Results round-up: Next, Ted Baker, GVC, Kier Group
Clothes retailer Next reported underlying annual profits fell for the first time in eight years and warned 2017 will be "another tough year" due to a shift away from spending on clothing and a squeeze on UK wages.
Furthermore, management admitted their focus on following fashion trends had seen them neglect their "heartland product" and so sales are expected to fall in the first half of the year before measures to resurrect the product range are expected to lead a recovery from the autumn season.
Chief executive Simon Wolfson said: "The year ahead looks like it will be tough with a combination of economic, cyclical and internal factors working against us. Our reaction to these challenges will be, as it has been in the past, to acknowledge where we can improve and focus on our core business."
He said while Next had substantially improved its ability to respond to new trends and been rewarded with good sales, "in the process of making our ranges more responsive, we have omitted some best-selling, heartland product" and so since the start of the year had taken corrective action.
"This work will begin to be reflected in our ranges as the summer season progresses. However, our ranges will not be exactly where we want them to be until we get into the third quarter.
"So we expect sales in the first quarter to be around the lower end of the 2017/18 guidance range we issued with our January 2017 trading statement. All other things being equal, we expect some improvement in the second quarter and a more marked improvement in the second half of the year. This, of course, is subject to there being no further deterioration in the external environment as the year progresses."
For the last financial year up to the end of January, total sales shrank 1.9% to £4.1bn as store revenues contracted 2.9% but sales for Next Directory, the catalogue and online business, increased 4.2%.
Ted Baker
In contrast to the travails of others in the rag trade, Ted Baker reported strong growth in sales and profits last year and, apart from remaining watchful for the impact of "external factors", seemed confident about its expansion path.
Founder and chief executive Ray Kelvin hailed another year of progress in the expansion of Ted Baker as "a global lifestyle brand" as revenue increased 16.4% to £531m, driven by a 15.0% rise in retail sales and wholesale revenues up 20.9%.
"We have continued to trade well and develop despite a backdrop of on-going external challenges across our global markets. This success reflects the strength and appeal of the brand as well as the outstanding quality of our collections," Kelvin said.
Looking forward he said the Spring/Summer collections "have been well received and we have a clear strategy for continued growth across both established and newer markets".
But in the outlook statement, there was an admission that trading across its markets continued to be "impacted by on-going external factors", which saw increased levels of promotional activity and a fall in international tourism in North America, while the trading environment continued to be "challenging" in Asia.
Nevertheless Ted's strategy for continued expansion remained in place, underpinned by a "controlled distribution across channels as well as the design, quality and attention to detail that are at the core of everything we do".
For the year to 28 January, as the store estate was increased with average square footage gain of 8.5% that helped drive retail sales in UK and Europe up 10.7% to £279.5m, with North American up 28.3% to £103.4m, more than half of which was due to currency effects, while e-commerce sales picked up 35.1% to £72.3m.
Profit before tax and exceptional items of £65.8m climbed 12.1%, with reported PBT up 4.4% to £61.3m.
GVC Holdings
Sports betting and gaming group and owner of the 'Foxy Bingo' brand GVC Holdings announced its audited results for the year to 31 December on Thursday, with pro forma sports wagers up 4% to €4.55bn, or up 7% at constant currencies.
The FTSE 250 firm said its pro forma sports margin was 9.6%, improving from 8.5% in 2015, while net gaming revenue was 9% higher at €894.6m, or 12% higher at constant currency.
Pro forma revenue was up 8% at €873.2m, or up 11% at constant currency, while clean EBITDA was 26% firmer at €205.7m.
Adjusted profit before tax was €93.8m, against €46.4m in 2015.
The board announced a second special dividend of 15.1 euro cents, giving a total dividend of 30 cents for the 2016 financial year.
Net debt stood at €131.5m, which the board pointed out was 0.6x clean EBITDA.
“The acquisition of bwin.party in February 2016 was our most ambitious transaction to date and through the hard work of our people we have once again demonstrated our ability to create significant shareholder value through selected acquisitions,” said chief executive officer Kenneth Alexander.
On the operational front, GVC successfully integrated the bwin.party group during the year, with the board saying it also improved its platform stability, and significantly improved the product offering.
Pro forma net gaming revenue from the sports labels was up 14%, or 16% in constant currencies, while the company also reported an improved sports win margin to 9.6% from 8.6% in 2015.
It said profirma gaming net gaming revenue from the acquired bwin sports labels was up 26%, while the value of first time deposits was 37% firmer.
Kier Group
Property, residential, construction and services company Kier Group posted its results for the six months to 31 December on Thursday, with revenue falling 1% to £2bn on an underlying basis.
The FTSE 250 firm said the results were in line with expectations, as profit from operations improved 4% to £56.5m, with the board saying there remained a “strong pipeline” of growth opportunities.
Profit before tax was 12% higher at £46.3m, and the board declared an interim dividend per share of 22.5p - up 5% on a year prior.
Its operating margin was 2.8%, improving from 2.7% in the six months to the end of 2015, and basic earnings per share were up 11% to 38.9p.
Net debt was £179m, widening 3% from £174m.
On a statutory basis, group revenue was up 1% to £2bn, profit from operations improved 149% to £47m, profit before tax was up 712% at £34.9m, and basic earnings per share were 405% higher at 39.9p.
“Today's results reflect the ongoing financial and operational discipline employed across the group and the strength of our flexible, integrated business model,” said chief executive Haydn Mursell.
“The group has a balanced portfolio of businesses and market leading positions in regional building, infrastructure and housing.
“Our continued focus on simplifying the portfolio and working with clients in a collaborative way is delivering further growth opportunities.”
Mursell said Kier’s clients recognised that approach as a “key differentiator” when working with the company.
He also claimed the group's breadth provided some resilience against economic uncertainty, and the board was continuing to “shape” Kier to focus on its core competencies.