Next

Next is a UK-based retailer selling through through high-street shops, catalogues and the internet. Although it has 170 shops abroad, vs 500 in the UK, 94% of its revenue is UK-based. Next claims to focus on the top end of the mass market.

25% of Next's revenue (over £800m) is derived from Next Directory, which encompasses its catalogue and internet business. The segment contributes 33% of Next's profit. Next is the market leading online clothing retailer, with 6.3% of the market..

In 2009 Next earned £302m of profit (after tax) on revenue of £3.27bn. Their assets are largely funded by debt - their balance sheet shows negligible shareholder funds - but their interest payments are covered more than 9 times over by pre-tax profit. They have a long history of buying back their own shares, reducing their outstanding shares by over 40% over the last 10 years.

In 2009 Next's EPS was 156p, and they paid 55p in dividends.

I bought two tranches of Next shares, one in September 2008, and one in January 2009. My average purchase price was 1142p. I bought on the basis that Next was profitable, had sufficiently high margins to remain profitable even in a pretty severe recession, and was trading on a P/E ratio of well under 10.