth consecutive year that its earnings per share and ordinary dividend have grown by 15% or more.
Sales for Next Directory increased by 12% and Next Retail by 5%. Total Group sales rose 7% and reached £4 billion for the first time.
The group noted that is share price rose by 14% during the year, from £62.80 to £71.50. As a result of the increase it did not buy back as many of its shares as in previous years. Instead it returned surplus cash to shareholders through special dividends.
It paid another special dividend of 50p per share in February and has since announced a further special dividend of 60p, to be paid in May.
Chairman John Barton said: “We will continue to undertake buybacks but only when it would give an effective return on the cash expended of at least 8%.
“Returning cash to shareholders has not been at the expense of investment in the business nor has it increased our net debt, which ended the year at the same level as last year. “
Next Retail continues to invest in new, often larger, stores. The Directory continues to increase its active customer base and now delivers to 71 countries and has a growing business in the sale of third party branded products through the LABEL. The company is also increasing its warehouse capacity and improving distribution capabilities.
Overall sales increased by 7.2% which was close to the top end of guidance issued in March last year, although the second half was relatively disappointing with a rise of just 5%.
Growth in underlying profit before tax of £782m was up 12.5%. This figure is flattered by 1.3% as a result of a £9m accounting profit on currency instruments, which is unlikely to recur in the year ahead.
Next noted weakness in some of their product ranges and in response, lowered its budget for full price sales growth in 2015/16 to a range of between 1.5% and 5.5% from between 2.5% and 7.5%, with the first half expected to perform at the lower end of the range.
Pic: Kim Sears, handbag.com