FIRST QUARTER SALES PERFORMANCE TO 27 APRIL 2019
Full price sales in the thirteen weeks to Saturday 27 April were up +4.5% on last year. This was +1.3% ahead of our internal forecast of +3.2% for the first quarter. We believe this over performance versus forecast was mainly as a result of unusually warm weather over the Easter holiday period, which was particularly helpful to our Retail stores. The table below sets out the full price sales performance for Retail, Online and Finance interest income.
|
Full price sales (VAT exclusive) |
13 weeks to 27 April |
|
Retail |
– 3.6% |
|
Online |
+11.8% |
|
Product full price sales |
+4.0% |
|
Finance interest income |
+11.4% |
|
Total full price sales including interest income |
+4.5% |
|
Of which sales from new space |
+0.3% |
The graph below sets out the full price sales variance to last year by month. As expected, we experienced strong sales growth during February because sales were adversely affected by extreme winter weather last year. March was broadly in line with our forecast for the full year and, as mentioned above, sales during April were better than expected.
FULL PRICE SALES AND PROFIT GUIDANCE FOR THE FULL YEAR
We do not currently believe that the over performance of the first quarter can be extrapolated through to the rest of the year. The over performance in the first quarter amounted to sales of around £10m. Given this is a relatively small number in the context of annual sales, we believe it is too early to revise our full year sales and profit guidance. For completeness, our central guidance is set out in the table below.
|
Full year estimate to January 2020 |
Central guidance |
|
Retail sales (including sales from new space) versus 2018/19 |
– 8.5% |
|
Online sales versus 2018/19 |
+11.0% |
|
Finance interest income versus 2018/19 |
+9.9% |
|
Total full price sales versus 2018/19 |
+1.7% |
|
Group profit before tax1 |
£715m |
|
Group profit before tax versus 2018/19 |
– 1.1% |
|
Earnings Per Share growth versus 2018/192 |
+3.4% |
1 This profit estimate excludes the impact of the transition to IFRS 16 'Leases'.
2 We have assumed that £250m shares are repurchased in the first half of the year and a further £50m in the second half of the year, with a future share purchase price of £58.38, being the closing share price at 29 April 2019.
Note on expected sales phasing for the rest of the year
We think it would be helpful to reiterate the guidance we gave in our March presentation for the phasing of sales across the full year. This is not straightforward because last year the first quarter suffered extreme weather disruption from the “Beast from the East” and the second quarter benefitted from an unusually warm spring and summer. Predicting sales by quarter can only be very approximate but gives an indication of the expected sales phasing. With that caveat, the table below sets out our expectations by quarter for the rest of the year.
|
% |
Q1 (actual) |
Q2 (e) |
Q3 (e) |
Q4 (e) |
|
Full price sales growth versus 2018/19 |
+4.5% |
– 0.5% |
+1.7% |
+1.7% |
CASH FLOW, SHARE BUYBACKS AND EPS
At our central guidance we estimate surplus cash3 generation of around £300m. As outlined in our January 2019 Trading Statement, we intend to return this £300m surplus cash to shareholders by way of share buybacks. We have purchased £86m to date.
As a result of the recent rise in our share price we now expect the enhancement from share buybacks to be 0.2% less than the 4.9% we initially expected. So, growth in Earnings Per Share, based on our central guidance for the full year, is now expected to be 3.4% rather than the guidance given in January of 3.6%.
3 Surplus cash is cash flow after capital expenditure, interest, tax and ordinary dividends but before financing any increase in Online debtors.
NEXT TRADING STATEMENT
Our next sales update will cover the first 26 weeks of the year, to 27 July 2019, and is scheduled for Wednesday 31 July 2019.