Next

The business
Next traces its roots back to 1864, when gentlemen’s tailors, J Hepworth & Son, was founded in Leeds. In 1981, Hepworth – then chaired by designer Terence Conran – bought a chain of rainwear shops, Kendalls, which it redeveloped as a womenswear brand.

The history
The first Next store opened in 1982. During the 1980s, it grew aggressively, moving into new areas, such as menswear and children’s wear. By 1988, it had over-reached itself, and then-chief executive George Davies was ousted. In the same year, it launched its home shopping business, and by the mid-1990s, the company had been turned around and had more than 300 shops in 16 countries. The company has rewarded shareholders handsomely, thanks to strong cash generation.

The leadership
Simon Wolfson has been chief executive since 2001, having joined the firm in 1991. He was paid £1.8m in 2010/2011. Under Wolfson, the strong performance has continued: since 2002, dividends have almost trebled; the share price has more than doubled and the company has bought back £2.4bn of shares. David Keens is finance director. John Barton is chairman.

The outlook
Next expects its pre-tax profits for 2011 to have grown by 4% to around £565m. However, its ongoing share buy-backs have reduced the number of shares in issue earnings per share are expected to increase by more than 11%. This should see shareholders rewarded with another healthy dividend increase. The trading outlook for 2012 is tough due to a weak economy, rising unemployment and intense competition. As a result, Next does not expect much profit growth for the year. Nonetheless, it does expect to generate £200m of surplus cash flow to buy back more of its shares.