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1、18 January 2018 Retail - Non Food UK Clothing Retail Retail Retail - Non Food Industry Update Europe United Kingdom Industry UK Clothing Retail Date 18 January 2018 Deutsche Bank Markets Research Wrapping up 2017 UK Clothing market -2.1% over 12 weeks to 17 December The Kantar WorldPanel data today
2、shows 1) a more promotional market with M and 3) 2017 was a markedly better year for the clothing market than 2016. The period has been fully reported for M AW=Autumn-Winter e.g. Spring Summer 17 = Feb-July 2017. Hedging assumes season is hedged on a rolling 12 month basis, and is fully hedged (100%
3、) by start of each season. 60% initial GPM and 80% USD/ 20% EUR sourcing mix is assumed * based on typical underlying sourcing currency exposure of 40% CNY, 12% BDT, 10% INR, 8% LKR, 8% EUR, 5% KHR, 5% TRY, 5% VND, 3% PKR, 4% other Time will tell if this given back to consumers (or suppliers) Next h
4、as been the most explicit in disclosing the scale of price changes it has made in response to currency pressures. In calender 2017 (fi scal FY Jan-18) the company increased average selling prices by 4%, close to the theoretical increase needed to maintain margins. If the company had not done this we
5、 estimate that Nexts margins would have fallen 330bps (assuming 70% dollar-based sourcing). Ignoring the potential demand elasticity of such action, this mitigated around 135m of profi t pressure (19% of FY Jan-18e forecast group pre-tax profi t). At current spot rates then, in FY20 there should be
6、a tailwind to margins worth around 160bps or 65m. Alternatively Next could choose to lower prices 2-3%. Page 6 Deutsche Bank AG/London 18 January 2018 Retail - Non Food UK Clothing Retail Figure 15: Next increased prices when input costs were rising due to currency. At spot there should be a tailwin
7、d from Autumn-Winter 2018. S Se ea as so on nF Fi is sc ca al lG GB BP P/ /U US SD D La as st t yr rG GB BP P/ /U US SD D Th hi is s yr ry yo oy y %P Pr ri ic ce e ne ee ed de ed d* * A AS SP P in nc cr re ea as se e SS171H181.541.39-9.7%3.9%4% AW172H181.471.26-14.3%5.7%4% SS181H19e1.391.26-9.4%3.7%
8、2%e AW182H19e1.261.29e2.4%-1.0%0%e SS191H20e1.261.33e5.6%-2.2%TBC AW192H20e1.29e1.37e6.2%-2.5%TBC Source: Company data, company estimates (above dotted line), Deutsche Bank estimates (below line) Deutsche Bank AG/London Page 7 18 January 2018 Retail - Non Food UK Clothing Retail Total Market Figure
9、16: Total clothing, footwear, accessories market value growth (yoy % 12-week rolling) Figure 17: UK womenswear market value growth (yoy % 12-week rolling) -4 -3 -2 -1 0 1 2 3 4 5 Dec-14 Mar-15 Jun-15 Aug-15 Nov-15 Feb-16 May-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Sep-17 Dec-17 UK clothing, footwear M
10、 M 2) weaker GM gross margins if supply chain benefi ts are below plan or these are consumed in lower prices or higher markdown; 3) a decline in Food LFL if UK consumers are lured back to the major supermarket chains for their premium ranges; or due to 4) a general downturn in UK consumer demand. Up
11、side risks are predominantly a reversal of these factors, or if the company can lower capital expenditure further to enable greater returns to shareholders. Next (Hold, TP 4,500p) Our target price is based on our DCF (WACC 8.4%, RFR 4.5%, ERP 4.5%, beta 0.9, 1.5% nominal terminal growth rate infl at
12、ion rate of 2%, infl ation passthrough rate of 50%, and real terminal growth rate of 0.5%). We also apply a 10% discount, consistent with peers like M as such, investors should take expert legal and fi nancial advice before entering into any transaction similar to or inspired by the contents of this
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15、 copy of this important document. ? ? Participants in foreign exchange transactions may incur risks arising from several factors, including: (i) exchange rates can be volatile and are subject to large fl uctuations; (ii) the value of currencies may be aff ected by numerous market factors, including
16、world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government-imposed exchange controls, which could aff ect the value of the currency. Investors in securities such as ADRs, whose values are aff ected by the currency of an underlying security, eff ectively assume currency risk. ? ? Deutsche Bank is not acting as a fi nancial adviser, consultant or fi duci
