steve2016
25 Feb 2017
Dividend and Special Div Hello all,I am a holder of Next - relatively small but am trying to find out when the ex dates are for the ordinary dividends and the special divs - anyone know ?I read the first special div is paying out in May but not formal list of dates from next anywhere ?Thx all Steve
EssentialInvestor
25 Feb 2017
Kingfisher (KGF) - Off Topic Folks, firstly apologies as this is the NXT board, however there are several posters herewho's opinion I value - and just wondered if anyone has a current (or longer termview) on Kingfisher, if so a quick post on the KGF board would be much appreciated.Briefly what attracts me- the best part of £1 Billion in net cash on the balance sheet,a pension scheme in surplus, the potential in their Screwfix franchise, the current "OneKingfisher Plan" with the potential of increasing returns, and the outside possibility thatHome Depot or even Berkshire may eventually pounce.Negatives - France uncertainty and poor performance, French Election looming,their business is tied to the housing market, at least to an extent.Screwfix has been aggressively rolled out in the UK, if that market suffered weaker tradingduring a recession, do they have flexibility in their cost base to reduce overheads,would think Yes with staffing levels etc.They are trialling Screwfix in a few German locations atm.Amazon are selling in the Home Improvement market, however the bulk and weight ofmany items mean this sector of retail may be a little less vulnerable to the Amazon threat.Apologies again as off topic.
Bill1703
25 Feb 2017
Re: Cash Flow Trend "If sales fall by only 5% it could be that net income in 2017 will struggle to match the last few years and the pay out could suffer... This is the vulnerability I'm thinking about - erroneously or otherwise."Games - look at it another way. NXT currently yields just over 4% on its ordinary dividend, but a full 10% based on the total FY 16 payout you are fretting about (ie. ordinary + specials).The market - and hence the current SP - will NOT be assuming that this level of total dividend payout will be sustained. Otherwise, it wouldn't be yielding 10% on such an income stream!So whether it is a "vulnerability" at all is open to question - but it is not a vulnerability for the current valuation and SP, I am pretty confident. You may end up deciding not to invest - as I have, for now anyway. But I don't think such a decision should hinge on this consideration ... FWIW and IMHO, of course!
Bill1703
25 Feb 2017
Re: Why did .... "It still doesn't get away from the fact they spent more than they got in for the year, and increasing debt to pay dividends or buy back shares is a slippery slope as far as I'm concerned.... Not a desirable way to run a company and surprising really." Games - well you did ask "Why did...", so just providing the answer!Yes, they spent more than they got in - in one particular 12m period. Yet at the end of that period, leverage remained modest - 0.9x ND/EBITDA, slightly higher than the previous period, but still well below the average for both peers and the large cap index (more like 1.5-2x). This is a metric they consider closely when they think about (essentially discretionary) cash returns.It is hardly rare for debt to go up while paying dividends - if you are raising this concern against NXT you would have to do the same for the majority of its index peers, among them a whole series of "quality" blue chips (Unilever, GSK, IMB, Bunzl, WPP, BAT.... I could go on!) And a large proportion of all dividend-paying stocks, much of the time.Is this a problem for them? Of course not... the question, as always, is 'why'. IF any are effectively paying the Ordinary dividend out of rising debt - on anything like a consistent basis - then yes, this is an issue. But NXT is a long way from this - as are many (if not all) of the blue-chip peers. FCF coverage of ordinary dividends (1.8x in FY16) for NXT has been consistently above average, and towards the upper end, of the FTSE peer group. So, "not a desirable way to run a company"? Doesn't stack up as a charge here IMHO, or anywhere close, nor should it be in any way "surprising".The charge that DOES stack up is that they are currently struggling to sell as many clothes - both in store or online - as they were before. And, more debatably, that this trend may persist and continue to undermine the SP - irrespective of their superior record or reputation on capital management. But THAT is an entirely different question.... !!Importantly, no-one will be 'valuing' their TOTAL cash returns as a recurring, progressive annuity stream, as they would with 'ordinary' dividends - or if they are, they deserve to come a cropper! FWIW as you consider a possible investment, it is the retail - rather than capital - management question that you need to get your head around.... that is where I am anyway!
EssentialInvestor
25 Feb 2017
How low can it go? May present an opportunity following the next update imv.Around £36 is mentioned by some as an interesting level.The clothing market is changing at an unprecedented level atm,about everyone agrees with that.
Bill1703
25 Feb 2017
Re: Cash Flow Trend "How far will they go with this trend? ... This has resulted in £53M in the bank -- OK this may all be planned, but it may be difficult for Next to grow the % of dividend payments above the 65.5% and maintain any cash at all."Games - are far as I can see you are looking at most of the right numbers. But there is a massive issue here about discretionary vs "ordinary" cash returns. I am not sure anyone is expecting this 65.5% to "grow" - this refers to total dividends of £568m in the period, against the annual cost of the ordinary dividend of more like £240m.The investment case has never relied on the total quantum of dividends rising every year - yes for "ordinary" dividends, but not in total. What it HAS relied upon is the management commitment to return all "surplus" cash (on their definition) via specials and/or buy-backs (according to conditions) in any one period. "If sales fall by only 5% it could be that net income in 2017 will struggle to match the last few years and the pay out could suffer. This is the vulnerability I'm thinking about - erroneously or otherwise."So yes, there is little doubt that FY 2017 net income, and hence total cash payout, will struggle to keep pace - but is it a problem? I doubt you'll find many shareholders to see it as a vulnerability, specifically - that is why "special" dividends are, er, special?!Next may very well continue to languish, operationally, going forward - and may prove NOT to be a great investment from these levels.... as you know, I have my concerns.But if it doesn't, it will NOT be because of their policy and/or practice in capital management and shareholder returns IMHO - for which they are widely regarded as market-leading practitioners, a view I agree with. But that alone will not guarantee your SP goes up!
LK Hyman
25 Feb 2017
Re: Sum Ting Think Games,"As for Mr Woodford, he can do whatever he likes, but like your own mistake, his buying Next heavily at £80 was a in hindsight not one of his greatest moves."Look on the bright side, m8, it was better than his buying Circassia heavily at whatever it was!Aaaaaaiiieeeee!!! Banzai! Tora! Tora! Tora!LKH on the flybridge tracking steadily north east
gamesinvestor
25 Feb 2017
Cash Flow Trend Bill - here are the last 5 years cash flow figures :-[link] cash from operations has increased from £526M in 2012 to £608M in 2016-- Capital expenditure averaged about £100M over the years 2012 to 2015 but jumped to £151M in 2016 -- I guess this was due to expanding into larger shop premises and the cost of shutting smaller outfits.Now look at the dividend payments :-in 2012 they paid £135M which was exactly 22.4% of net income for that yearin 2015 they paid £434M which was 53.44% of net income for that yearLast year they paid £568M which is now 65.5% of net income.How far will they go with this trend?Net Change in Cash - was positive, only slightly from 2012 to 2015 and then swung to negative (£220M) last year.This has resulted in £53M in the bank -- OK this may all be planned, but it may be difficult for Next to grow the % of dividend payments above the 65.5% and maintain any cash at all.If sales fall by only 5% it could be that net income in 2017 will struggle to match the last few years and the pay out could suffer.This is the vulnerability I'm thinking about - erroneously or otherwise.Games
gamesinvestor
25 Feb 2017
Re: Sum Ting Think Mr Wonk,"you sound rather worried about whatever angle it is Games"I don't hold a position in Next, never have - I actually admire the company and I am considering an investment. As the stock is continuing to fall I am questioning every angle before I decide one way or another.Bill challenges my arguments in a positive manner and that's what I want to see.As for Mr Woodford, he can do whatever he likes, but like your own mistake, his buying Next heavily at £80 was a in hindsight not one of his greatest moves. He obviously believes in Next as he has bought more at these lower levels.He may be right but that won't stop me challenging every angle until I am happy to invest or not.Games -- probably best if that is the end of our discussion
SumTingsWong
24 Feb 2017
Re: Sum Ting Think SunTingWong - should keep his opinions to himself - especially as he has nothing concrete to add to the debate.Games - Ahhh sole!!========== ========== ========== ========== =Gamesinvestor - sounds like he has a vested interest or a wanton need for the share price to decline, you sound rather worried about whatever angle it is Games, your desperate attempts to find negativity within the company speaks volumes and you are beginning to sound like a broken record.Maybe give Mr Woodford a call on Monday morning and tell him what a big mistake he is making by adding Next to his portfolio, after all, I am sure a iii poster such as your good self knows much more about investing than a very successful Fund Manager, you never know he may even offer you a job?As SoMr Wonga
gamesinvestor
24 Feb 2017
Re: Sum Ting Think SunTingWong - should keep his opinions to himself - especially as he has nothing concrete to add to the debate.Games - Ahhh sole!!
gamesinvestor
24 Feb 2017
Re: Why did .... "I think a section in the FY 2016 results statement, which details the £335m increase in net debt, provides useful visibility - coped and pasted below. "Bill - non of that's in dispute. It still doesn't get away from the fact they spent more than they got in for the year, and increasing debt to pay dividends or buy back shares is a slippery slope as far as I'm concerned.Games - Not a desirable way to run a company and surprising really.
gamesinvestor
24 Feb 2017
Re: Why did .... " I think your numbers are leading to an erroneous conclusion"I don't think so - numbers are explicit.It's all in the accounts, basically they spent out more than they got in.Games - not sure what you would be looking for deep in the accounts, as it would have to be reflected in the Cash Flow Statement - if not then the auditors have failed to do their job.
SumTingsWong
24 Feb 2017
Sum Ting Think Mr Gamesinvestor should do more research before play with stock market.Ah SoMr Wong
Bill1703
24 Feb 2017
Re: Why did .... "Would it not have been more rational to pay an affordable dividend of say 40-50% of the £469M?"Games - I think a section in the FY 2016 results statement, which details the £335m increase in net debt, provides useful visibility - coped and pasted below. In short, there was approaching £500m spent on special dividends and "brought forward" (from FY 2017) buy-backs, and a £200m-plus movement in Directory working capital. Note also, the NXT ordinary dividend (as at FY 2016) costs around £240m ********** ***Net debt January 2015 515 Surplus cash from operations (after tax, capital expenditure and ordinary dividends but before funding additional Directory debt)+372Special Dividends- 341Financing for additional Directory debt- 215Buybacks brought forwards from 2016/17- 151Net debt January 2016850
