Join our community of smart investors

Next overdelivers, Kingfisher tools up, Anglo and Agarwal, Savills' Eastern promise

Our second weekly batch of IC companies analysis
March 23, 2017

He's only gone and done it again. Next (NXT) shareholders are used to its chief executive Lord Wolfson being oh so gloomy, inciting caution and then reigniting confidence. They may be feeling smug after the shares rose 8 per cent on the day of its annual results. News that a big cost-cutting exercise has offset higher costs - and perhaps, management's stated preference for special dividends over buybacks - has pleased the market. Click here for our analysis.

The question is how long it can keep up these tricks. The economic factors will likely outlast the efficiencies it can wring out of its distribution function, and it has already moved its garment production to more cost-efficient territories, as we found out at the half-year stage (that's here). A chunk of this year's extra costs relate to online investment - whether this can be tapered down will be important for operating margins as the business restructures its retail estate.

If the mood is brighter for Next, it is souring for Kingfisher (KGF), as the company's continental sales weaken on a like-for-like basis. Click here for our take on its progress over the year to January 2017. At its Castorama business, across La Manche, Kingfisher is also investing in its IT platform. At least digital sales are up at B&Q as it imitates its faster-growing stablemate Screwfix. As we've said previously, Travis Perkins (TPK) is applying similar lessons to its own retail estate (click here for its recent full-year results). DIY enthusiasts have a feast of click-and-collect options at their disposal.

Don't miss our long analysis of what major Vedanta Resources (VED) shareholder Anil Agarwal wants with a stake in Anglo American (AAL) - it is a complex deal with implications for both companies. That's here.

Bravo to the canny operators that didn't buy into the ill will towards Savills (SVS) after the Brexit vote, when it was caught up in the wider real estate sell-off. After recovering some of that dip last year, its shares are up more than a fifth since the start of 2017, and its full-year results showed why: nearly half of its revenue comes from advisory services, which have benefited from its geographical spread. Click here for our analysis.

Scroll down for more, and the pod.