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Next plans £200m series of buybacks

Nigel Cope,City Editor
Friday 24 March 2000 01:00 GMT
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Next, the fashion retailer, announced plans to return up to £200m to shareholders yesterday following the decision last November to put the group's Clydesdale consumer loans business up for sale.

Next expects Clydesdale, which is part of the group's Ventura finance division, to fetch £80m-£90m including the value of outstanding loans.

Combined with the retailer's net cash of £123m, Next will have a cash pile of over £200m which will be used to fund a series of share buybacks over the next two to three years.

The news came as Next showed that it has again avoided the high street gloom with a 17 per cent increase in full-year profits to £195m. However, the shares fell 3 per cent to 504p after the City expressed disappointment with a slowdown in underlying sales in current trading and dissatisfaction with the share buyback plans. Like-for-like sales in the first seven weeks of the year were up by 3 per cent on last year in the high street stores. This compares with an 8 per cent increase announced in January.

David Jones, the chief executive, defended the performance saying: "The January statement including an exceptional autumn and winter period. And we don't believe many established retailers will match the figures we have produced today."

The comments came as Mr Jones expressed disbelief at the sums many companies are spending on their e-commerce activities. He revealed that Next spent just £100,000 setting up its website which launched in August. "If people are investing heavily to set up a delivery systems then I can understand it. But we were quoted £600,000 just to set up our website. We ended up doing most of it ourselves for a fraction of the cost. We have two people running it and they do a very good job. We advertise the site for nothing on our carrier bags and that's it. I have no idea what other companies are spending all this money for. "

Mr Jones revealed that he expects Next's online business to achieve sales of £12m-£15m this year. With its call centre, credit checking and home delivery expertise, Next would offer third-party fulfilment services to third parties, Mr Jones said, "as long as they are not rivals or fly-by-night operators".

Sales at Next Directory rose by 2 per cent on the year as the company avoided chasing unprofitable sales. Trading profits at the division rose by 19 per cent to £30.5m.

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