Morgans presentation. 22 October 2015

Transcription

1 Morgans presentation 22 October 2015

2 Agenda 1. Proven track record 2. FY15 highlights 3. Well positioned for continued growth and achievement of FY16 Prospectus Forecast

3 Proven track record Adairs brand heritage has been built on delivering quality products at affordable prices, combined with superior service in store Commenced trading on Chapel Street, Prahran, Victoria Linen Lovers Club launched Launched online store BBRetail Capital (BBRC) invested alongside management Catalyst acquired 70% interest alongside BBRC and management Invested in a new DC and ERP First incarnation of modern Adairs boutique opened First Homemaker store in Victoria Opened first UHR and Adairs Kids stores 100 stores Key strategic investments in product, merchandise planning and omni marketing teams Successful ASX listing 17 Jun stores (30 Jun 15) 2

4 Differentiated customer proposition Fashion, quality and value, coupled with superior service Price Features of Adairs marketplace Low High Design / Fashion Low High Highest value Adairs market position has shifted in recent years Price & volume oriented players Adairs targets mid to upper demographic customers who are house proud and passionate about design and home decoration National specialty market is dominated by Adairs and Bed Bath & Table, with other competitors being relatively small or regional Home is a key category for Discount Department Stores and Department Stores Global players (Williams Sonoma, Pottery Barn, Zara Home), expected to develop a small store presence bed sizing, counter seasons, local style preferences and existing competition provide barriers to entry ¹ Management estimate. Lowest value Online penetration in the market is still quite low (3-4%¹ of total), and growing at ~15-25%¹ p.a. 3

5 Agenda 1. Proven track record 2. FY15 highlights 3. Well positioned for continued growth and achievement of FY16 Prospectus Forecast

6 Continued success from product and range differentiation Strong performance from fashion bedlinen and home furnishings Improved performance from Adairs Kids product range Strong growth from new emerging product categories Staples grew +12% in FY15 (twice market) Fashion & decorator grew +39% in FY15 (58% of Adairs FY15 sales mix) 5

7 Continued success across store portfolio All 5 store formats profitable with double digit sales growth in FY15 Core store formats Adairs & Adairs Homemaker +20% Emerging store formats Adairs Kids & Urban Home Republic +39% Outlet stores +20% All stores (open 12+ months) profitable LFL sales growth +21.6% in FY15 (2H15 +24%) At 30 June consecutive months of L4L sales growth driven by very strong transaction growth 6

8 Continued growth in retail platform Adairs has grown into one of Australia s most successful retailers 135* stores nationwide across Adairs (including Adairs Homemaker and Adairs Factory Outlets), Adairs Kids and Urban Home Republic Growth in store footprint over FY15 3 x new Adairs stores x new Adairs Homemaker stores 3 x new Urban Home Republic concessions at Myer I x underperforming store closed at lease end 7 x existing stores fully refurbished Scoresby head office, located close to the new 6700m 2 DC in Keysborough Adairs Stores (incl. Outlet) Homemaker Stores Adairs Kids Stores UHR Stores (inc. Myer concessions) DC and HQ * At 30 June 2015; including three concession stores within Myer 7

9 Continued omni-channel success Online sales growth +35% in FY15 (2H15: +48%) Linen Lovers loyalty base continuing to grow strongly Continue to see stronger returns from loyalty and digital based marketing 8

10 Infrastructure investment to underpin growth New 6,700m 2 distribution centre opened in January 2015 incorporates larger online fulfilment facility New ERP implemented warehouse, merchandise and finance moved across in 2015 (store POS FY16) ERP enabler for: international stores, click & collect, online gift registry improving customer experience faster transaction speed, reducing administration hours/more selling hours and better data collection 9

11 FY15 result ahead of Prospectus forecast Sales $210.9m up 25.6% LFL sales growth 21.6% Gross profit margin CODB 44.1% of sales 62.0% down from 46.5% EBIT $33.1m Up 51.8% NPAT $22.0m Variances refer to pro-forma FY15 highlights compared to pro-forma FY14 highlights 10

12 Strong growth across key metrics Revenue LFL sales growth EBITDA NPAT Note: FY16F contained in Prospectus 11

13 Agenda 1. Proven track record 2. FY15 highlights 3. Well positioned for continued growth and achievement of FY16 Prospectus forecast

14 Key growth strategies it s all about execution 1 Continued product & range differentiation 2 Faster store rollout 3 Ongoing omni channel success 4 Leveraging infrastructure investments 5 Continue to scope international expansion opportunities 13

15 1. Continued product & range differentiation Biggest LFL sales driver Strong commitment to enhancing shopping experience through improved product creation process and lifecycle management: product innovation eg RJL Home Republic success in 1Q16 (Rebecca Judd Loves collaboration) range extension strong growth in newer product adjacencies - wall art, floor rugs, lighting, home fragrance constant newness on trend fashionable product eg improvements made in the Adairs kids product ranges value priced staples quality merchandise 14

16 2. Faster store rollout 11 new stores targeted for FY16 on track to deliver FY16 Prospectus forecast Focus on core formats over next 5 years majority of company store growth in short term (expect 7-10 stores pa) strong focus on NSW & Qld Emerging formats performance metrics are compelling focus for medium term (expect 2-4 stores pa) rollout potentially faster more UHR concession stores post trial (promising 1Q16) FY16 store rollout progress 3 x opened; 2 x committed; 3 x advanced negotiation FY16 store refurbishment progress 3 x completed; 7 x planned Up size of strong performing Homemaker stores committed Mile End SA, Nunawading VIC (relocation) & Sunshine Qld Werribee Vic upsized to a Homemaker 15

17 3. Ongoing omni channel success Driving superior customer engagement through all touch points Online sales growth via: bigger qualified active database driven by loyalty program more product availability adding homewares and smaller furniture click & collect and online gift registry to be introduced over next 15 months Switch of marketing dollars to more effective digital & loyalty initiatives grow the Linen Lovers database focusing on better retail execution and adding customer value continue to focus on social channels to improve customer engagement Facebook friends 100k (54k this time LY) Instagram followers 64k (launched CY15) Commenced Platinum sponsorship with National Breast Cancer Foundation 16

18 3. Ongoing omni channel success Substantial ramp-up in social media engagement 17

19 4. Leveraging infrastructure investments Focus on driving operational improvements within the distribution centre Improving online order fulfilment timelines Optimising the performance of the new ERP across all areas warehouse, merchandise & finance Rolling out new store POS 2H16 trial stores commenced 18

20 5. Scope international expansion opportunities for the future Potential pathway for longer term growth Management still evaluating the possibility of opening trial stores in New Zealand or South Africa More research & diligence required on both markets Trial would be disciplined and selective 19

21 Well positioned for continued growth Successfully listed on ASX in June FY15 result ahead of Prospectus forecast Attractive growth opportunities new products, new stores, new markets Well positioned to achieve FY16 Prospectus forecast Reaffirm the prospectus dividend expectation of 11 cents per share fully franked in FY16 20

22 Questions? 21

23 Appendix 22

24 Successful ASX Listing Adairs listed on 17 June 2015 and has outperformed benchmarks $3.00 $2.80 ADH 9.2% Price rebased to ADH $2.60 $2.40 $2.20 XDJ -1.4% XSO -3.7% $ Jun Jun 15 8 Jul Jul Jul Aug Aug 15 1 Sep Sep Sep 15 4 Oct Oct 15 Adairs (ADH) S&P/ASX 200 Consumer Discretionary Index (XDJ) S&P/ASX Small Ordinaries Index (XSO) 23

25 Experienced Board & management Michael Butler Independent Chairman Non-Executive Director Trent Peterson Non-Executive Director David MacLean Managing Director and CEO Executive Director 31 years experience in the retail sector Kate Spargo Independent Non-Executive Director Michael Cherubino Chief Financial Officer Finance Director 19 years experience in the retail sector David Briskin Independent Non-Executive Director 24

26 Disclaimer Some of the information contained in this presentation contains forward-looking statements which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Adairs Limited current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside the control of Adairs Limited. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Because actual results could differ materially from Adairs Limited current intentions, plans, expectations, assumptions and beliefs about the future, you are urged to view all forwardlooking statements contained herein with caution. 25