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Executive summary ………………………………..3

Introduction………………………………………..4

Analysis(company, sector and market)…………..5.

Conclusion……………………………………….12

Bibliography……………………………………..13

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EXECUTIVE SUMMARY

Purpose : - This Report should give the reader an overview of NEXT Plc in detail

which is one of the companies listed on London Stock Exchange. It will be showing

the price and index information for a period of six months starting from 1st October

2008 to 22nd march 2009. Particularly, it seeks to examine the share prices of NXT plc

and compare it with the market Index.

Approach: - The data for this report consists of annual reports, information from the

London Stock Exchange. Data for the analysis of the General retailers were collected

from their respective official websites.

Findings: - The report consists of NEXT plc price and index information over the

past six months. It includes the history of the company, the functions of NEXT plc. It

mainly links the changes in stock prices to events, news about the company. The

report also describes the general trend in the chosen financial market in the last 6

months and compares them with the chosen company’s price which is NEXT plc and

is also compared with the FTSE general index.

Limitations: -As the chosen sector is large in scale this factor may have an effect on

the strength of conclusions that can be drawn. But out the conclusions brought out in

this report are proved with statistical proof and news and articles published by the

London Stock Exchange.

Originality/Value: - With this report one can understand the stand of NEXT plc in the

General retailers market my comparing it with Price index of the London Stock

Exchange. It helps the investors and the general public in understanding the market

and also helps them in deciding to invest in which market.

Keywords: -London Stock Exchange, NEXT plc, General Retailers, Share price

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NEXT

NEXT plc is a UK based retailer that sells moderately priced clothing for men, women, and

children. It also specializes in house wares and furniture through some 500 stores primarily in

the UK and Ireland. It also franchises more than 160 stores in Asia, Europe, the Middle East,

Russia, and Turkey.

Their main customers range from the age groups of 20- 30 who look for style but can afford

such clothes that take them through the next fashion trend.

Their revenue basically comes from its retail stores, its NEXT Directory catalog business, a

Web site, and Ventura, a division which provides call center and customer support services

for the retailer and other firms.

Their top competitors are Arcadia Group, Debenhams plc, and Marks and Spencers plc.

NXT plc got admission to trading (Listed) on the 12th of march 1948.

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ANALYSIS

Share price chart

Over the past six months since September 2008 the performance of the share price has

been fluctuating. It started from 1,059 pounds in October to 858 pounds and had come

upto 1,324 pounds as on 22nd march 2009.

There was an increase in the share price on the 3rd of October 2008 as NXT plc had bought

women's fashion retailer Lipsy Ltd. for an initial of 17.4m pounds in cash. The share

capital was acquired for 14m pounds and loan notes of 3.4m pounds were repaid.

Due to the 4.4% decrease in the like to like retail sales the share price had decreased from

1189 pounds to 1132 pounds on the 6th of November 2008.

On the 6th of November 2008 there was an expected cut in the UK interest rates which

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helped Britain’s struggling retailers like NXT. This factor along with the fall of almost 1

billion pounds debt, the share price had increased to 1162 pounds on the 7th of November

2008.

Marks & Spencers is facing a market that is slowly moving towards high end brands. The

mid market brands such as NXT plc have seen their market share decline and this has led

to their fall in share price. Consumers across the world are reducing their expenditure

following abrupt rises in food and energy costs and after the crisis in financial markets has

plunged large parts of the developed world into recession. NXT plc has suffered much

steeper falls in its underlying sales which in turn caused a decline in their share price in

October 2008.

Due to the global recession the textile firms in Mauritius that supply some of Europe's

biggest high-street stores are bracing for a tough 2009. As their average sales have

dropped by almost 10%, to compensate for this fall in sales, they are fighting for better

prices which would result in the middle markets to be worst hit like NXT plc which

reduced the share price in December.

On December 25th 2008, the British Retail Consortium (BRC) said retail sales figures

reflected a poor Christmas season this year. The BRC, which publishes the retail sales

surveys in Britain, said conditions were tough and consumers were struggling.

Meanwhile, a survey by market researcher Experian showed UK consumers fell 4.3 %

on Christmas Eve compared with the same day last year, dampening hopes that the

traditional last minute shopping for gifts and heavy discounting in the run up to

Christmas would have helped consumer spending hold up. It was said that retailers had

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discounted heavily prior to Christmas in an effort to maintain market share and sales

volumes.

Next, which runs more than 450 stores as well as internet shopping, reported a 4.4 %

drop in sales at 334 stores unaffected by new openings for the 14 weeks to Nov. 1 and

towards end of its report it mentioned a second-half decline of between 4 and 7 percent.

According to the forecasts for the 21 weeks to Dec. 24 ranging from a decline of 6

percent to a fall of 8 percent, some analysts think the group may now miss that target, ,

according to three brokerages.

The combined sales of NXT retail and Next directory for the period from 29 July to 24

December 2008 were down by 1.9% compared to the same period last year. Next retail

sales were down by3.0% in the period. In the 347 stores that were unaffected by new

openings, the like for like sales were down by 7.0%. Next directory sales were up by

1.1% .Like for like sales were within the guidance range of -4.0% to -7.0% they gave in

September and repeated in November.

After a good start to the sale period NXT plc now expects clearance rates to be ahead of

last year. Their full year profit forecast for the year to January 2009 remains in line with

Their previous expectation and current market agreement.

Major part of the city profit forecasts are currently in the range of £415m to £435m. This

calculates to earnings per share of between 152p and 160p which represents a decline of

between -5% and -10% for the full year. The year 2009 looks set to be another

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challenging year.

NXT plc is again budgeting very conservatively, with negative like for like sales for the

full year, they believe the first half will be particularly difficult. They expect NXT

directory to remain less affected by the downturn than retail, and is currently budgeting

for sales in directory to be only marginally down for the full year.

Shares in retail stocks were in demand after Citigroup upgraded its long held sector

stance to 'neutral' from 'underperform' where Next Plc is up 4 % in January. NEXT

suffered a loss because of their pre-Christmas as their competitors gave heavy discounts

so its sales fell by 7% but d directory sales wer up 1% which made a slight change in the

share price.

NEXT plc highlighted in January that it anticipated significant upward pressure on

prices and downward pressure on margins in the autumn/winter of 2009 as a result of

sterling's weakness. At the end of 2008 the fall in sterling against other currencies could

mean much higher debt levels for UK companies versus cashflow, income and earnings

before interest, tax, depreciation and amortization. Few companies will be immune from

the impact of steep exchange rate falls late last year, which could raise a warning signal

for some credit ratings.

On march 19th 2009 HSBC raised Next Plc price target to 1425P from 1340P; rating

overweight. During the year we can see there is only a slight variation in the share

prices. As the variations are minor, the company has not revealed its reasons to the

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public.

ANNOUNCEMENTS

During times like these the whole world is going through a financial crisis namely the

‘credit crunch’. This has not only affected companies but also hugely affected stock

exchanges. During this time banks do not sanction loans easily, this affects the buying

power of the people and the financial ability of companies. It has not only become

important to gain the trust of the people in ones company but loyalty has to be earned.

“The outlook for the consumer economy remains challenging and, as we have said before,

the first half will be particularly tough.”

(Simon Wolfson, 2009)

This can only be done when a company has the ability to pull itself together during times

like these and foresee a prosperous future for the company. NEXT plc. Has not only kept

itself together put it has managed to pull away from the down falling trends of the London

Stock Exchange (LSE) and keep growing even through tough times. During times of

recession a companies should hold on to its assets. In NEXT’s case its internal assets like a

well qualified and experienced managerial team, a powerful and efficient operating model, a

strong financial position make it possible for them to run their business profitably. Its

biggest assets, being its customers have to be happy with what they see as the company’s

future.

“Our strategy remains as it was last year; to concentrate on the design, quality and value of

our product, together with excellent customer service and delivery. We believe this will

serve us well through the current recessionary period and leave us well placed when the

recovery begins.”

(John Barton, 2009)

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Despite the losses occurred to NEXT, it has a strong Balance Sheet which not only

motivates new investors but also makes the present investors invest more.

“We anticipate cash flow will again be strongly positive for the coming year, with debt

peaking at less than £750m after paying the final dividend in July.”

(Simon Wolfson, 2009)

This announcement has not only informed the investors about the plans of the Chairman and

CEO for NEXT in the future but has also shown proof that it has grown in a market where

others have failed. This is significant because in the long run it will gain investors and help

the company grow well in the future.

General trend in the General retailers market in the last 6 months

Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-090

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40

60

80

100

120

INDEXNEXT

NEXT plc belongs to the General retailers. Some companies tend to stay above and keep

rising, whereas others jus fall with the market. As the above chart demonstrates that the

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price margin of Next was not affected and was also not set according to the market index.

In October 2008 NEXT had a similar pricing to that of the market i.e. 101.166 pounds

(index) and 103.925 pounds (NEXT) but since then it always maintained a higher pricing

strategy and has not been affected by the market trends.

Further on in November 2008 the index prices began to fall drastically from 101.166

pounds to 90.634 pounds as the recession started to show its effects in the market. Still

NEXT maintained it standards and did not face a decline in its prices as the other markets

i.e. 103.925 – 107.458 pounds.

In December 2008 it faced a decline with the recession hitting but its decline was not much

as compared to that faced by the market in which index was 82.928 pounds and next being

98.43 pounds.

In the following month in January 2009 it again saw a rise in its prices (index being 93.051

pounds where as NEXT was 108.832pounds) which thus in turn shows that NEXT tried to

get back into its position.

During February 2009 NEXT grew much higher than its expectations and faced the

uncertainty in an optimistic manner leaving behind the index prices as it grew from 108.832

to 110.108 pounds whereas index faced a decline from 93.051 to 83.178 pounds.

By March 2009 NEXT maintained its standard prices where as the markets seemed to fall

even more due to global recession (index falling from 83.178 to 73.96 pounds whereas

NEXT growing from 101.108 to 111.089 pounds).

It thus shows that its prices are not determined by the market trends but its set according to

its value and yet consumers stay brand loyal and prefer clothing and accessories from Next.

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CONCLUSION

While most of its competitors struggled from the declining market, NEXT managed to

increase its market share over the past years and during a n environment like the present

due to global recession, they still maintained their stand in the market. Due to high sales

they could increase their dividends which had a positive effect on shareholders and

investors. As mentioned above, the analysis shows that it is not affected by the different

market trends and it sticks to maintaining its standards which in turn puts an impression

on its consumers and helps them to stay brand loyal with the improvised quality and

therefore results in continuous growth and efficiency as compared to different market

sector

The expected cut in the UK interest rates which favored most of the middle markets and

the acquisition of women's fashion retailer Lipsy Ltd. for an initial of 17.4m pounds in

cash were the 2 main reasons that affected the performance of NEXT plc.

Based on the financial analysis using the graphs and diagrams shown above, the public

would not mind investing in the company as this UK retailer has gone ahead all the other

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middle market retailers showing the public their trustworthiness in not letting them down

even during the time of global recession. With the analysis done over the past six months,

it has been noticed that the share price is not affected by the different market trends and it

sticks to maintaining its standards which in turn puts an impression on the public.

APPENDICES

Table showing share price of NEXT plc for 6 months

Date Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 March 2009

1 I059 10032 1099 1034 1109 1122 11323 1135 1095 1013 1134 11404 1125 1058 1164 11765 1189 991.55 1091 1168 11486 1033 1132 1227 1218 11337 1059 1166 12038 991.5 1087 11899 985 1124 1198 1224 111010 947.5 1120 1080 1173 114011 1111 1085 1195 116012 1052 1035 1167 1186 112713 1047 1000 1023 1189 1223 115714 1003 981 118615 956.5 114416 862 1068 1173 1189 118917 858 945 1112 1130 120918 940 1112 1113 123119 930 1110 1200 1139 129920 900 970 1130 1105 128621 927 970.5 1102 1092 1283

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22 921 1098 1098 1088 132423 896 1080 109724 873 1067 108425 1036 114326 1034 1104 119027 885 1073 1132 116928 900 1108 119829 1011 1099 116430 1094 1093 117731 1054 1081

Bibliography

1. Financial services

NEXT Plc, Annual Report January 2008 (www.next.co.uk)

Key Note - Market Information

2. Papers

Market news-London Stock Exchange

Anonymous,(3rd October 2008). ‘ Next buys women's fashion retailer Lipsy

for initial 17.4 mln pounds cash’ Financial Times

Anonymous,(13th November) ‘UK clothes shoppers abandon mid-market’

Financial Times

3. Miscellaneous

http://www.londonstockexchange.com/en-gb/pricesnews/marketnews/

marketnews.htm?bsg=true&ns=NXT

http://www.londonstockexchange.com/en-gb/pricesnews/prices/System/DetailedPrices.htm? sym=GB0032089863GBGBXSET13208986NXT#VTChart

http://www.nextplc.co.uk/nextplc/financialinfo/ http://www.grin.com/e-book/99429/analysis-of-next-plc-and-its-environment

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