SUMMARY

·    Q2 full price sales up +4.0% on last year

·    Full year full price sales guidance increased from +1.7% to +3.6%

·    Full year profit guidance increased by £10m to £725m (+0.3% on last year)

·    Earnings Per Share guidance increased from +3.4% to +5.2% on last year

SALES FOR THE 26 WEEKS TO 27 JULY 2019

Full price sales in the first half were up +4.3% on last year.  Total sales, including markdown sales, were up +3.8%.  The table below sets out the full price sales growth by business divisions: Retail stores, Online and Finance interest income, by quarter and for the first half. 

Second Quarter Analysis – 13 weeks to 27 July

Full price sales in the second quarter have been better than we anticipated and were up +4.0% on last year.  This was 4.5% better than the guidance of -0.5% given in our May Trading Statement.  A closer examination of the quarter's performance by month (set out in the chart below) shows that full price sales during May and June combined were up +3.0%; July was particularly strong and up +6.8% on last year.  However, some of July's over-performance in full price sales came as a result of lower markdown sales in our end-of-season Sale.  We believe that the sales performance in May/June is a better guide to underlying growth and we have used this number as the basis for our second half guidance (see below). 

Click or paste the following link into your web browser to view the graph titled '2019 Full Price Sales Variance by Month vs 2018 (£m and %)'. Refer to page 2 for this graph 

http://www.rns-pdf.londonstockexchange.com/rns/2774H_1-2019-7-30.pdf

End-of-Season Sale

We went into the end-of-season Sale on 6 July, with surplus stock down -1% on last year.  Clearance rates to date (the percentage of Sale items that have been sold) are -2% lower than expected.  As a result, we have adjusted our guidance to assume a similar reduction in Sale clearance rates in the second half.

SALES, PROFIT AND EPS GUIDANCE FOR THE FULL YEAR

Following the better than anticipated sales performance in the second quarter, we are increasing our full price sales guidance for the second half from +1.7% to +3.0%, in line with our full price sales growth in May and June. 

The table below sets out our revised central guidance for full price sales, Group profit and Earnings Per Share growth for the year to January 2020.  For completeness, our previous guidance is also shown. 

The increase in our full price sales guidance is £70m and, after accounting for associated costs, is expected to add £20m to profit.  Lower clearance rates to date, along with anticipated lower clearance rates in the second half, are forecast to cost an additional £10m.  As a result, we are increasing our guidance for full year Group profit by £10m to £725m, marginally up on last year.  We now expect Earnings Per Share to grow by +5.2%.

¹ This profit estimate excludes the impact of the transition to IFRS 16 'Leases'. 

² £280m of shares were purchased in the first half of the year and we are assuming that a further £20m are purchased in the second half of the year, with a future share purchase price of £56.16.

SHARE BUYBACKS

We maintain our guidance to return £300m of surplus cash3 to shareholders, by way of share buybacks.  To date we have purchased £280m.

³ Surplus cash is cash flow after capital expenditure, interest, tax and ordinary dividends but before financing any increase in Online debtors.

INTERIM RESULTS

We are scheduled to announce our results for the first half of the year on Thursday 19 September 2019.