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Michael Roney: Good morning, and welcome to the NEXT plc Half Year Presentation. It is great to see all portions of our business moving forward in a positive way. Geographically, the business in the U.K., both retail and online and our international business are all moving forward in a meaningful way here. If you look at the data from another viewpoint, looking at our brands, our NEXT brand, wholly-owned brands and third-party brands are also very positive. While we're very pleased about our broad-based growth, we maintain a balanced and cautious outlook for the future, principally due to the external situation, both here in the U.K. and around the world. In spite of what the external world may hold for us, we believe that our strong management team, balance sheet and financial position leave us very well positioned to withstand any external events. Before I turn over to Simon, I would like to publicly recognize the retirement of a very important long-serving and experienced executive. Her name is Seonna Anderson. And her final position at NEXT was both Corporate Secretary and Corporate Controller. Seonna always seemed to wear at least two hats at NEXT. She was a great asset to the Board and a great asset to the company. And I think she really embodied the culture of NEXT, very hard-working, very smart, willing to take the lead when necessary, but also worked very well in a team to really meet our objectives. So Seonna, many thanks. And I'm sure any Board where you're an NED in the future will be very glad to have you. Simon?
Simon Wolfson: Thank you very much, Chairman. I didn't know I was doubling up as a recruitment consultant as well. Excellent. Yes. Thank you, Seonna. So sort of standing back from the numbers, really good first half. And I think there are -- the important thing to stress about these numbers is that there is news that is genuinely very good news, and there's news that's not quite as good as it looks. And the news that's very good news is the overseas sales. It doesn't appear to us that there are any sort of external tailwinds that are helping that business. But in the U.K., we think the first half was definitely boosted mainly by the weather. This year was a particularly good summer, last year was particularly poor. And competitive disruption definitely helped us towards the back end of that half, which is why we're not as optimistic for the second half as we have been or as our performance in the first half would indicate. So moving on to those numbers. Total sales, up 10.3%. Full price sales up just under 11%. Breaking that down in terms of U.K., U.K. up 7.6%. Online still ahead of retail, but perhaps the most exciting or most surprising number here is the U.K. retail number. That is driven -- 1% of that comes from new space. But the underlying strength, we think, is down to the weather where weather seems to have a disproportionate effect on retail. When -- particularly when you get sudden changes, people want the product immediately. Overseas, up 28%, which was an unexpected but very good performance. Profit before tax, up just under 14%. Tax rate, pretty much in line with last year and as we expect it to be for the full year. And then in terms of earnings per share, earnings per share up 16.8%, boosted by the share buybacks, mainly by the share buybacks we did last -- at the end of last year. In terms of the dividend, 16% increase in the interim dividend. We'd expect the full year dividend to be broadly -- to increase broadly in line with whatever we deliver in terms of EPS, in terms of the total dividend for the year. In terms of cash flow, and just to remind you all, we talk about profit and loss and sales. When we're talking about that for the group, we report the percentage of the businesses that we own. So of the subsidiaries that we own, we report -- we own 70% of the business, where we'll report 70% of their sales, 70% of their profit. In the cash flow and balance sheet, for reasons I don't quite understand, it's impossible to disaggregate it according to our finance department, so we'll show this on a fully consolidated basis. Cash flow from profit, GBP 62 million. In terms of capital expenditure, up marginally on last year in the half. Just to reiterate where we are on CapEx, GBP 179 million, which is pretty much what we expected to spend at the beginning of the year. In terms of where the growth is coming from, it's all coming from the increase in additional space. It's not maintenance CapEx. Maintenance CapEx in the stores ran at 17 -- will run at about GBP 17 million this year compared to GBP 20 million last year. And that's the sort of number that we would expect in terms of maintenance CapEx for the foreseeable future for the next few years. In terms of the space expansion, we mentioned at the beginning of the year, Thurrock. Thurrock is a bit of a one-off. It's the sort of first of a kind. So we spent more on it than we would spend. Normally, it's GBP 19 million of that GBP 54 million. And the only news here really is that having opened it, it's hitting its targets. But I wouldn't want you to look at the payback on this store and I think that's what NEXT targets are going forward. It is very much a one-off. In terms of the stores that we opened that weren't Thurrock, they missed their target so far. They've missed their target by around 6%, 18% net branch contribution. So they've beaten the hurdle that we -- internal hurdle that we set of 15% profitability, but they missed the payback of 24 months or we expect them to miss the payback of 24 months. And I think there is an important point to make here. And that is that it's going to be much harder to open retail space in today's environment than it was 10 years ago. And it's just worth sort of spending a little bit of time explaining that. If you look at what our stores were taking on average per square foot 10 years ago, being around GBP 300 a square foot. Today, on a like-for-like basis, a store that was taking GBP 300 a square foot 10 years ago, today would be taking about 30% less. Now as it transpires, that's not as big a problem as it sounds because rents have come down on a like-for-like basis by pretty much the same amount. So we still got a profitable store portfolio. The issue is the cash generated per square foot versus the cost of fitting it out. So at, let's say, 25% cash contribution, that's adding back depreciation of around 25%, we were generating GBP 75 a square foot. But today, that would generate GBP 53 a square foot. So if you look at the payback, very simple basis, it's deteriorated, not just because the cash per square foot has gone down, but because the cost per square foot of fitting out shops has gone up significantly, 32% in that interim period. So what would have been a 22-month payback is today 42-month payback on a like-for-like basis. Now obviously, actually, our average pounds per square foot in the portfolio hasn't dropped by nearly as much as the like-for-likes. And that's because generally, we've opened smaller shops losing a little bit of potential in locations, but in order to boost the pound per square foot to attempt to pay for the shop fit. Nonetheless, we haven't hit the 24-month payback. And the question that we are asking ourselves that we haven't completely answered yet is looking at the portfolio that we've opened, 18% net branch contribution, and 38% internal rate of return, payback and that's based on the assumption that the stores decline by 2% like-for-like each year after opening. The question is, would we today close those stores because they were performing like that? And the answer is no. And so what we need to do, if we are to continue to open space, and there is a big if there, we're going to have to look at -- we won't be able to do it at 24-month payback, I don't think. And I think the answer is to come up with different hurdles and to raise the hurdle -- to reduce the risk of shops by raising the profitability hurdle, entering where we can into turnover rent arrangements or total occupancy cost arrangements to derisk shops. And I think in those circumstances -- and only in those circumstances, we can afford to take a slightly longer payback. We're going to be thinking about -- we haven't come to a sort of definitive set of hurdles, but I wanted to give you a sense of as we move the goal posts, the direction in which we're moving the goalposts if and when it happens. I think one of the important things that will feed into our consideration is what happens to wage costs and the outlook for our employment equal pay case, because if we think wages are going to continue to go up dramatically as a percentage of sales, then that will affect this decision also. So that's new stores. In terms of working capital, GBP 18 million less. This is mainly about the timing of payments for staff incentives. Actually, it's all about the payment we made last year in respect of the previous year's performance, which was a very good performance. We pay the staff bonus or the employee bonus in the financial year after it's been earned, which is why you sort of get this tail lag. So that's given us cash boost. Stock is up GBP 25 million, and we'll be talking more about that later. So total surplus cash up GBP 87 million on last year. Buybacks up GBP 43 million. This isn't because we've consciously slowed down our buyback program, it's because for a lot of the last 6 months, we've been locked out of the market. Jonathan got annoyed with when I said locked out of the market in the rehearsal because it made it sound like that somehow we weren't allowed to trade, we were, but we were above our internal hurdle for price. It looks like you've very helpfully helped us with that today. But our intention will be to carry on buying back shares as and when we can. Net cash flow, up GBP 141 million. Moving on to the balance sheet. Investments appear to have come down by GBP 17 million. This is all about the amortization of brands on the balance sheet. Stock, I need to talk a little bit about stock because our stock has gone up more than you would expect and in fact, more than we expected. And I need to explain that. And actually, in the NEXT brand, it's gone up by 16%. Just to explain that. Two years ago, we were on around 20 weeks cover of stock. That's the stock in the business and the stock on the water. Last year, we increased our cover to account for the additional time the stock was going to be on the water, which is about 2 and a bit weeks, and because we were experiencing disruption in Bangladesh. So we moved to 23 weeks. We thought that was it. This year, we're on 26 weeks. And the reason for that is because last year, a huge amount of our stock still turned up late, mainly as a result of factory disruption, but also disruption in the world's logistics, the freight market. And so this year, our teams felt embraced the decision to buy and they ordered early. And I would stress this is ordering early rather than ordering more stock, but we clearly overdid it. In addition, not only that, but because capacity has come out of the global supply network, it feels like that to us, factories have actually been delivering early. They've got a window of 2 weeks, they can deliver early. And actually, freight times have taken slightly less than we had put into our calculations. So both of those good news in a way, but it means we've got much more stock in the business. In terms of end-of-season sale and the total amount of stock we bought, we're not anticipating that our stock for the end of season will be any higher than the forecast we got for second half growth. So we think end-of-season stock combined with any mid-season stock, total stock markdown in the year, we think will still be at or just below 4%. I think it is also worth mentioning there is a slight upside risk here on the sales numbers by having so much stock. This time last year, as we ran into Christmas, those delays were definitely impacting some of the sales on some of the products that we were selling. So there's a potential upside from having all that stock in the business. In terms of customer receivables, customer receivables is the amount our customers owe us on their mail order accounts -- sorry, I'm going back in time there, on their online accounts. Actually, credit sales to customers were up 5.2%, but we're continuing to see customers paying down their balances slightly faster. We think that's a very encouraging sign. It means the consumers -- our consumers at any rate are not feeling squeezed. In terms of default rates, they are the lowest levels that we've ever seen them at 2.3%. And we're still conservatively covered in terms of provisions at 7.6%. So although we've released GBP 10 million of provisions this year, and we did the same thing last year in the first half, we are still, I would argue, adequately, but not overprovided for bad debt. Other debt -- I said the overprovided stuff just for the benefit of our auditors that are in the room, and we have regular interesting conversations about this. Other debtors, GBP 56 million. That's two things going on. First of all, the growth in our aggregation business. Our aggregation business is largely on commission, which means that the aggregator, people like Zalando, About You, take the sales and a month later, give us those sales less their commission. So there's a month lag and that increases cash out by GBP 20 million. And about a year ago or just under a year ago, we stopped doing the interest-free credit in our stores on furniture with Barclays and took it in-house and finance ourselves, and that's what's sucking out that other GBP 19 million of cash. Credit is up GBP 152 million. Big number here is stock, as I've explained. We've ordered more stock, so we owe more to our suppliers. The other two issues are payroll accruals and taxes. And both of those are fascinating subjects upon which I could spend a lot of time speaking about. I don't want to deprive Jonathan any of the interesting questions you may give him afterwards. So please do speak to Jonathan about those in detail afterwards. They're basically technical. Dividends up 9%, in line with last year's earnings per share. Buyback is down 100 -- buyback commitments, this is not buybacks. This is the -- last year, we put in place a 6-month buyback program. We haven't put in that program this year, partly because our share price was above our target. We will continue to do closed period buybacks, but you shouldn't necessarily expect us to do a long 6-month program of committed buybacks going forward. So net debt down GBP 180 million, net assets up GBP 340 million, very strong balance sheet and very strongly financed. This was the -- our cash and facilities at the beginning of the year, our financing at the beginning of the year at GBP 1.2 billion. We repaid the 2025 GBP 250 million bond. We also bought back GBP 136 million worth of the GBP 250 million 2026 bond. That was funded by the issue of GBP 300 million bond. You'll remember that we have been keeping our powder dry for a number of years now, accumulating cash in case we weren't able to go into the market or we felt the market wasn't at a price that we prepared to pay. The market actually was fine. So we've refinanced those bonds through the market, and we pushed our RCF up by GBP 100 million. So we're still very comfortably financed as a business. In terms of cash flow in the year and debt, we start at GBP 660 million, generating around GBP 870 million of cash, GBP 179 million of CapEx, GBP 280-odd million of ordinary dividends. And were we to land at exactly the same number at the end of the year, we'd be at GBP 400 million -- we'd return around GBP 400 million of cash to shareholders. We think that GBP 660 million is beginning to look a little bit low. We've always said that the company should maintain or intends to maintain investment grade. And we're way off the leverage that will put us close to the edges of investment grade. The company has been at more than 1.2x leverage. We started the year at 0.63x. We think it will be wrong for us to continue to lower the leverage. So maintaining leverage at 0.63x means that year-end debt, we're now forecasting to be about GBP 720 million with GBP 470 million of cash to be returned to shareholders or invested in the meantime. We've only spent GBP 119 million on buybacks so far. That leaves GBP 350 million odd to either buyback -- spend on buybacks or special dividends or investments. Although I should say, whilst we are talking to a number of potential investments at the moment, there are none of any significant size that will put a dent in that number. So basically, most of it will either be share buybacks or special dividends. Moving on to retail. Retail sales up 3.7%. Full price sales up 5.4%. The big drop in markdown sales in store is all about the fact that we kept far more of our stock online and the online warehouses for the online sales, particularly overseas, then we put into retail. We felt we could get a better return there. And it was one of the big advantages of having so much more capacity that we were able to retain more sales stock for the online sale. So underlying full price sales after deducting new space is around 4.2%. Profit in stores down 1.4%, margins off by 0.5%. Obviously, in my normal way, I'll be going through in painful detail all the margin movements, but spoiler, this is all about national insurance. Basically, the entire -- all the erosion of margin is about national insurance, NIC and minimum wages pushing up the cost of labor in stores. Bought in margin nudged up a little bit with underlying margin up 0.2%. Remember, this is where we said we will put our prices up a little bit to help pay for the cost of NIC. Markdown clearance rates, even though we had less stock in the stores, our clearance rates were a little lower. Payroll was a big cost. And here, actually, without the productivity improvements we were able to make, that number would have been 0.7%. Store occupancy costs, positive movement here, increase in like-for-like sales, pushing wage costs down as a percentage of sales. New space, particularly the stores actually we opened in the second half of last year, pushing up cost of space by point -- at the same point, offsetting that, lower energy costs and no business rates refund this year, whereas we did have one last year. Central costs, not a lot of movement here, a little bit more technology cost and retail's share of the marketing campaign that we did in sort of March, April, the sort of newspaper campaign we did then. So total movement minus 0.5% in retail. Looking to the full year, assuming that our like-for-like sales are down 2% in the second half, we'd expect total sales to be down 0.6%. What that means is that we would expect margins for the full year to be at 9.8%, down 1.2% on the previous year, of which 1.1% comes from NIC and wages. And if you're wondering why the erosion is greater in the second half than the first half from the NIC and wages bill, it's because it didn't come until April. Moving on to online. Just to remind you, the online business now, we split -- in terms of our analysis, we split between U.K. and overseas because the economics are quite different in the two businesses. So starting with our online business in the U.K. Total sales up 11%. That was boosted by the additional stock that we had for sale that we kept back for sale. So underlying full price sales up 9.2%. In terms of where that's come from, the business now is just under half the business is non-NEXT brands. And in terms of where we're getting the growth, NEXT brand is still growing online in the U.K., but you can see third-party brands and wholly-owned brands and licenses delivering around 13%, 14% growth between them. That's important. And one thing I should say is that wholly-owned brands and licenses are a bit of a mouthful, so I will use the unfortunate acronym WOBL as we go through here. But you can smile at that now. Please don't smile as I'm going through because it's just embarrassing. Profit, really good number on profit in the U.K., up 17.7%. Margins are improved. NEXT brand, these numbers -- I'm showing you these numbers, but they're not quite right because we've reallocated cost between our non-NEXT branded business and NEXT. Over the past 2 or 3 years, we haven't added some of the technology and marketing costs. We attributed them all to the NEXT brand. But actually, when you look at the marketing, although most of it is focused on the NEXT brand, the reality is it does benefit the non-NEXT business, too. So we were underallocating marketing and tech costs to the non-NEXT branded business. If we just sort of walk both of those numbers forward, and I've swapped the columns and rows here, so just climatize yourself. The starting point is at the top, and that is without the adjustment in central overheads. If I account for the adjustment in central overheads, the underlying NEXT brand profit would have been at 20%, brands at 12.2%. What you can see is the NEXT brand has moved forward a smidge and the non-NEXT branded business has moved forward by around just under 2%. That's all about the item level profitability work we did to make sure that we weren't selling unprofitable third-party brands on the website. And that really came down to the mainly commission brands that were putting low value, high-returning items onto our website. And those items because they're low value and we're going out and coming back in large volumes, we're eating up all of their profit through operations costs. So we've weeded out those products in one or two ways. We've said to the brands either you can keep the items on the website, but you have to pay a higher commission for them or you can take them off. And they've done a combination of both. So in terms of the walk forward on margin, what you can see is bought in gross margin on brands up 0.7%. That's all about higher commission rates on those unprofitable lines. Markdown broadly in line with last year, and actually a good number considering how much more stock we had on the website, how much more markdown stock we had on the website. And warehouse and distribution, big gain on the branded -- non-NEXT branded side of the business, and that was all about taking out these low-value, high-volume lines. If full price sales in the U.K. online are up 3.6% in the second half, then we expect margins to move forward for the full year to around 0.8% with the total margins around 21.5% in the U.K. for the full year online. Moving on to our international business online. Total sales up 33%. We were able to put an awful lot more markdown stock onto our international websites. So the actual underlying full price sales were up only 28%. In terms of where the business is at the moment, around 1/3 of it is coming on third-party aggregators, likes of Zalando, About You. 70% from the NEXT direct websites. In terms of growth, 26% on the NEXT direct websites. We think -- of that 26%, we think around 2/3 of it, 17% is driven by marketing and 9% natural, word of mouth, et cetera. On third party, the 33% is better than the underlying trend. We think new aggregators -- well, new aggregators added 9% of the growth and the existing aggregators grew broadly in line with our own website at around 24%. In terms of the shape of the business globally, still dominated by Europe and the Middle East. In terms of growth rates, Europe grew the strongest. I think the most encouraging number actually on this page and in fact, in this section is the growth that we're getting in the rest of the world, where in many territories where we had no traction at all, we have begun to get good growth. And I'm going to talk a little bit more about that in the sort of focus section at the end. In terms of profit, profit up 36%. Margins moved forward by 0.4%. There is a slight wrinkle here in that last year, we understated profits by around 0.7% in the first half. That reversed out in the second half. This was all about overproviding for duty in one of the territories where duty rules changed, and we were overly conservative in that. So actual like-for-like restated margin is broadly flat at around 15%. Bought-in gross margin, up 0.4%. Underlying margin on NEXT goods up 0.2% and lower duty goods -- lower duty costs contributing 0.2% to margin. That's not because duties have come down, it's because we've become more effective at working out exactly what duty we should be paying and reducing admin costs. In terms of markdown, this isn't really an erosion of profit. This is because we've got so much more -- so many more markdown sales on the website because we put more stock on. So it's more about pushing the top line up from the 28% to 33% than it is about pulling the profitability of the full price sales down. Warehouse and distribution, inflationary cost in wages broadly offset by operating efficiency, leverage over fixed overheads and an increase in handling charges. This is where the customer is paying for the delivery of goods. Marketing is the big increase in cost, as you'd expect. So you can see that more than all of the margin erosion overseas was driven by our increasing marketing costs, which we see as a strong positive. And again, I'll talk about that in a little bit more detail later. In terms of second half, we're forecasting the second half to be up 19%. You might look at that and go, that looks overly conservative given that we grew by 28% in the first half. In the first half, we grew our marketing by 57%. At the moment, we don't think we have the opportunity to increase marketing by much more than 25% in the second half. That's what -- that is why we're being cautious about that number. I mean it's still a big number, but relatively cautious. We will see how it goes. If we are able to achieve better returns on our marketing, I wouldn't want you to think that, that budget is fixed. Every few weeks, we review the performance of our marketing. If we do better than expected to get better returns, then we will increase that number. So margin forecast for the full year, we expect it to be up around 1% on the basis of those assumptions at just under 15% net margins. Moving on to customers. Grew customers across the board. U.K. credit up 4%, just under the 5% increase in credit sales. U.K. cash customers up 12%. We think this number was almost certainly temporarily boosted by the disruption to another retailer as we were -- during the year. So I think I wouldn't expect that number to continue for the full year. International customers up broadly in line with sales, slightly more as you'd expect because the new customers likely to spend less than the existing customers. In terms of sales per customer, a move forward in the U.K., we think driven by the increased product offer we've got on our website and overseas, a reduction, but potentially by less than you'd expect given the increase in new customers that we've got on the international business. And just to remind you that these numbers exclude aggregators because we don't know how many customers are shopping with us on aggregators. Now the sharp amongst you, which I'm sure is all of you will instantly be saying, hold on a second, that 10.3 million was significantly less than the 13.7 million he quoted at the year-end. And what's -- how have they managed to lose all the customers. Just to remind you, we switched at the end of last year just talking about unique customers that order in the year rather than actives because it was the only way of getting meaningful sales per customer numbers. The 10.3 million is the number that's ordered in the half year not the full year. So still we would expect the full year number to be more than 13.7 million unique customers in the year. Moving on to full year guidance. Full year guidance, we're expecting sales to be up 7.5%. That looks conservative. It looks like a 6-point swing in the second half if you just compare it to the first half. If you compare it to 2 years ago, it looks a little bit more realistic at 3.7%. And remember that this year, we had an exceptional summer, competitive disruption in the first half, which boosted numbers. And we think the U.K. economy will get tougher as we move through the second half. What we're particularly concerned about is employment. If this is the -- you can see vacancies have continued to drop since 2022, and we can see no change in that trend. And that is beginning to be affected -- to affect payroll employee numbers. It hasn't yet affected unemployment numbers, our view is that it will. And what's interesting is that those numbers are reflected in our own numbers, which are much more dramatic. So if we look at the number of vacancies that we have in NEXT relative to 2 years ago, we've got 35% less vacancies. That's not because we are dramatically or even at all reducing our headcount. But by far, the biggest driver of this is a slowing in staff turnover. And we're seeing that across the board. And we think that is indicative of the absence of job opportunities elsewhere in the economy. If we look at the applications that we're getting, unique applications that we're getting for those vacancies, they're up by 76%, even more dramatic in head office actually. And so, the applicant per vacancy ratio is now at 17 per vacancy. That's up 2.7% on 2 years ago. So if you look at that the other way around, if you were to apply for a job at NEXT, your chances of being successful have reduced by over 60%. I'm not saying that you will apply or that you have got good prospects, by the way, just -- but nonetheless, the odds are worse. And we think that is indicative of what's happening in the wider economy. We think the reasons for that are very simple. They're threefold. First of all, I should say it is at the entry level, we are seeing by far the most pressure. We think it's a very obvious reason for that. If you look at the cost of national living wage has gone up 88% over the last 10 years compared to inflation at 38%. And if you look at the cost of part-time workers and factoring the NIC, the cost of a 16-hour part-time employee has gone up just over 100% versus 10 years ago. That has meant inevitably that customers -- companies have driven for productivity. NEXT is no exception. We've invested an enormous amount in mechanization because this hasn't just affected entry-level work, it's also affected the levels immediately above that as well, for example, in warehousing, where we've put a lot of mechanization in. So you've got increasing costs driving mechanization layer. On top of that, AI making a lot of entry-level desk work much more productive and impending legislative barriers to employment. And we think what you're looking at is a big squeeze on employment. Now how that -- no one knows how that will pan out. Our guess is that it won't pan out with some sort of cliff edge moment of sudden massive unemployment. I don't think that's going to happen. We think it's much more likely that companies will do what, in essence, we have done. Which is as and when vacancies come up through natural turnover, not to replace them. And particularly at the entry level where you tend to get higher levels of turnover as well. So we think this squeeze is going to be felt by the people coming into the workforce or attempting to move job rather than those in the workforce, which goes some way to explaining the stability of our debtor book. So those -- that was a little section just to anyone who is looking at our H2 numbers and going, oh, they're way too soft. It's just to add a little bit of our caution to yours. In terms of where we are for the full year, 7.5% sales growth, we think will deliver around GBP 1.1 billion of profit. I'm not going to walk this forward from last year, I'm just going to walk it forward from the estimate that we gave in March to just talk about the differences. So if we are at [indiscernible] estimate in March. In terms of the change, the lion's share of the change is driven by our increased expectations of sales, mainly in the first half, GBP 34 million. Clearance sales have significantly improved. These are not the sales in the end-of-season sale, these are the sales that we get on the clearance tab of the website. And it's one of the big unseen benefits of having so much more capacity in that we've been able to put away and put up for sale in a much shorter time, all the stock that comes out of the end-of-season sale. So our clearance tabs have had a very good -- clearance tab on the website has had a very good half year, and we expect that to continue right to the end of the year, at GBP 7 million of profit. Total Platform partners, we've increased our estimates from there -- of their profits and Total Platform profit from GBP 78 million to GBP 80 million. There may be a little bit more upside in that as the year progresses. And we're spending more on marketing. As that marketing becomes more effective, we're increasing the amount we spend, so that pulls profit back a little bit to give you the GBP 1,105 million profit for the year-end. That would result in earnings per share up 12.5%, assuming we can buy back all the -- we can use all of our surplus cash to buy back shares in the second half. If we can't, it won't affect TSR because we'll put it in special dividend. Add to that a dividend yield of around 2.5% and get to TSR of around 15% which we are -- we will be very pleased with if we can achieve that. Standing back from the numbers, just to talk about the shape of the business. NEXT has evolved slowly over the last 10 years into a very different business from the one it used to be. And in your pack, we've given a real analyst delight, I think, of the participation of every segment of our business by brand, by geography, given the participation, the sales growth in percentages and the sales growth in cash. So hours and hours of fun with your spreadsheets, getting ever more granular predictions. But it does bring home that the business has changed and that the business is far less constrained by its core brand in its core market of the U.K. And it's a sort of story of quarters really. If you look at the business now, we're taking nearly 1/4 of our sales. And by the end of the year, probably it will be 1/4 of our sales overseas. If we look in the U.K., we're taking just over 1/4 of our sales on non-NEXT brands. If you look overseas, where you'd expect the NEXT brands to be pretty much all our sales, it isn't actually. And we're getting -- we are getting some traction overseas with non-NEXT brands. The difference between the non-NEXT branded business overseas and the U.K. is that overseas, our WOBL business, the wholly-owned brands and licenses are a much bigger percentage of that business. And when you think about it, there's an obvious reason for that. In the overseas on all the other third-party brands or most of them, we are competing with other local, often dominant aggregators for sales on those brands. But in the brands that we own that have much less exposure in those markets, we're pretty -- we're often the only source of those brands. In terms of growth, what you can see is it's the peripheral, the smaller businesses that are outside of our core NEXT U.K. business that are delivering the growth. And if you look at in cash terms, it's pretty even. Still the U.K. delivering the majority of our growth, NEXT brand in the U.K. delivering GBP 75 million of the growth, although that was boosted in the first half. So you would expect that number relative to the other numbers to be lower for the full year. And what's driving that growth is a combination. I'm going to just sort of focus on four things. There are lots of things we're doing, and this is not a comprehensive list of all the things that we're doing to drive growth. I'm going to focus on four things: product, the new warehouse and how that's going, our international websites where we've made a lot of progress, and international marketing. Starting with product, breaking it down into three sections. NEXT, third-party brands and wholly owned brands and licenses. There's not -- the NEXT brand is where I and most of my colleagues spend the vast majority of our time. And there's not a huge amount to say about it, but I wouldn't want the absence of a long expos to think that -- for you to think that it's not where we spend most of our time. The emphasis here is, as I've said, for the last three results on three things. First of all, really delivering newness, delivering new trends when they first appear as soon as possible with conviction. And where we've done that, it has definitely paid off. And it does seem to be a general trend that we're seeing across everywhere that newness and delivering the right newness pays off. And you can't do that old thing of saying, we'll try something this season and if it works, do a lot more of it next season. Next season, it's too late. Secondly is improving quality, improving the quality at every part of our -- every bit of our price architecture, improving the quality. The main thrust there has been improving fabric and yarn and working harder with mills before we've necessarily decided which garments -- fabrics and yarns are going to go into to develop fabrics and yarns earlier in the product life cycle. And again, where we've done that, that has delivered, we think, much better product. And not just at the sort of mid and upper price points, but actually most -- in one case, in particular, most notably at the entry price point where we've really been able to -- through engineering fabric and yarns, we've been able to improve -- significantly improve the quality of our entry-level product. And the third thing is pushing the boundaries of our price architecture into delivering more items at the top-end of our price architecture. And it is worth saying we think that is the way that the market is going. It's not a dramatic effect. But if you look at the increase in our like-for-like product, the like-for-like product is up by around 1% in price, factory gate -- in essence, factory gate prices that we pass through to customers up around 1%. The mix, what people are actually buying is up 4%. And we think consumers are buying slightly fewer, slightly better things. And that's certainly -- everything we can see from our sales data is telling us that. In terms of third-party brands, third-party brands had a good season, up 16%, delivering GBP 67 million of growth. The thing that has really made the difference here has been focusing on our major brands. We spent a long time building our brand portfolio, adding new brands. We've gone back and really focused on getting the best offer from our biggest and most popular brands. And the story there is exactly the same as the story on the NEXT brand. We have had to be braver with buying more of their new products than we have been in the past on wholesale. And on commission, we've had to force them to be a little bit braver about putting things that they haven't had a lot of history -- not force them, encourage them to be braver about putting more of their newer stock onto our website and being braver with the newness and making sure that we're backing that in depth. And I suppose that's the positive. The negative is not relying on last year's best-selling blue V-neck white Polo shirt to deliver exactly the same as it did last year this year. That is definitely not the way to be successful on the brand. So a bigger push for newness there. Two smaller things to talk about. We have got a very good sports business, but it's mainly athleisure parts of the ranges people like Nike, adidas. We have performance items, but we really want to push the performance element to offer our customers more performance sports products. So we're adding brands like On Running this season, Hoka next season. And we've sort of got a dedicated part of the website. This product is available generally on the website. We also -- if you want performance sports, there's a dedicated sports club part of the website where we're grouping together all the performance sportswear. We think that's a good opportunity for us in the longer term. And sort of an acorn, and this is an acorn, don't expect anything big from this. But this is the type of -- this is the way that NEXT grows. We don't ever spend vast amounts of money building new businesses. We start with small experiments that take us into new markets. And Seasons is a point in case. This is selling high -- top end of the premium market and luxury goods. It's a small business, but we are beginning to get traction on our premium website. It's a separate website from NEXT. What we are able to do is advertise those products or those brands on our website or to our customer base of 10 million customers and move them across to the Seasons website. So it's a slow burn business. Don't expect me to talk about it again for another 5 years, but it's just an example of how we sort of plant a seed that may or may not be a big business at some point in the future. In terms of the wholly-owned brands and licenses, this is, in many ways, the most exciting part of the business. Our wholly-owned brands and licenses grew by nearly 100% overseas. They fall into two categories, just to remind you. Wholly-owned brands is where we either buy a brand like MADE or Cath Kidston, now to administration and find a team to run it or where we start a new brand internally like Love & Roses and Friends Like These. Brands you won't really hear of every day, but something like Love & Roses, both those businesses taking nearly GBP 100 million. So good small niche brands. And on the other side, licenses. This is where we take great brands who have got, let's say, great adult clothing range, but want to do children's wear or want to produce furniture. We use our sourcing expertise and our products -- our skills at buying those products, quality standards and all the rest of it in order to provide ranges for them for those brands that fulfill the ethos and look and feel of the brand, but give them exposure to different categories. And the way that works is that we buy the stock and pay them a royalty. So it's pretty much full margin less the royalty. In terms of where those brands sit relative to NEXT, you all have seen these graphs, these bubble graphs. We're not great fans of them. But if you see, NEXT sits somewhere sort of towards the more expensive and more fashionable end of the general market, center next on that grid and show where all the brands and licenses that we have sit relative to NEXT brand in terms of price and fashion. What you can see is that the weight of the brands is more fashionable -- slightly more fashionable in terms of weight, but definitely more expensive. So in terms of cash, 55% of them, for example, will be more expensive, 20% will be great, more than 25% more expensive than NEXT. And we think this is a good thing for two reasons. First of all, we think that it makes our website a more aspirational place to shop, potentially attracting new customers to the website. But as importantly, if not more importantly, attracting more brands to the website. We think it makes it a more attractive place for brands that want to go to an aggregator to come to NEXT. And the other important point is that, of course, the higher the price point generally, the better the economics because unit costs of shifting a GBP 50, GBP 60 T-shirt are not much different from the unit cost of shifting a GBP 5 T-shirt. So we think sort of economically more advantageous. And you might look at that and think that the way that we've built this business is through very clever people in the boardroom coming up with a grid and posted notes and circles and having some sort of digital representation of it with market research. And nothing could be further from the truth for 2 reasons. One is, we don't have to have people in the boardroom. And so obviously, excluding our nonexecutive people who are here today. And the other is, it's just not how the real world works. It's not how you create great brands for consumers through sort of market research. The way that these businesses have been built is really simple and opportunistic, and it's basically about finding great people where we've got new brands, it's about finding brilliant people to drive those brands. And that is a truth that we know from our own business. At the end of the day, the best product is driven by the best people, and that's as true of the new brands that we're starting and the ones that we buy in as it is our own brands. And with licenses, it's about partnering with brilliant licenses. And licenses that can genuinely bring something different to the table, whether that be the print archive or the people that they currently employ or their point of view, it's about having something that is genuinely great for the consumer that we can translate into product that those licenses couldn't produce for themselves, whether they're big existing businesses that might want to go to children's wear like Superdry and AllSaints or whether they're very small businesses, like Rockett St George, a very small business that just hasn't got the capacity to produce everything from a side table to dress. And the aim is to create a brilliant place, an environment, a brilliant place across all NEXT, WOBL and third-party brands, a brilliant place for product people to create great ranges. But if you were someone thinking I could go and start my own brand, actually doing it at NEXT, you've got all the resources of the business area, we've got our systems, the access to our sourcing base, all of the tech that we have around, producing a quality support, if you want that. So a great place to produce fashion. And of course, the other big advantage is that instantly overnight, you get access to our consumer platform as well, so warehouse and distribution, our U.K. website, international website, access to our international -- our network of international aggregators, our online marketing, all the technology that sits behind our website, you don't have to develop yourself. And of course, the cash that we're generating that can fund these businesses. So that is the objective. There is, however, and it's very important that we're conscious of this, a risk in this. And we call this the sort of Play-Doh or plasticine risk. And those of you who, like me, have young kids or 5-year-olds, Play-Doh is beautiful stuff when you buy it. It's like smells delicious, it's squidgy and softer, these vibrant colors, and that's how it looks on day 1. And after 2.5 weeks, it's basically a crusty pile of brown stuff. And it's all mushed into one. And the risk of all sort of retail conglomerates, I think, is that they end up -- all the brands and product end up looking exactly the same. And I can't guarantee that won't happen, but we are acutely aware of that risk and work very hard to prevent it. And three things are central to that. First of all, it's all bought by separate teams. We don't say it's the NEXT blouse buyer, go away and buy Love & Roses blouse and then buy a Cath Kidston blouse. Those are bought either by dedicated licensing teams that are responsible for individual licenses or by completely separate teams in the case of Love & Roses, where it's their own team and often in a different location, not necessarily in any of the either. They're not all the brands are -- this is a mistake we made when we first started these brands actually, all assumed. We didn't say anything. It was like a weekly board. It just happened. Everyone thought somebody else was moving the glass. We don't insist that they all conform to NEXT quality standards are fit standards because if they did, the product would end up looking like NEXT. Of course, it has to be merchantable quality, but they don't have to have the same rub test store. The sofas don't have to have the same durability, if they're high-end sofas because they're not going to be used as much. So it's down to those individual brands to come up with their own standards. It has to be merchantable quality, has to be brand, has to be a product that we are proud of, but it doesn't have to conform to NEXT standards. What it does have to do, obviously, is it has to conform to all of our ethical trading standards. We're not -- we don't want to be caught out by a brand that uses a factory that we wouldn't use as a group. The other really important thing is that we don't share data between the teams. When we started, they used to all get each other's data and the first thing they did is look at each other's best sellers. And of course, after 18 months, what we end up with every brand came up with its version of the other brands' best sellers. So it's quite important to keep division between -- sort of data division between the teams and not think this, "Oh, is a wonderful opportunity to leverage our data," which is the temptation you start with. In terms of the parts of the business supporting that, I just want to focus on three. A quick return to the warehouse. This is the new Elmsall 3 warehouse, just so you know how it's going. Capacity is up and running. It's delivering more than a 40% increase in capacity on where we were 2 years ago. The cost savings that we were expecting from the warehouse are as we expected, in fact, slightly ahead of where we expected them to be. It's worth just sort of looking at that in terms of long-term sort of trends in cost per unit. This is cost per unit in real terms, so adjusting for inflation and wages. And you can see that sort of since 2022, we have achieved a marked improvement in productivity in our warehouses, firstly, through new sortation equipment that we introduced in 2022, then through just having the additional space from Elmsall 3, and this season through the ramping up of the mechanization and moving to more efficient automated picking within the warehouses. We think we've got further to go on that as well. It is not quite as good as it looks because obviously, wages have gone up faster than we could become more productive, but not a lot faster than the average selling prices would have gone up across the group. In terms of service, this is an amber tick, so sort of good news and bad news here. In short, the good news is that we are delivering better service than last year. Last year, this was what we call the notif rate. The order is not delivered on time and in full. And it's not quite as bad as it looks. The vast majority of these are where customer orders, average number of items, say, 4, 5 items and the fifth one doesn't turn up next day. It turns up the day after. So it's not catastrophic, particularly towards the back end of last year, that was not a good place to be. As we've started to fire up the new mechanization, we have, really since end of April, started to achieve much better service levels, but they are still not where we want them to be at 5%. The main reason for that has been the teething problems we've had integrating the new third-party warehouse control systems. These are the systems that actually control the cranes, not our software. We have the warehouse management system. The integration, you will always expect teething problems, but they have been slightly more challenging than we expected. We're not concerned by that. It's a question of time. We think we'll be at around 6% by the end of -- I'm not going to say we're not concerned about that. Obviously, I'm jumping up and down in one way. But we do think that this is not structural work. The problems, as we've gone along, are being solved, and we'll be at 6% by the end of the year, and we should get to 5% at some point in the first half of next year. In terms of international websites, who can forget this table. Whenever I bring this table up, my colleagues groan because I think, oh, you're just showing masses of data and it's hard to read. This is a really important table. It's in your pack, so you have -- you can look at it at leisure. But basically, what this sums up is in January '25, at the beginning of this year, how many services we had in how many of the countries that we operate. So for example, we operated and still operate around 83 countries. We only had -- customers can only pay in local currency in 56 of those countries at the beginning of the year. We've worked really hard over the last 6 months to improve that. And you can see that now all countries trade in their own currency. And you can see that pretty much every service, we've increased our coverage. Parcel shop is the only one that we haven't cracked yet, and we're really waiting for the ZEOS transition to be complete before we move our systems teams on to that because we thought it was more important to prioritize the ZEOS transition than Parcel shops. And marketing spend is everyone where it's more than 5% of sales. In some ways, that's encouraging because it shows how much more potential we've got in terms of increasing our marketing spend. In terms of what that means in terms of the -- this is what the countries we serve are as a percentage of the total clothing market in those countries. And you can see on local currency, we've gone from 70% of the potential market to 100% of the potential market of the countries we serve. There's still a way to go, and the numbers aren't quite as good as they look. So for example, on that top line, local currency, although we weren't serving 30% of the market with local currency, actually, in January 2022, that only represented 0.2% of our sales. So what we've, in effect, done is, we spent a long time investing in functionality and services in markets where we weren't taking a lot of money. And you could say that sounds like a bit of waste of time. But it hasn't been hugely expensive. And there is a chicken-and-egg issue here. And if you don't invest in a website that has local currency and local language registration, how on earth can you expect to grow the business. So you'll never really know the potential of the countries that you haven't got traction in, so you do all of this. And the work we've done here is what explains the traction we're getting in that Rest of World segment that I showed you earlier on, the 28% growth, we're getting there. And just to give you one example of that, just to sort of give a bit of color on this. In Japan, we were marketing in Japan, spending a little bit of money on marketing in Japan spring/summer '24, but we were only getting GBP 1.19 back for every pound we spend. That's not nearly enough. We need to be at GBP 1.50 to really justify spending a lot of money on marketing. In the interim period, we've got local language registration. We've optimized our product listing page, which means that it's much more appropriate to local markets. We've got local sizing conventions, which means, for example, we -- very simple idea this actually. In Japan, they do sizing by the height -- children sizing by the height of children in centimeters rather than age, which is actually I think since when we switched to the local sizing conventions. And we've improved conversion rate on the website as a result of that by around 6%. We've also made sure that we're paying the proper duty and we're getting the product into the country effectively, which is no mean feat. And we've increased our prices slightly. That's moved margin forward by 12%, net margins moved forward by 12% on that website. It was sub-6%, and now it's in the mid-teens. What that means is that our marketing has gone from GBP 1.19 to GBP 1.70. And as a result of the marketing activity, which has only really just started, sales are up 20% so far. So it's just a good example of that sort of chicken and egg, you get the fundamentals right, increase the profitability of the website and then you can afford the marketing and then you get the growth. In terms of marketing, not a lot to say here other than overseas, we've increased by 57%. That number in itself is not that remarkable. What is really remarkable is the fact that our returns have not only not eroded, they've edged forward very slightly. We think that is all mainly about all the improvements in functionality and everything we've done to improve conversion rate on the overseas website and the product that we've added to those websites, particularly our own WOBL product. But it's also about the ad technology where we're getting better at using our existing main suppliers, the big people like Meta and Google, getting better at using them overseas. We're forging new regional media partnerships in countries where the big players in the U.K. are not necessarily -- they don't have as much of the market as they do in other countries. And we're beginning to invest the time, the amount in human resource and people to start marketing and doing marketing programs in the smaller countries in which we operate. So kind of when you pull all that together, we've got 4 things, and these are not exclusive, but that are driving growth. I think what's interesting about this is that marketing piece because what you need to realize is, yes, better product, of course, better warehouses and all the other services we wrap around that call center, the website functionality, all of those things do drive sales. But because they drive sales, they also reinforce marketing and they allow us to spend more on marketing because if the customer is more likely to buy when they get to the website, you can spend more money to get them there. The final thing I want to talk about is cost control. You'll have gathered from the frequency with which we micromanage the allocation between our brands and NEXT and all the things we do to manage profitability, that we are obsessed with profitability. And people often think that, that is just about -- when I say just about, it's very important. They think it's just about our capital allocation and shareholder returns and derisking the business through having adequate margins. And it is about all of those things. But it's also about growth because if we can control our costs and make sure that every transaction that we undertake is profitable, that means that we can afford to spend the money, driving the part of the business that is growing fastest. And our control of costs and understanding of the profitability of every element of our business is one of the things that has done most to enable the marketing that is pushing growth forward. And in this respect and only in this respect, our finance teams are heroes. Now you don't often hear that thing in fashion retail business, but it's true that the work we do on profitability is as important as all the other things. I think what also becomes apparent when you look at these things is that none of them on their own are enough. And if you want to sort of look at NEXT and occasionally, people sort of terrify me by talking -- using the phrase well-oiled machine and all that sort of stuff. There's no well-oiled machine. There's no moat. There's no USP. There's nothing that can't be copied or done by others. Success for us and the risk and the opportunity is all about execution. It's all about all of these areas being good. It's no good having great product ranges if you can't get them out of your warehouse. It's no good having great warehouses if your website doesn't work. So every single area of the business has to execute brilliantly. And if it does, it's mutually reinforcing. And if you don't, it is mutually undermining. So if you want to sort of look at NEXT and look at the risks and downside, the risks and downsides are all about execution. I think what has changed -- and by the way, opportunities. I think what has changed from 10 years ago, all of these risks were there 10 years ago, exactly the same. What has changed about the business is that whereas 10 years ago, our runway for growth was really constrained by our core brand in our core market. The difference between then and now is that the opportunity for growth outside of that core market has opened up, both in terms of the products we can develop and sell on our websites, the non-NEXT brand we can sell, and in terms of the countries that we can develop in. So in the report, we've said we recognize the challenges of the U.K. economy and the challenges of executing well. But on balance, we think that the opportunities outweigh any of those threats. And on that uncharacteristically optimistic note, we'll go to questions. And I've been told to remind you that in this wonderful high-tech auditorium, you have microphones there. So you don't have to have people running to you, pick them up apparently and press the button. And not only can we all hear you, but it will be recorded for the transcript as well, so you'll be famous. So over to questions.
Simon Wolfson: So Warwick?
Alexander Richard Okines: Warwick Okines from BNP Paribas Exane. Two questions, please. Is the opportunity to develop the WOBL brands a bigger opportunity than signing more Total Platform customers? And should we sort of think of that as a bigger opportunity?
Simon Wolfson: I think as it stands today, yes. I think the -- the thing about Total Platform is it's sort of -- it's the difference between macro fishing and whale fishing. The Total platform only make a difference where we make a big deal, and that's going to be pretty binary. So in the year that we do, do a big deal, and as and when we do them, that will make a much bigger difference. I think WOBL is a much more reliable and steady source of growth than Total Platform, which is likely to be sporadic.
Alexander Richard Okines: And secondly, you talked about still an opportunity to improve the delivery service out of Elmsall. Is that a sales opportunity for 2026? Or is it just about cost efficiency?
Simon Wolfson: I think there is a cost element to it. Obviously, if you're delivering the fifth item separately, you've got the extra parcels, there is definitely a cost element to it. I don't think it's an immediate sales opportunity in a way that putting a brilliant range or not brilliant range is an opportunity and threat. I think it is about the slow and steady establishment of brilliant service. And I think that, that takes years to deliver. So yes, it is a sales opportunity, but I don't think you should be building into your wonderful models x percent for warehouse improvements in terms of sales opportunities because I think it's much longer term -- great service is a longer-term opportunity to acquire and retain customers rather than immediate fill up to sales.
Adam Cochrane: Adam Cochrane from Deutsche Bank. There's been a lot of chat about business rates being changed in the U.K., particularly with regards to larger stores. Would this be of impact, do you think, to any of your larger stores? And would it change any way you look at them?
Simon Wolfson: Yes. We very rarely have the opportunity to take larger stores. So the answer is yes, it would, but it's unlikely to be the defining characteristic on the appraisal. Just to sort of by way of background, we estimate that the net effect of the changes on rates overall will be GBP 5 million more cost in warehousing, GBP 3 million less cost in retail. I think I'm right to say.
Unknown Executive: Yes, GBP 2 million. So it's a small number, depending on what rates will reach in the budget. But I think if you take the mid-case, we think it's only about GBP 2 million.
Adam Cochrane: That's great. And then a few years ago, we talked about increasing the number of brands and items online as being a real competitive advantage. You're now talking about sometimes removing or at least trying to change high-volume items. What's the overall outlook in terms of number of lines, brands, et cetera, that you're offering online and compared to where you would like to be or where you were?
Simon Wolfson: That whole like to be thing, and that suggests that the business is somehow the result of my will, which mercifully for you, it isn't. We will add lines as and when we can see they're incremental and profitable, take them off when we think they're duplicative and unprofitable. I think what is likely to happen is that you will see an increase in the amount of wholly-owned brands and licenses on the website. I think in the short term, we will continue with focusing on getting the best of our bigger brands rather than new brands on the website. There will be some new brands, but those new brands will be limited to the areas we're talking about, performance sportswear and sort of luxury brands on the Seasons website. So I wouldn't want to make a prediction as to what the balance of those effects are going to be.
William Woods: William Woods from Bernstein. The first one is just on the brand mix that you've been experiencing. So you've got positive momentum with higher ASPs versus like-for-like pricing. Excluding Seasons, how do you see that brand elevation or the increase in ASPs going forward? And do you think you've highlighted the Play-Doh risk in brand -- a number of brands? Do you think there's also a risk in terms of average pricing that you're putting forward to your customers?
Simon Wolfson: Well, again, I think, first of all, we'll be very careful with the word momentum. And my experience is very little momentum in retail. And I don't think we are getting momentum on average selling prices going up. It's just something that we're pushing and going faster and faster as we push it harder and harder. This is very much a pull. This is what the customer is choosing to buy. And the way that we build our ranges isn't by deciding what we want our customers to buy. It is -- our job is to guess what they will themselves want. We don't make them want to. So who knows which way that trend is going to go. All I can say at the moment is that it appears to me that the most exciting products we're looking at are the slightly more expensive ones to make. So I think I can't see any change in that trend, but it will change at some point, these things wax and wane.
William Woods: Great. And then the second question is just on international. I think in the report, you mentioned the opportunity to expand breadth and availability in international to support that growth. Can you give us some idea of what that looks like and what you're doing at the moment? Is it categories, SKU count, size availability, color availability, things like that?
Simon Wolfson: In terms of availability, by far, the most important thing we're doing actually is in our aggregation business in Europe. With the transition to ZEOS, and this is where we're moving the warehousing of our own direct websites into Zalando, which means that there's a shared stock pool. And what that means is that both our websites and their websites will have access to a bigger pool of stock, and we think that will increase availability for the aggregator. Less of a market effect for NEXT because we always drew on our U.K. warehouse where the European hub didn't have the stock available. So actually, the way the customer will experience it on our website will be about more things arriving sooner in 1 parcel and coming in 2 parcels.
Richard Chamberlain: Richard Chamberlain, from RBC. A couple from me, please. First one is on sourcing, Simon. I wondered what's the current percentage of sourcing done in U.S. dollars? And how are you thinking about potential to reinvest those gains into next year? Are you thinking that's a good opportunity to, for instance, improve quality style and so on of the offer next year?
Simon Wolfson: And the second one?
Richard Chamberlain: Second one is on international rest of world. You gave Japan as an example, talking about kids wear and so on. But is it still the case that rest of world is seeing a sort of broadening out more into women's and men's now in terms of the -- what's actually driving the growth of that segment?
Simon Wolfson: Yes. Okay. Good question. So in terms of broadening, we're seeing that across the board, not just in rest of world. We're seeing the parts of our range we sold the least are growing the fastest. So in territories where we were selling mainly children's wear, we're seeing men's and women's growing fastest. And that trend continues, not just in the rest of the world, but in all the other territories, pretty much all the territories in which we're selling. In terms of sourcing and dollar gain, I think, so most of the stock we buy is dollar-denominated. I'm going to guess around 80%, what's your -- a bit higher, lower, anyone else, please, from the back? So yes, it's a lot. I think you've got to be very careful about assuming that an improvement in the dollar rate translates straight into an improvement in the factory gate price because a lot of the costs are in local currency. And so if the dollar weakens as a result, if it's a dollar weakness, then actually you don't get very many gains. If it's pound strength, then that's the only time you really get that translates through into factory gate prices. But in answer to your broad question, our aim and to be is that where we get increases in costs or decreases in costs in the goods -- in the input cost of goods, we pass that straight through to the consumer. We did increase our bought in gross margin very slightly this year because of the NIC increase. But generally, our view is pass it through to the consumer. And here, I wouldn't want you to think, again, that it's clever people in the boardroom going, oh, we'll put that into quality or we'll put that into price or go higher end, lower end because that's not our decision. The person will decide will be the shoe buyer or the blouse buyer, and they will decide do I slightly upgrade the fabric, do I put a better print and do I lower my price. It is all done at buyer level rather than boardroom level. So I wouldn't want to give you a steer as to how any gains we get are invested. My guess is that if we see at the moment, what those gains are being invested in is better quality, better designs, better prints. Whether that's the same next year will depend on hundreds of people who work at the business.
Sreedhar Mahamkali: Yes. Sreedhar Mahamkali from UBS. A couple of questions. Firstly, I think you've pointed to international marketing returns being extremely strong. If they're as strong as they are, why wouldn't it grow another 50% in the second half? So why only 25%? And the second one, you've talked about potentially or if you minded to potentially change the U.K. sort of return on stores, payback periods or heading in that direction at least anyway. What does that mean for ERR for buybacks to both capital allocation decisions?
Simon Wolfson: It doesn't mean anything for ERR on buyback, obviously, at 8%, changing -- because I mean stores are only -- the retail business is only 20% of our business and the retail new space might account for 1% if we're lucky of retail sales. For us to change our ARR as a result of that, it would be -- wouldn't make sense. I think the important thing is that every investment decision we make, we're balancing 2 things, risk on the one hand versus return on the other. I think the point I was making about the stores is if we are able to derisk the stores in one way or another, either through a higher hurdle on profitability or more flexible rents, then we will consider moving the payback out. But it won't affect our ERR. And in terms of marketing, it might -- I'm not going to rule out it growing. I think it's very unlikely to grow by 57% because I think a lot of the gains we got were about these website improvements where we've already annualized some of them versus last year. So I think it's very unlikely to be as high as 57%, whether it's more than 25% will depend entirely on how we trade.
Georgina Johanan: It's Georgina Johanan from JPMorgan. Just 2 really quick ones, please. Just first of all, in terms of the pressures obviously being faced by Marks & Spencers in the first half, just wondering if there was any learnings from that for you really in terms of the customers that you are acquiring. Could you sort of leverage that in some way going forward? And then second one, please, was just, obviously, you have a sort of lot data presumably on customers by income demographic, given the debtor book. And just wondering if you could talk a little bit about how the different income demographics were performing in the half across your sales base, please?
Simon Wolfson: Yes. The answer is we don't have income data about our customers because we have relatively light credit score. So we don't do -- there are a small number here on the edge, we do affordability checks on, but the vast majority, we don't know what our customers are earning. So I wouldn't want to give you any data on that. And in terms of lessons from -- we don't know which customers -- customers when they come to us don't say, Oh I'm coming to you because I can't go on to somebody else's website. So in all honesty there isn't -- there aren't any lessons that we have learned that I would be willing to share. And in truth, there aren't -- I don't think there are any that I know of.
Andrew Hollingworth: Andrew Hollingworth from Holland Advisors. Can I just ask a couple of clarification questions from questions that will come up before? So just on your follow the money...
Simon Wolfson: You didn't ask the question properly. Fair enough, no, I'll take the criticism.
Andrew Hollingworth: On your follow the money commentary this morning, which I think is sort of obviously a very sensible to go about things. The gentleman in front of me asked about the sort of WOBL situation. Could you just talk about whether or not the success of the business overseas gives you more confidence in terms of wanting to commit capital to buy more brands, to innovate more brands internally and so on. I'm not expecting you to tell me what you're going to buy. Just yes, is a perfectly acceptable answer or no because is another answer. The answer is no.
Simon Wolfson: I don't think so. I mean in reality, when you're looking at investing in a new brand or a new team or buying something, we're mainly looking on what the business currently does rather than what we think we can do with it because that is the only -- those are the returns that we look at most carefully. In terms of the upside, are we thinking overseas U.K. We're just thinking total online. The more we take online, the more the upside is there. So indirectly, yes. But we're not thinking this would be a brilliant brand to sell in Japan or Saudi Arabia, so let's go buy it because we would make a lot of mistakes that way.
Andrew Hollingworth: Okay. Fair enough. And then on the international marketing question, is there -- I get the success orientated. But is there any reason why in 3 years' time from now, having done everything we've done overseas that we couldn't be spending multiples of what we're spending today. And it feels like the world is a big place. It feels like the people you use your marketing spend would be delighted if you'd spend 3x as much. Could you just tell us why that might not happen? Is there a limitation that I can't foresee?
Simon Wolfson: I think it's all down to execution. We will only be able to spend more money on marketing if we continue to improve our websites. We continue to see -- depending on -- a lot will depend on convergence of global fashions, whether that continues at the pace we think it's happening at the moment. So it comes down to internal factors, product ranges, execution and service and external factors and the speed at which global fashion trends converge. And some of it's also third parties' willingness to trade with us.
Andrew Hollingworth: But if you keep getting returns you're getting, you'd be happy to spend significantly more in the way that you have done in the first half?
Simon Wolfson: We're not capital constrained. The reality is we're talking about we're returning GBP 350 million this year in one way or another, that we can't -- over and above the GBP 118 million we've already spent by way of returns. So we are not capital constrained as a business. We will -- if something makes money, we will just carry on investing in it.
Geoff Lowery: Geoff Lowery, Rothschild & Co Redburn. Could you help us understand a little bit more about the behavior of your customers in the U.K. who have a credit account? I'm not really talking about this half year, more this broad sweep of you continue to add customers with an account, but they seem to spend more with you, but they're less reliant on your provision of credit to them than they were. So what sort of triangulates all of this for us? And is that growth in credit customers, a function of converting ones who were cash? Or is there something going on beneath the surface that we can't see in terms of the overall profile?
Simon Wolfson: That's a good question. So I think, first of all, the vast majority of credit customers are not first-time customers. So it's a question of converting cash customers into credit customers. In terms of behavior, what we're seeing is -- in terms of delinquency and default rates, I think a lot of that is about how more and more credit is being joined up. If you default on your GBP 100 debt to next, you might not be able to get a mortgage. So I think that is what's driving a sort of consistent reduction in debt rates. And then I think also a lot of customers who are switching from -- some of the customers switching from cash, I think more of them, and I haven't got numbers for this, but I think more of them are just using it as a try and buy facility rather than a proper credit facility.
Unknown Analyst: [indiscernible] from Citi. Just one. When we told your warehouse, you talked about potentially offering the spare capacity to other brands, Zalando, Esquire. Obviously, now you have maybe more capacity from shifting your stock to Zalando, but then you also talked about improving the performance and reliance of the brand. So is that still an opportunity?
Simon Wolfson: Yes, I think so. It will depend on -- and we are talking to a number of people about that. So it's an ongoing discussion. It's not a huge margin business. So I don't think it's not -- it won't be -- it won't generate as much pounds profit as total platform, but it is a profitable business, and we're still talking to a number of people about offering that service.
David Hughes: David Hughes at Shore Capital. A couple of questions from me. First of all, on pricing and the broaden margin, obviously, you've increased that a little bit to offset some of the higher costs. Did you see any kind of customer reaction to this? And if there is a further increased cost either through the Employment Rights Bill or from another minimum wage increase next year, do you think there's more that you can do there to offset that cost? And then secondly, just on international, alongside the improvements you're making in the 83 countries, do you have any significant plans to expand that to cover kind of even more of the globe?
Simon Wolfson: Yes. In terms of more of the globe, not really. There are countries that we -- the big countries that we're not in either -- Russia, either there are political reasons for not trading there or the market is just not ready. So I'm not expecting the number -- I'm not expecting that 83 number to change dramatically. In terms of pricing, it's very difficult to see a response to 1% increase in price. So the honest answer is we don't know what the response to that was. I don't think there was any -- if you ask my gut feeling, I don't think there was any response because the 1% is still significantly less than consumer than -- wages are going up by. So actually, in sort of share of wallet terms, that 1% increase is a game for customers whose wages on the whole are going up by 3%, just slightly more than that. So I don't think that was a -- I don't think it's been a problem. And then in terms of our ability to pass on, I'm often asked about what's your ability to pass on the price? And the answer is that we print the tickets. We print the price ticket. So our ability -- we've always got the ability to do that. And our view is that you have to do it, you have to maintain the profitability of the business because if you don't, when you look at that, what would I have to gain by way of sales in order to sacrifice to make back the margin I'm sacrificing. The answer always comes back, don't do it. And so our view is that where we get better prices from our manufacturers, we pass those through. And we've done that consistently for the last 20 years in real terms, the price of clothing generally, not just the NEXT has come down, getting better quality for less money. But where your costs go up, you have to cover them regardless of whether that has an adverse impact on your sales or not because it's more important to maintain the profitability of the business for all the reasons that we discussed than it is to maintain your top line.
Anubhav Malhotra: Anubhav Malhotra from Panmure Liberum. A couple of questions from me, please. Firstly, I would like to understand how is the mix of the third-party brands you sell between wholesale and commission developing? And are you still making a concerted effort to move more into commission? And maybe the reverse of that as well, when NEXT sells on international aggregator platforms, are you doing that mostly on a commission basis or on a wholesale basis? And my second question is about...
Simon Wolfson: That was 2 questions, you have 3 now, Anubhav.
Anubhav Malhotra: All right. Sorry. The third one then is when you're thinking about developing products and you talked about developing what the customer actually wants. And then I'm looking at the lead times that you mentioned and those increasing now you're trying to -- you are having 26 weeks of cover almost. How do you balance those 2 requirements? Because fashion -- I mean, you don't want to probably get into fast fashion, but the fashion needs constantly evolve very, very quickly. Are you looking at more near-term sourcing?
Simon Wolfson: I think it's about -- so in terms of the last point, which is a really important one is that -- and by the way, 26 weeks of cover doesn't necessarily mean 26 weeks lead time. The continuity product will have much longer lead to cover. There are products we can react to faster. And we are developing new sources of supply closer to home, which are giving us much faster lead times. We're growing our presence in Morocco at the moment. So I wouldn't want you to think that, that increase in of that ordering the stock early means that we're not pushing to develop product faster. But our universal experience is that it's not the time taken to make the garment that determines whether or not you are -- you capture the trends. It's the speed at which you go from seeing the trend to executing it with authority and a good quality. And that's where we focus -- that is where we're focusing all of our time. And the whole thing about developing fabrics earlier because there are fabric trends that emerge before garment trends, that is critical to that process. In terms of aggregator, pretty much all of the business we do with aggregators is on commission. And then in terms of wholesale versus commission, we're much more agnostic about that than we used to be. So we're not -- there was a point at which we were encouraging wholesale to move to commission. We're not really doing that anymore. We'll go with whichever way the brand goes. And in terms of growth, we're not seeing significant difference in growth between the 2. If anything, the improved focus we've got on buying the right quantities of brands and getting and backing newness, obviously benefits wholesale more than it does commission. So the big push has benefited wholesale more than commission. Pleasure. And on that exciting note, we'll finish. Thank you very much, everyone. Have a good day.