Agenda. BoConcept in short. Latest financial development. Long-term targets and short-term guidance

Transcription

1 BoConcept Holding A/S

2 Agenda BoConcept in short Strategic focus back on profitable growth Latest financial development Long-term targets and short-term guidance Forward-looking statement This presentation includes forward-looking statements, including forecasts for revenue, earnings and cash flow. BoConcept Holding stresses that forecasts are subject to considerable uncertainty with respect to the level of activity we will see in the future due to high global macro-economic volatility and subsequently reduced revenue visibility. The revenue generated by the franchise chain and BoConcept will thus be sensitive to fluctuations in macro-economic factors such as GNP growth, number of home sales, consumer confidence, and disposable income trends in the group's markets. Should these variables deteriorate, the franchise chain will have even tougher sales conditions to contend with, and thus management's expectations with respect to future financial trends may not be realised. Contacts: Viggo Mølholm, President & CEO Hans Barslund, EVP & CFO 2

3 BoConcept in short A retail-oriented concept holder 3

4 BoConcept a global brand and business International retail-oriented concept holder within furniture and lifestyle products for private homes Affordable luxury products primarily sold via 248 franchise-based BoConcept Brand Stores in approx. 55 countries Strong brand and highly coordinated and commercial collection with attractive market positioning Vision To make BoConcept no. 1 brand within urban interiors Mission Through passionate and persistent performance we make customized and coordinated design furniture and accessories affordable to the urban-minded customer 4

5 5 Collections positioned to reduce exposure to price competition

6 one WORLD one CONCEPT one BUSINESS MODEL Americas EMEA ASIA 17% of revenue* 65% of revenue* 18% of revenue* 44 brand stores 159 brand stores 46 brand stores 6 * Based on FY 2009/10

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8 Creating a unique customer experience at the centre of our focus Our brand stores must be inspiring and exiting to visit Our staff must offer an exceptional and competent service We will constantly and proactively explore new ways of addressing shopping trends and behavior Interior decoration service (home consultancy) 8

9 Business model based on refined core skills and award winning franchisee model Customers Sales, delivery and after-sales services Franchisees General support Franchise masters Brand, concept and products BoConcept A/S Sourcing and ownprod. Supply chain mgt. Design and product dev. Marketing and comm. IT, training and specialist support Business dev. and admin. 9

10 BoConcept A/S provides a full business and concept platform for brand stores Customers Sales, delivery and after-sales services Franchisees General support Franchise masters Brand, concept and products BoConcept A/S Concept and business strategy Design and branding Sourcing and ownprod. Supply chain mgt. Design and product dev. Marketing and comm. IT, training and specialist support Business dev. and admin. Specialist support Development of training programs Supply chain and warehouses 10 IT systems

11 Decentral retail organisation provides strong and customised support to franchisees Customers Brand, concept and products Sales, delivery and after-sales services Franchisees General support Franchise masters BoConcept A/S BoConcept A/S + 8 external BoConcept A/S plus 6 external partners: Retail Account Managers (store assesment) National marketing National training Price levels Axapta support Sourcing and ownprod. Supply chain mgt. Design and product dev. Marketing and comm. IT, training and specialist support Business dev. and admin. 11

12 Brand stores focus on providing customers with a unique experience and increasing same-store-sales Brand, concept and products Customers Sales, delivery and after-sales services Franchisees General support Franchise masters BoConcept A/S Approx. 140 across the world: Rent agreement Local marketing Driving sales Deliveries and assembly BoConcept A/S + 8 external After sales service Sourcing and ownprod. Supply chain mgt. Design and product dev. Marketing and comm. IT, training and specialist support Business dev. and admin. 12

13 Financial development 2006/ /11E Revenue in DKKm EBIT in DKKm / / / / /11E / / / / /11E Number of brandstores Cash Flow in DKKm / / / / /11E 0/ / / / / /11E

14 Shareprice development (last 24 months) Number of A-shares: 240, Number of B-shares: 2,622,119 Shareholders registered by name: App. 1,400 Free float in BoConcept Holding represents 75%

15 Strategy Focus back on profitable growth 15

16 Strategy focused on utilising strong business model and market uptake to increase growth STRATEGY FOR PROFITABLE GROWTH TRACK l TRACK ll TRACK lll Growth though increased same-store-sales Growth though more brand stores Cost reduction though increased productivity 16

17 Track l: Growth through increased same-store-sales 2011 collection focused on functionality, flexibility and customisation Highly commercial 2011 collection - >25% of collection has been renewed - Most introductions in lower end of price range to accommodate customer demand - Upholds market position as 'affordable luxury' BoConcept inspiration Camp (BiC) format changed to focus on execution - Products and store layout at the centre of attention - Moved to May to align with collection roll-out New mid-year collection introduced in Feb as follow up on last year's success focus on functionality - On display in 220 stores in 45 countries - Huge marketing effort, online and distribution of 4.2 mill. flyers 17

18 Track l: Growth through increased same-store-sales Multi Channel Retail meet the customers where they want to meet us! The Multi Channel Retail strategy will become a cornerstone in increasing traffic to both website and brand stores going forward Initial platform which integrates with Axapta consist of (2010/2011) - Newly designed website - Home Creator a new online 3D configuration program - MyBoConcept a personal end-user universe (CRM) 18 First stage of MCR Strategyt in place - Home Creator rolled out in all A-markets and several B & C markets since Sept In Spring 2011 a 3D-roomfunction will be added to Home Creator - E-commerce platform to be rolled out in the UK in Sept. 2011

19 Track l: Growth through increased same-store-sales Introducing e-learning to accelerate growth in same-store-sales New e-learning platform will become central in BoConcept University's training activities INTRO E-LEARNING SALES E-LEARNING PRODUCTS E-LEARNING PRACTI- CAL SALES FACE-TO-FACE INTERIOR DECO. FACE-TO-FACE Increase knowledge and service levels to boost hit rate and basket size, while - Reducing training cost for both BoConcept and franchisees - Reducing time-to-market Focussed e-learning effort on sales and campaign training of staff since Sept E-learning programs all basic sales and all product training are implemented in spring

20 Track ll: Growth through more brand stores New BoConcept Inspiration Store concept to complement existing BoConcept Brand Stores To increase brand awareness and traffic, BoConcept launches BoConcept Inspiration Stores BoConcept Inspiration Stores are small units - Total of 17 Inspiration Stores worldwide - Central stores in high traffic locations - Concession stores in department stores as Illum, Harrods, Selfridges and ECI - Higher sales per m 2 - Positive effect on sales generally Will be a satellite for nearby BoConcept Brand Stores - Owned by existing franchisees - Generate marketing, administration and logistics synergies 20 Test of pup up store

21 Track ll: Growth through more brand stores Further growth initiatives Expansion of ffranchise chain in both A markets and new markets - ADC important part in penetration of Asian market - Regional director based in Hong Kong To stimulate pipeline build-up and accelerate opening of new stores, BoConcept will allocate DKK 10m in FY 2010/2011 to facilitate financing for suitable potential franchisees - DKK 2-3m is allocated as location involment to accelerate openings in USA Allocation of dedicated business development ressources in Germany & France 21

22 Track lll: Cost reductions through increased productivity Focus on strengthening profitability and maintaining cash flow Focus on strengthening profitability and cash flow by reducing cost and optimising capital structure will be maintained To utilise BoConcept's business model's potential for high marginal profits, future initiatives will be focused on - Continue to secure attractive contracts with strategic sourcing partners - Optimise supply chain to enable faster delivery times at lower costs - Maintain an asset light model and low overheads 22

23 Track lll: Cost reductions through increased productivity ADC - an important part in the expansion strategy and the optimisation of the supply chain New Asian Distribution Centre (ADC) in Shanghai up and running in April 2010 Considerably more efficient and competitive location in terms of sales, delivery time and costs A central location for providing support to general build-up and brand store penetration of new Asian markets 23

24 Financials Development in Q /

25 Double digit revenue growth due to stronger performance and positive currency impact Underlying markets remains stable, but still influenced by uncertainty and consumer hesitancy 760 Development in revenues (DKKm) YTD +11.5% to DKK 753.1m (DKK 675.5m) - Increase in revenues to brand stores accounts for 6.9% of growth - Increase in currencies (USD and JPY) contributes to 4.6% top line growth Q % to DKK 249.6m (DKK 216.7m) /10 YTD Currency Additional sales to brand stores Additional sales to studios 2010/11 YTD

26 Continuous increase in same-store-sales despite low traffic Healthy development in same-store- sales (SSS) 30% - Invoiced SSS up 6.9% in Q3 (Q2: 6.1%) - Order intake SSS up 5.0% in Q3 (Q2: 8.3%) 20% 10% Quarterly development in same store sales Invoiced Order intake Traffic remains lower but is generally better qualified than before 0% 10% Persistent growth in hit rate as result of focus on sales-generating activities and 20% training programs, but basket size down 30% in Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007/ / / /11 FY2010/2011 Guidance Revenue growth: +5-10% Same-store-sales (invoiced): +5-10%

27 Positive development in A-markets in Q3 2010/2011 Underlying growth and increasing activity in France Allocation of revenue last 12 months Double digit growth and continuous stronger momentum in Germany Moderate growth rates in Denmark Political and economic clarification in 4% 13% England improve performance Challenging market conditions in Japan and Spain remain, but signs of stabilisation in both markets 1% 25% 21% France Germany USA Spain Japan Denmark 4% Norway 6% 3% 6% 6% 5% 10% England Sweden China B&Cmarkets

28 Net-additions of brands stores as anticipated Number of brandstores Positive net-addition of brand stores continues from Q Q3: +8 (13 opened/5 closed) - YTD:+10 (27 opened/17 closed) Five BoConcept Inspiration Stores opened in Q3, number of inspiration stores now at 17 total Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007/ / / /11 Increasing interest from potential franchisees, especially within new markets such as Asia and Latin America Brand store pipeline pp Phase 2 Phase 3 FY2010/2011 Guidance Approx. 35 new store openings (net-addition of min. 10 stores) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008/ / /11

29 Gross margin maintained despite increasing FX Quarterly gross margin (%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007/ / / /11 Gross margin in Q3 at 42.7% (42.7%) and YTD 2010/2011 at 41.9% (41.6%) - Net effect from currency is neutral - Net effect from more own stores +0.9% Sourcing cruises at 75%

30 Overheads increased in nominal terms, but is down relative to turnover Development in overheads (DKKm) 267 Overheads 2009/10 YTD 12 6 Currency Own stores Business activity Overheads 2010/11 YTD Total overheads increased by DKK 21.4m affected by hike in currencies and larger number of own brand stores compared to last year - In pct. of revenues overheads reduced from 39.5% to 38.2% YTD sales and distribution costs at DKK 229.7m (DKK 210.7m) or 30.5% of revenues (31.2%) - Currency impact DKK -10m - Own stores impact DKK -6m - Losses and provisions at DKK 10.8m YTD (DKK 3.1m in Q3) Administrative costs up to DKK 56.5m (DKK 52.0m) corresponding to 7.5% of revenues (7.7%) 7%)

31 EBIT margin climbing steadily EBIT in DKKm Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007/ / / /11 Q3 EBIT at DKK 9.9m (margin at 4.0% vs. 1.4% last year) and YTD EBIT at DKK 27.9m (margin of 3.7%) Net financials down to cost of DKK 2.0m (DKK 5.1m) as a consequence of reduced NIBD PTP for Q /2011 at DKK 25.9m (DKK 9.6m) FY2010/2011 Guidance EBIT% of 3-4% Losses and provisions at DKK 12m

32 NWC normalised at level of long term target Net working capital to Sales ,0% ,0% Inventory ramp-up to DKK 127.3m due to increased activity and very low levels at beginning of financial year ,0% 8,0% 6,0% 4,0% 2,0% Debtor days remain at 40 compared to 42 last year Long-term target of NWC at 10% of revenues 0 FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/10 Q3 2010/11 0,0% NWC (DKKm, LHS) NWC % of Sales (RHS) Long term NWC/Sales target (RHS)

33 Cash flow down as inventories are re-established YTD CFFO at DKK 4.0m (DKK 70.9m) as NWC is increased Cash flow in DKKm Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007/ / / /11 YTD cash flow before instalments on non-current debt DKK -22.0m (DKK 43.8m) Net investments at DKK 26.0m YTD - Slightly higher than expected due to acquisition of Swedish master rights in August 2010 FY2010/2011 Guidance Net investments of DKK 33m (previously DKK 30m) Cash flow before instalments at DKK 0 (previously 3% of revenues)

34 Outlook Long-term targets and short-term guidance 34

35 Sales and store expansion strategy to take advantage of market uptake Reinforced focus on exploiting the improved marked conditions to increase growth significantly going forward Optimised asset light business model to increase earnings and cash flow By FY 2014/2015, BoConcept is expected to - Grow revenue by 10-15% p.a. by increasing same-store-sales and brand store portfolio to units (incl. BoConcept Inspiration Stores) - Maintain the gross margin level - Generate high marginal earnings (>25% on EBIT-level) to realise an overall EBIT-margin of 12% - Generate cash flows of 6% of revenue and RoA of 30% - Maintain asset light setup and equity ratio of 30-40%

36 Growth and profitability in focus in FY2010/2011 Increasing activity level despite low traffic support SSS growth scenario, and brand store openings/pipeline confirm franchise model's attractiveness Strong emphasis on sales optimisation via collection updates, sales training and increasing i support Focus on efficiency, optimisation of supply chain and profitability improves earnings NWC expected to be maintained at approx. 10% of revenues going forward Guidance Revenue Same-store-sales (invoiced) Losses on bad debt EBIT-margin Cash flow in % of rev. Investments Net chg. # brand stores FY2010/2011E DKK 950-1,000m (5-10%) 5-10% DKK 12m 3-4% 0% DKK 33m Net addition min. 10 App. 35 openings FY2009/2010R DKK 910m (-9%) -7% DKK 18m 14% 1.4% 8.5% DKK 29m Net reduction of 9 21 openings 36

37 Attractive long-term investment case with upside potential as market gradually improves Global brand with strong market position in the high end of the global middle market (or in the low end of the high-end market) Business model and core competencies cover entire value chain from design, branding, marketing, production, supply chain management and sales training BoConcept's franchise model and concept competencies remain attractive to both customers and franchisees - Highly attractive collection with focus on customisation - Rewarded and optimised franchise model After considerable restructuring initiatives during the global recession, focus is now back on profitable growth - BoConcept will take advantage of favorable position to grow same-store-sales store sales and increase the number of stores considerably - BoConcept will generate substantial marginal earnings and high cash flows as growth increases by leveraging on its optimised business model with high cost efficiency and an asset light structure 37

38 Thank you for your attention For further information visit our website