262-Bagger Lifts Profit Guidance

LONDON -- Next (LSE: NXT.L  ) climbed 4% to 3,356 pence this morning after the retail chain lifted its profit guidance for the full year.

A trading statement today revealed that first-half sales had climbed 4.5% and signaled annual profits should come in between 575 million pounds and 620 million pounds. Next had previously indicated profits would be between 560 million pounds and 610 million pounds.

Today's statement confirmed that shareholders could expect profit growth of up to 9% for the 12 months to January 2013. Next also said a 200 million pound share buyback program could help current-year earnings advance by up to 15%.

Today's statement also underlined how Next remains one of the market's most resilient and shareholder-focused FTSE 100 companies.

Since the credit crunch erupted during 2007, a combination of higher profits and regular buybacks has pushed earnings per share 74% higher and dividends per share 84% higher. During the last 10 years, earnings per share have advanced 340%, while the dividend has been raised 227%.

Naturally, the share price has been a strong performer. Indeed, it has been one-way traffic since 2008, when the shares hit a banking-crash low of 838 pence.

In fact, since the chain's deep troubles in the early '90s, Next's shares have been among the most impressive in the London market. The price touched just 12.75 pence during 1991 as the group flirted with bankruptcy, but anyone smart enough to buy then and hold on would now be sitting on a 262-fold capital gain.

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Maynard does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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