Jan 3, 2018

Next: a capital idea

The business is more mature these days, but buyback mathematics still work well for Next. This compares the boost to earnings per share with the equivalent expected investment return from the capital otherwise used for the buyback. Some of Next's other rules governing buybacks are worth revisiting. Next routinely throws off more than £500m a year, after £150m or so of capital spending. Analysis last year suggested the stores would still be cash generative even if sales fell for years.

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