Investor & Analyst Presentation Capital Markets Day

Transcription

1 Investor & Analyst Presentation Capital Markets Day London, March 22 nd, 2018 Dr. Cornelius Patt, CEO Andreas Grandinger, CFO

2 Safe Harbor Statement This document includes supplemental financial measures that are or may be non-gaap financial measures. These supplemental financial measures should not be viewed in isolation as alternatives to measures of zooplus financial condition, results of operations or cash flows as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently. This document contains statements related to our future business and financial performance and future events or developments involving zooplus that may constitute forward-looking statements. We may also make forward-looking statements in other reports, in presentations, in material delivered to stockholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of zooplus management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond zooplus control, affect zooplus operations, performance, business strategy and results and could cause the actual results, performance or achievements of zooplus to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or anticipated on the basis of historical trends. Further information about risks and uncertainties affecting zooplus is included throughout our most recent annual and interim reports, which are available on the zooplus website, Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of zooplus may vary materially from those described in the relevant forward-looking statement as being expected, anticipated, intended, planned, believed, sought, estimated or projected. zooplus neither intends, nor assumes any obligation, to update or revise these forwardlooking statements in light of developments which differ from those anticipated. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Investor & Analyst Presentation - Annual Report 2017 page 2

3 Your presenters today Dr. Cornelius Patt CEO, Founder Andreas Grandinger CFO» Corporate Management» Business Development & System Development» IT» HR» Logistics and Supply Chain Management» Finance» Controlling» Legal» Internal Audit» Investor Relations» Sourcing» Previously with Roland Berger Strategy Consultants» Previously with Parfümerie Douglas Management owns around 5% of the shares of the company Investor & Analyst Presentation - Annual Report 2017 page 3

4 Annual results 2017 Capital Markets Day London, March 22 nd, 2018 Dr. Cornelius Patt, CEO Andreas Grandinger, CFO Investor & Analyst Presentation - Annual Report 2017 page 4

5 zooplus profitable sales growth continued in 2017» Sales increased by 22% to 1,111m European market leader position in online retailing sustained Double-digit growth rates in all 30 European markets» Customer loyalty with 93% sales retention High loyalty of existing customers as major sales driver» Acceleration of registered new customer growth in H Registered new customer count increased by 26%, H2 by 36% with even better quality» Positive result before tax (EBT) of 4.1 m Stronger investment in 2017: competitive prices, marketing, logistics and personnel» Operating cash flow of 3.3 m Further improvement in working capital from 6.3% to 5.1% of sales Investor & Analyst Presentation - Annual Report 2017 page 5

6 zooplus continues to put sales growth and customer retention first Sales ( m) ,111 New customer sales (1 st year) % % % % % % % 94% 93% % 92% 94% 1 28% 93% 93% 1 22% Repeat customer sales Sales growth vs. PY ) in local currencies Investor & Analyst Presentation - Annual Report 2017 page 6

7 Sales of over 1.1bn in 2017 Sales ( m) Sales growth by category + 22% FX adjusted + 23% 1, % 15% Food Non-Food Investor & Analyst Presentation - Annual Report 2017 page 7

8 Sales development by quarter vs. prior year Sales ( m) Sales growth by category Food 26% 20% 24% 25% 24% 22% 25% 18% Q Q Q Q % 23% FX adjusted 25% 18% 23% 25% Non- Food 11% 8% Q Q Q Q Q Q Q Q Investor & Analyst Presentation - Annual Report 2017 page 8

9 Retention of existing customer business continues on record high level Sales retention rate (exchange rate adjusted) 94% 94% 94% 93%» Sales retention rate on continuously high levels in all four quarters» Lower sales growth rate in Q2 resulting from reduced new customer business sales, not from existing customer business Q Q Q Q4 2017» Continued focus on strong loyalty of existing customers Investor & Analyst Presentation - Annual Report 2017 page 9

10 New customer intake in Q4 again higher than in previous quarters Registered new customer growth vs. PY» Significantly improved new customer intake in Q3 and Q4 23% 9% 34% 38%» More focused approach of new customer acquisition - Stronger focus on registering - Google bidding - Accessories» Growth of new customer intake supported by higher marketing acquisition costs and competitive price positioning Q Q Q Q4 2017» Improved new customer intake across all countries Investor & Analyst Presentation - Annual Report 2017 page 10

11 New customers acquired in H show a good quality New customer retention (56 days) 28.7% 29.2%» Customer retention 56 days after first purchase in H2 above H1 level» New customers acquired in H2 have so far at least the same quality than prior new customers H H New customer retention (56 days): Share of new customers who did a repurchase 56 days after their first purchase. New customer is accounted for the respective period of his first purchase. 56 days repurchase is a good predictor for repurchases after 182 days Investor & Analyst Presentation - Annual Report 2017 page 11

12 zooplus is the online market leader in all geographies of Europe with the widest possible base for further growth Sales 2017» Sales 2017: 1,111m, sales growth rate +22%» Double-digit sales growth rates in all countries Sales zooplus in 2017 zooplus market share in 2017 Total market bn 1,111m 4.9% Sales growth in m 96m 3.9% ES, PT 2.4% UK, IE +27% 187m 5.1% +27% (fx-adj.) 124m 7.0% NL, BE, LU FR, MC +22% +22% 70m 4.5% 335m 6.2% DK, SE, FI, NO 90m 3.7% +25% D,A,CH IT 80m 12.2% +18% +21% PL +41% 62m 4.5% HU +37% CZ, SK, HU, RO, SI, HR, BG, TR, GR, LV. LT, EE Source: zooplus sales, unaudited data, growth rates compared to 2016; market shares based on Euromonitor 2016 market data and zooplus estimation Investor & Analyst Presentation - Annual Report 2017 page 12

13 Customer loyalty the winning factor of the business model is at very high levels Retention rates Cohort analysis Sales ( m) Ø 85% % % a Ø 79% % 88% % a % % 95 96% 91 97% a % 2011 a 87 91% 79 99% 78 99% 77 99% % 62 90% 56 99% % % % a % 46 98% 45 99% 104% 101% % 47 <= % % 101% % 102% % Reading example: 2011 a = sales of 2011 s new customers in 2011 Ø 91% 1) in local currencies Ø 94% Ø 93% 1) a Ø 92% Ø 94% 1) a 253 Ø 93% Ø 93% 1) 86% 1, a Investor & Analyst Presentation - Annual Report 2017 page 13

14 Development of further business KPIs Active customers (m) Reg. new customers (m) Sales retention 91% 93% 94% 93% 85% 79% in local currencies Orders (m) Basket size ( ) Sales per account ( ) Investor & Analyst Presentation - Annual Report 2017 page 14

15 Markets continue to be price competitive zooplus prepared to defend it s strategic position Product mix 1 Gross margin 2 Total margin 3 in % of sales in % of sales + 1.1%p 82.4% 83.5% - 0.6%p 25.0% 24.4% - 0.6%p 29.8% 29.2%» Continued focus on sustainable dog/cat food customers for higher lifetime value» Ongoing price competition in the markets» zooplus will defend it s high customer retention Share of food and cat litter on sales 2 Sales - CoGS 3 Gross margin + other income on sales Investor & Analyst Presentation - Annual Report 2017 page 15

16 Cost leadership position in 2017 sustained but reflects stronger investment focus Total margin & Cost structure (in % of sales) Total margin 1 Advertising/ Marketing 29.8% + 1.0%p 29.2% 27.8% 28.8% 1.4% 1.7% 19.4% 19.8% 1.1% 1.0% 2.7% 3.0% 3.2% 3.2% » Stronger growth and investment focus reflected in cost ratio development» Logistics costs impacted by increased share of faster interim purchases resulting in a lower value per parcel» IT/Admin impacted by higher depreciation 1 Gross margin + other income on sales m logistics costs of 2017 reclassified Logistics 2 Payment to depreciation according to IAS 17 (finance lease) IT/Admin/ (incl. Personnel 3 3 all in, including LTI & SOP depreciation & interest) Investor & Analyst Presentation - Annual Report 2017 page 16

17 Four main pillars of investment focus for speeding up growth and improve zooplus overall product quality Competitive pricing Marketing costs IT product development Logistics» Continued focus on price leading position» Defending high loyalty of existing customers» Lower basket size» Increase in new customer acquisition costs» Stronger focus on registered repeat customers» Continuously high customer lifetime value» More software developers from 90 in Q to 160 in Q4 2017» Fourth internal software development location in Vienna» Focus: mobile/app, new functions, service aspects, internal algorithms» Faster delivery» Ramp-up costs new logistics centers» Additional earlier capacity expansion Investor & Analyst Presentation - Annual Report 2017 page 17

18 zooplus will continue it s strong effort to further improve cost leadership position in the category Total margin & Cost structure (in % of sales) 40.9% 42.4% 6.1% 31.6% 29.8% 29.2% -1.2%p -1.8%p -0.6%p vs. prior year 32.8% Total margin % 31.1% 1.8% 29.8% 1.5% 21.2% 20.1% 27.8% 28.8% 1.4% 1.7% 19.4% 19.8% 1.7% 5.6% 1.3% 1.1% 1.1% 1.0% 2.9% 3.5% 2.7% 3.0% 5.0% 3.9% 3.5% 3.2% 3.2% Advertising/ Marketing Logistics 2 Payment IT/Admin/ (incl. depreciation Personnel 3 & interest) 1 gross margin + other income on sales 3 all in, including LTI & SOP m logistics costs of 2017 reclassified to depreciation according to IAS 17 Investor & Analyst Presentation - Annual Report 2017 page 18

19 zooplus earnings before tax (EBT) in 2017 reflects investment in marketing, IT and logistics infrastructure EBITDA ( m) EBT ( m) in % of sales 2.2 % 0.8 % in % of sales 2.0 % 0.4 % m logistics costs of reclassified to depreciation according to IAS 17 Investor & Analyst Presentation - Annual Report 2017 page 19

20 Strong profitability of repeat customers business invested to grow the business with long-term perspective Repeat customer and new customer contribution ( m) Repeat customers (consecutive year s sales) New customers (sales in the year of acquisition) Sales % of total z+ EBT EBTmargin EBTmargin Sales % of total z+ EBT % % % - 5-2% % % % % Reduction of profit margins in 2017 resulting from deliberate decision of stronger investment focus to improve overall zooplus strategic position and long-term valuation. Investor & Analyst Presentation - Annual Report 2017 page 20

21 UK market continued to negatively impact zooplus from a P&L perspective in 2017» One of three biggest markets in Europe» Highly competitive market in particular with amazon and ocado» Around 10% of zooplus sales are generated in the UK» Currently one of highest growth rates of major zooplus countries» Local purchasing will be further strengthened Overall negative impact on zooplus P&L in 2017 due to fx-changes: EUR 7.1 m zooplus will continue to strongly develop it s business in the UK Focus on long-term development, taking into account short term market disruptions and profit impact Investor & Analyst Presentation - Annual Report 2017 page 21

22 Operating cash flow continues to be positive in 2017 although sales growth of more than 200m EUR Operating and free cash flow ( m) Cash flow from operating activities 1.3 % 1.1 % Cash flow from investing activities Free cash flow Cash flow from operating activities Cash flow from investing activities Free cash flow Investor & Analyst Presentation - Annual Report 2017 page 22

23 Working Capital has been further improved in 2017 Working capital in % sales 9.5% 8.1% 6.3% 5.1%» Increase in inventory turnover» More efficient replenishment process» Improvement in payment days» Total working capital savings from 2014 to 2017 of EUR 49m Working Capital = inventory + prepayments + receivables - liabilities Average of quarters Q1 Q4 Investor & Analyst Presentation - Annual Report 2017 page 23

24 zooplus shows a strong balance sheet at end of 2017» Positive cash balance of 51 m EUR at 12/31/2017» Equity ratio of 47%» No financial debt» Credit lines of EUR 50 m until end 2020 without guarantees Solid foundation for further growth Investor & Analyst Presentation - Annual Report 2017 page 24

25 2017 results Q & A Investor & Analyst Presentation - Annual Report 2017 page 25

26 Strategy & Outlook Capital Markets Day London, March 22 nd, 2018 Dr. Cornelius Patt, CEO Andreas Grandinger, CFO Investor & Analyst Presentation - Annual Report 2017 page 26

27 zooplus investment hypothesis Strong historic development to No. 1 specialist online pet retailer and No. 2 in total market online and offline 1 4 High moat through loyal customer base, cost leadership position and dedicated logistics operations and IT infrastructure Large, non-cyclical and growing market with ample room for further growth 2 5 Solid financial base with room for further scale and cash flow optimization Fast growing business with recurring revenues model through kind of subscription 3 6 Founder driven business with long-term perspective and focus on shareholder value Investor & Analyst Presentation - Annual Report 2017 page 27

28 Main takeaways from todays presentation about zooplus strategic perspective» Sales target of minimum 2 billion in 2020 confirmed» Working towards market leadership in the total market» Sales growth stays top priority» Investment mode in 2018 to further improve strategic position» Sales growth as key driver for increasing future profitability» Repeat customer EBT in 2020 of more than 60m» Laying the foundation for further growth after 2020 Lower profit level today makes zooplus more valuable in future Investor & Analyst Presentation - Annual Report 2017 page 28

29 zooplus is Europe s leading online retailer for pet supplies Sales ( m) m) Key figures 2017 Average sales growth % p.a. 1, Years of online experience 8,000 SKUs Active countries 5.8 m Active customers 1.4 bn Website impressions m Unique visitors m Orders 25 m Parcels shipped 11 European warehouses Employees in 8 offices Investor & Analyst Presentation - Annual Report 2017 page 29

30 Overall around 90m EUR has been invested into zooplus for a market capitalization of around 1,300m EUR ~90m Capital injection from shareholders since inception of the company in ,111m Net sales in 2017 cumulated > 4.7bn EUR since 1999 ~1,300m Market capitalization at mid March 2018 Investor & Analyst Presentation - Annual Report 2017 page 30

31 Primary target of the company development Target of zooplus Maximize valuation of the company Main tasks for zooplus Reach strategic dominance in the European pet market Secure future prospects of the company Main value driver Sales growth and absolute size of the company Investor & Analyst Presentation - Annual Report 2017 page 31

32 The core drivers of zooplus business development Market leadership» Online by a wide margin and the strongest player in the overall market online and offline» Recurring revenue model built on consumption cycle and customer loyalty Best partner for premium brands» National champions/ Multinationals/Niche brands Sales Suppliers Costs Most efficient operator» Scaling and specialization built to purpose» Superior product experience» Critical size in all markets Financials and metrics Investor & Analyst Presentation - Annual Report 2017 page 32

33 zooplus key priorities for 2018 and beyond Sales growth Retention rate New customer intake Efficiency and scale focus Private label growth Market place for services Investor & Analyst Presentation - Annual Report 2017 page 33

34 Key drivers for sales growth Customer retention and new customer acquisition Offering and availability of assortment Delivery capacity and speed Pricing towards customers Digital experience (mobile) Investor & Analyst Presentation - Annual Report 2017 page 34

35 Market & Competition

36 European pet supplies market is a very attractive market Pet supplies market in Europe e (gross sales bn) CAGR +3% p.a » Ownership of pets is on the rise in Europe» Humanization of pets drives spending» Market is resilient through economic cycles» Consumables recurring revenue subscription like» No technology and fashion obsolescence risk» Low product return rates e Source: Euromonitor 2016 and zooplus estimation Investor & Analyst Presentation - Annual Report 2017 page 36

37 The pet population continues to grow in Europe No. of dogs and cats in Europe (in mio.) Dogs Cats + 2.7% p.a % p.a Source: Statista Investor & Analyst Presentation - Annual Report 2017 page 37

38 Pet supplies is very attractive for online distribution from a consumer perspective, however only 8-10% online today Pet supplies online market penetration Pet supplies online attractiveness Consumable products Repeat purchase pattern 3 Projectable consumption, low seasonality Offline share 98-99% % Standardized products Well-known brands Attractive prices Online share 1-2% 8-10% Product information very important Convenience aspect (heavy & bulky) zooplus assumes that in the long run more than 50% of the market goes online Source: 2016 European market in bn - Euromonitor and zooplus estimation Investor & Analyst Presentation - Annual Report 2017 page 38

39 Online market penetration of pet supplies in Europe still leaves a lot of growth potential the best still to come Online penetration per category - Europe Books Electronics Fashion Pet supplies Food 1-2% 8-10% > 20% > 25% > 50%» All categories still growing in online share» No signs of saturation of online market in pet supplies» Next step of online market penetration to 15-20% market share» Online as leading distribution channel expected long-term Source: 2016 Statista, zooplus estimation Investor & Analyst Presentation - Annual Report 2017 page 39

40 In a large and fragmented market zooplus dominates online and is rapidly catching up with the offline leaders Market share zooplus and competitors 2017 Fressnapf Net sales 2017 : ~ 1.7 bn (+ 6%) Online: ~ 0.06 bn (+ 20% vs. PY) Total pet supplies market Europe (incl. VAT): ~ 26 bn (~ 23 bn net) Pets at Home Net sales 2017: ~ 1.0 bn (+7%) Online: ~ 0.05 bn Other onliners: CAGR: : +3% Net sales 2017: 1.1 bn (+22%) ~ 50% market share zooplus online ~ 5% market share online and offline Net sales 2017: n/a Source: Euromonitor; company information, zooplus estimation Investor & Analyst Presentation - Annual Report 2017 page 40

41 zooplus reached No. 2 position in Europe in 2017 and is well on its way towards market leadership Net sales and growth 2017 European market (EUR bn) 1 1) + 6% Online ~ (+100 EUR m) 2 3 2) +22% +7% Online ~ (+202 EUR m) 1.0 (+65 EUR m) Strategic goal Close the gap towards the current number 1 in Europe 4 3) +22% n/a Working towards market leadership online and offline Benefitting from all the advantages of size and market leadership Source: Company data for 2017 figures; zooplus assumptions 1) Net sales estimated from gross sales 2) Includes services 3) amazon international growth rate Investor & Analyst Presentation - Annual Report 2017 page 41

42 zooplus is the only real pan-european pet retailer in Europe online offline» Is more than 10 bigger than the No. 2 online specialist in Europe» Is the only true pan- European pet retailer» Is the only pet specialist with a pan-european logistics infrastructure» Is the only retailer with a European-wide customer service (400 agents) local international Investor & Analyst Presentation - Annual Report 2017 page 42

43 However, competition continues to be strong but zooplus is prepared to defend its position A good market segment is also a populated segment (examples):» Entering Spain and Italy with full pet supplies assortment in Q3 2017» Strong growth of pet category» Multi-channel approach» Start in French market in summer 2017, FR store closed in Q again» Continued losses, closed Spanish shop in Q1 2018» zooplus strategy pays off - more than double growth at zooplus» Store openings with higher margins do not compensate losses in online» zooplus strategy pays off - more than double growth at zooplus» Price reductions in stores to support growth» Acknowledging that customer proposition also encompasses attractive pricing Investor & Analyst Presentation - Annual Report 2017 page 43

44 amazon is not new to the category but is and will stay the main competitor in the category Category Full local assortment Private label Additional pet content Pricing Supply chain Logistics Sales 2017 Start of category Generalist UK, DE, FR, IT, ES None None Competitive Direct + Marketplace Non pet specific Less than half of zooplus 2005 Pet specialist 30 countries 11% of sales Pet specific content Competitive > 99% Direct (control of supply chain) Specialized logistics 1,111 m 1999 Investor & Analyst Presentation - Annual Report 2017 page 44

45 Market and competition Q & A Investor & Analyst Presentation - Annual Report 2017 page 45

46 Differentiation towards the competition

47 Differentiation towards competition The following pillars determine zooplus differentiation towards the competition: 1 European online market leadership 2 Loyal customer base 3 Distribution channels 4 Focus on mobile 5 Private label brands 6 Pet related services 7 Pan-European logistics infrastructure 8 IT infrastructure & resources 9 Most efficient operator Investor & Analyst Presentation - Annual Report 2017 page 47

48 European online market leadership

49 zooplus is by far the European market leader in online pet supplies zooplus sales 2017 ( m) and market share of total market % of total net sales growth rate absolute growth online market position D, A, CH 6.2% % 18% 50 m 1 FR 5.1% % 22% 33 m 1 NL, BE, LU 7.0% % 22% 22 m 1 UK, IE 2.4% 96 9% 27% 21 m 2 IT 3.7% 90 8% 21% 15 m 1 PL 12.2% 80 7% 41% 23 m 1 DK, SE, FI, NO 4.5% 70 6% 25% 14 m 1 ES, PT 3.9% 66 6% 27% 14 m 1 Other EE 4.5% 62 6% 37% 17 m 1 Source: market shares zooplus estimation, UK: fx-adjusted growth figures Investor & Analyst Presentation - Annual Report 2017 page 49

50 zooplus is the online market leader in all geographies of Europe with the widest possible base for further growth Sales 2017» Sales 2017: 1,111m, sales growth rate +22%» Double-digit sales growth rates in all countries Sales zooplus in 2017 zooplus market share in 2017 Total market bn 1,111m 4.9% Sales growth in m 96m 3.9% ES, PT 2.4% UK, IE +27% 187m 5.1% +27% (fx-adj.) 124m 7.0% NL, BE, LU FR, MC +22% +22% 70m 4.5% 335m 6.2% DK, SE, FI, NO 90m 3.7% +25% D,A,CH IT 80m 12.2% +18% +21% PL +41% 62m 4.5% HU +37% CZ, SK, HU, RO, SI, HR, BG, TR, GR, LV. LT, EE Source: zooplus sales, unaudited data, growth rates compared to 2016; market shares based on Euromonitor 2016 market data and zooplus estimation Investor & Analyst Presentation - Annual Report 2017 page 50

51 zooplus offers by far the biggest selling space in Europe for pet suppliers Advantages for brands to work with zooplus on a European level zooplus can offer:» Access to 30 country markets in Europe via one retailer» Pet specific environment» Strong sales growth perspective across Europe» One European purchasing/category management organization» Only very few delivery points (fulfillment centers)» No European-wide distribution and on-field sales organization necessary» Detailed customer data on customer behaviour Investor & Analyst Presentation - Annual Report 2017 page 51

52 zooplus is the No. 1 sourcing partner of branded pet food products in Europe Multinationals + regionals Multinational groups Regional and local champions (selection) Building partnerships for brand development and customer satisfaction Improving terms & conditions Investor & Analyst Presentation - Annual Report 2017 page 52

53 Loyal customer base

54 USP and differentiation towards competition Key drivers for the attractiveness of the zooplus business model from a shopper perspective 1 Convenience 2 Completeness 3 Performance 4 Content» Weight and bulkiness» 97% delivery to preferred address» Emotional band through pet focus and value adding free services» All relevant brands/ products (8,000 SKUs)» Dedicated specialists approach» Customer centricity» Reach across Europe (30 countries - 25 local language)» Reliable 1-2 days delivery 1)» European-wide customer service» Detailed product descriptions & videos» >1 million product ratings from shoppers (peer-to-peer)» Other services (Vet search) 1) Workings days in core countries Investor & Analyst Presentation - Annual Report 2017 page 54

55 The zooplus customer Key facts % women Around 6 Mio. active customers Both rural and city Average age: 40 Spent per year around 250 EUR Average basket 55 EUR Investor & Analyst Presentation - Annual Report 2017 page 55

56 Loyal customers are the core base of zooplus growth path Sales ( m) ,111 New customer sales (1 st year) % % % % % % % 94% 93% % 92% 94% 1 28% 93% 93% 1 22% Repeat customer sales Sales growth vs. PY ) in local currencies Investor & Analyst Presentation - Annual Report 2017 page 56

57 Customer loyalty the winning factor of the business model is at very high levels Retention rates Cohort analysis Sales ( m) Ø 85% % % a Ø 79% % 88% % a % % 95 96% 91 97% a % 2011 a 87 91% 79 99% 78 99% 77 99% % 62 90% 56 99% % % % a % 46 98% 45 99% 104% 101% % 47 <= % % 101% % 102% % Reading example: 2011 a = sales of 2011 s new customers in 2011 Ø 91% 1) in local currencies Ø 94% Ø 93% 1) a Ø 92% Ø 94% 1) a 253 Ø 93% Ø 93% 1) 86% 1, a Investor & Analyst Presentation - Annual Report 2017 page 57

58 The strong zooplus loyalty model works in all countries Sales retention Top 10 zooplus country shops % 95% 94% 96% 92% 103% 94% 90% 96% % 95% 91% 92% 92% 105% 95% 91% 92% DE FR UK NL IT PL ES CZ CH Sales retention 2016 and 2017 in local currencies Investor & Analyst Presentation - Annual Report 2017 page 58

59 Account value and customer account retention increase with length of customer life Projected sales per active account out of 2017 (in ) Cumulated sales per account created over a+10 years: 1,730 a a+1 a+2 a+3 a+4 a+5 a+6 a+7 a+8 a+9 a+10 a: year of acquisition = % 1) 79% 81% 89% 93% 94% 95% 95% 96% 96% 95% 100% 1) 79% 64% 57% 53% 50% 47% 45% 43% 42% 40% ) customers with at least one consecutive purchase after first transaction 2) Projected rate based on account retention rate of respective cohort 3) Average projected share of remaining accounts based on account survival rate Account survival rate 2) Share of remaining accounts 3) Sales per account created Investor & Analyst Presentation - Annual Report 2017 page 59

60 Customer lifetime value is strongly positive 2017 a+5 projected a+10 projected 2017 net sales per account in EUR (cum.) ,017 1,730 (2016) (206) (1,049) (1,812) (2016) 19 (15) Customer acquisition costs 2 (100) (172) CM cumulative 5 years plus acquisition year CM cumulative 10 years plus acquisition year 1 Only accounts with repurchasing activity based on cohort specific retention rate (incl. fx-effects) 2 Traffic acquisition costs per new account with repurchasing activity 3 CM = contribution margin = net sales all variable costs (excl. acquisition costs) = 9.5% Investor & Analyst Presentation - Annual Report 2017 page 60

61 Today s sales growth and retention determine future net sales tremendously Locked-in sales over next five years ( m) Net sales of year Retention rate (local currencies) % 2,060 Locked-in sales for next 5 years from 2014 customer base and a retention rate of 91 % % 2, % 3, , % 4,492 Investor & Analyst Presentation - Annual Report 2017 page 61

62 Strong profitability of repeat customers business invested to grow the business with long-term perspective Repeat customer and new customer contribution ( m) Repeat customers (consecutive year s sales) New customers (sales in the year of acquisition) Sales % of total z+ EBT EBTmargin EBTmargin Sales % of total z+ EBT % % % - 5-2% % % % % 2020e > 1,550 78% > % > % tbd tbd Investor & Analyst Presentation - Annual Report 2017 page 62

63 Distribution channels

64 Differentiated shop portfolio with further room for specialization Vet diets & antiparasitics Specialist pet food & accessories Pet food all channel brands Discount oriented pet retailer with focused product portfolio for price sensitive customers Pet specialist with broad profile of covered product segments & brands Additional specialized concept under development - Specialization - Service and advice for specific brands - More possibilities for targeted marketing Closing relevant segments of the market for the competition Pet specialist zooplus brand is and will stay no. 1 priority of the company Investor & Analyst Presentation - Annual Report 2017 page 64

65 Around 90% of total sales come from the zooplus brand shops Development of net sales zooplus shops ( m) 1, » Pet specialist concept with a pet DNA» Around 8,000 SKUs» 30 local language webshops» Low threshold for free delivery» Bonus points» Savings plan» Pet related additional content» Extensive social media content Investor & Analyst Presentation - Annual Report 2017 page 65

66 Around 10% of total sales come from the bitiba brand shops Development of net sales bitiba shops ( m) » Focused concept for price sensitive customers» Reduced number of SKUs» 14 local language webshops» Higher threshold for free delivery» No bonus points and savings plan» Uses same infrastructure as zooplus» Slightly lower levels of customer and sales retention» Contribution on similar level as for zooplus customers Investor & Analyst Presentation - Annual Report 2017 page 66

67 zooplus focuses on easy-to-use product presentation in the shop Example zooplus vs. amazon Clear product shelf / no market place, almost 100% control of supply chain Speedy and reliable delivery without Prime / practically no shipping fee Investor & Analyst Presentation - Annual Report 2017 page 67

68 New features will be continuously added for more personalization and differentiation Pet profile» Updated in summer 2017» More than 200,000 pet profiles from registered customers within 6 months» Additional customer insights for personalization and marketing initiatives (birthday mail, etc.)» Differentiation towards competition» Retention driver Investor & Analyst Presentation - Annual Report 2017 page 68 68

69 Subscription will offer additional convenience for regulars Subscription» Live in Germany since end Q3 2017» Flexible options for delivery frequency» Large range of brands available for subscription» One additional option for zooplus customers to facilitate purchasing» Too early to communicate specific KPIs» Further roll-out planned Investor & Analyst Presentation - Annual Report 2017 page 69

70 Focus on mobile

71 zooplus is a digital multi-channel retailer» Mobile share of orders around 30% and growing» Mobile will be the dominant channel in future» Full responsive frontend for all devices» Own zooplus smartphone Apps (ios and Android)» Significant investment in mobile channel» More technical features and optimized UX to come in future» Online activities adapted to mobile usage Investor & Analyst Presentation - Annual Report 2017 page 71

72 Mobile channel has considerably increased its share and is continuing to grow Mobile business zooplus 2017 Visits 64 m +49% Orders 4.4 m +67% Sales share 6% App Clear focus on mobile in all activities Note: TY 2017 figures, growth: 2017 vs Mobile: traffic by mobile phones (incl. app). Investor & Analyst Presentation - Annual Report 2017 page 72

73 Development of channels across main markets - Mobile share in % of orders Germany UK 29% 23% 15% 16% 22% 28% France Netherlands 17% 23% 10% 14% 21% 29% Fast growing share of mobile driven sales across all key markets Mobile: traffic by mobile phones (incl. app). Investor & Analyst Presentation - Annual Report 2017 page 73

74 KPIs Mobile vs. desktop Major KPIs (2017) Visits Orders Conversion rate 47% 53% 26% 74% 7% 17% Mobile Desktop Mobile Desktop Mobile Desktop Mobile: traffic by mobile phones (incl. app). Investor & Analyst Presentation - Annual Report 2017 page 74

75 Mobile - App - Competition overview Distribution of apps in the pet category zooplus amazon Fressnapf zooroyal Pets at Home Tiendanimal Arcaplanet medicanimal» App version available for all zooplus shops» Clear and intuitive design» Responsive design» Future focus on stronger personalization Benchmark for zooplus app is outside the category Investor & Analyst Presentation - Annual Report 2017 page 75

76 Private label

77 zooplus offers all the relevant categories that customers expect from a pet specialist Specialty brands/super Premium brands Vet/Dietary Special trends/ grain free Private label Grocery brands Accessories Antiparasitics Investor & Analyst Presentation - Annual Report 2017 page 77

78 Online private label business gets build up over time by converting the existing customer base to own label brands 13% Share of total food 5% Share of first order sales 1.5 Growth index private label / food Further significant increase in private label share until 2020 Investor & Analyst Presentation - Annual Report 2017 page 78

79 The private label portfolio of zooplus has a clear focus on valuable premium brands Dog Cat Dog & Cat Other GROCERY SPECIALTY VET» Various brands with different positioning within the different categories» Focus on dog and cat brands Investor & Analyst Presentation - Annual Report 2017 page 79

80 The single private label brands are designed for dedicated target groups and reflect latest nutritional trends Segment description: Dry food, wet food and snacks Positioning: Wild and Free! Wolf of Wilderness has been formulated to mimic the wild wolf s diet. USP: High fresh meat content, grain-free, species Target customer: Premium focused dog owners who look for natural products with holistic concepts (grainless, berries etc.) and strong emotional messages Price Positioning: Premium Number of SKUs: 65 Investor & Analyst Presentation - Annual Report 2017 page 80

81 Brand positioning, product development and successful visuals determine the own label development process Development of brand & product concept Product development together with supplier Development of design & packaging Production of packaging & product Launch in zooplus shops General Positioning Brand name Selection of supplier Declaration & Ingredients Acceptance Tests Sizes & calculation Logo & Packaging Complete product range Texts & translations Packaging Product New shop articles Launch campaign CRM Trial offers Feb 2014 March 2015 Investor & Analyst Presentation - Annual Report 2017 page 81

82 Focus brand Wolf of Wilderness comprehensive marketing initiatives ongoing to achieve sales growth New Sub-Ranges The Taste of : Printed advertising: Marketing initiatives Soft & Strong : Pet fair: Samplings: as present for new customers Investor & Analyst Presentation - Annual Report 2017 page 82

83 Wolf of wilderness shop WoW webshop» Separate webshop» Multi-language shop» Additional support for brand building Investor & Analyst Presentation - Annual Report 2017 page 83

84 Private label brand: Purizon Segment description: Dry food Positioning: High Premium nutrition made taking inspiration from the natural, carnivorous diet USP: 70% meat content, high protein content, grain-free Target customer: Health experts who buy brands with special nutritional concepts (grain-free, high share of meat, single protein, fresh meat) Price Positioning: Super Premium Number of SKUs: 47 Investor & Analyst Presentation - Annual Report 2017 page 84

85 Private label brand: Concept for Life Segment description: Dry and wet food for cats and dogs Positioning: A unique and scientific-based nutritional concept, which focuses on your pet s individual well-being and dietary requirements at different life stages. USP: Tailored nutrition for your pet Target customer: Brand believers who normally feed standard life stage brands Price Positioning: Super Premium Number of SKUs: 85 Investor & Analyst Presentation - Annual Report 2017 page 85

86 Private label brand: Wild Freedom Segment description: Dry and wet food for cats Positioning: Wild and Free! Wild Freedom has been formulated to mimic the wild cat s diet. USP: High content of fresh meat, grain-free, low carb Target customer: Premium focused cat owners who look for natural products with species-appropriate concepts (grain-free, protein-rich etc.) and strong emotional messages Price Positioning: Super Premium Number of SKUs: 21 Investor & Analyst Presentation - Annual Report 2017 page 86

87 Pet related services

88 Stronger focus on additional services for more differentiation Building additional services around a zooplus market place for people with pets No.1 pet world in Europe Veterinarians Other pet related services/shops Grooming services Insurances zooplus owns by far the biggest dedicated pet owner customer base in Europe with already today around 6 Mio. active accounts» Differentiation as pet specialist» Potential future additional contribution margin Investor & Analyst Presentation - Annual Report 2017 page 88

89 Vet search as a first step to integrate additional services on the zooplus platform Vet search» Live in Germany since end Q2 2017» More than 13,000 vets integrated» Search for vets with opening hours and driving directions» Rating of vets by registered zooplus customers» Access for vets to update their data» Further roll-out planned Investor & Analyst Presentation - Annual Report 2017 page 89

90 Pan-European logistics infrastructure

91 zooplus is the only specialist player in the category with a pan-european logistics network» New FC Birmingham (UK) since 03/2017, new FC in Mühldorf (DE) since 09/2017» New FC in Boleslawice (PL) from 11/2017 on; additional capacity in Wroclaw (PL) since 10/2017» All centers managed as one integrated pan-european network» All FCs operated by partners; no capex for zooplus» SKU allocation, replenishment, order routing and packing algorithms intellectual property of zooplus / Fulfillment center (FC) 2013 Investor & Analyst Presentation - Annual Report 2017 page 91

92 zooplus fulfillment centers Tilburg (NL) Hörselgau (DE) Wroclaw (PL) Chalon (FR) Antwerp (BE) 34,000 sqm 7-8,000 SKUs 30,000 sqm 7-8,000 SKUs 29,000 sqm 5-7,000 SKUs 21,000 sqm 5-6,000 SKUs 16,000 sqm 5-6,000 SKUs Rhenus Rhenus Dirks Rhenus Katoen Natie Additional medium FCs: Strasbourg (FR), Birmingham (UK), Mühldorf (DE), Boleslawice (PL) Additional small FCs: Jirikov (CZ), Istanbul (TR) Capex per center: m 1) provided by partners 1) Including facility / building for big zooplus fulfillment center Investor & Analyst Presentation - Annual Report 2017 page 92

93 zooplus logistics structure is tailor-made for heavy and bulky products in inbound and outbound logistics zooplus logistics Tilburg, Netherlands Tilburg, Netherlands Antwerp: 16,000 sqm Logistics partner: Katoen Natie Antwerp, Belgium Antwerp, Belgium Source: zooplus Investor & Analyst Presentation - Annual Report 2017 page 93

94 zooplus fulfillment process Inbound logistics Warehousing Picking & packing Outbound preparation & loading Investor & Analyst Presentation - Annual Report 2017 page 94

95 Distribution to the customer with the leading local last mile providers» Last mile distribution with external partners (DSPs)» zooplus operates approx. 60 relations of line hauls (trunk) and direct DSP connections» At least two DSPs for every country offered for better customer service» Management of parcel allocation to FCs and DSPs by zooplus owned algorithms» Focus on delivery speed and efficiency / Fulfillment center (FC) Hubs (DSP) - shown are selected relations from FC to Hub of DSPs Investor & Analyst Presentation - Annual Report 2017 page 95

96 zooplus logistics system is an intelligent network solution between fulfillment centers and destination countries Example Cat s Best (cat litter): article flow between fulfillment centers and country of destination for a period of three months Fulfillment center PL WRO HOE TIL SXB ANR CHA BHX DE IT NL GB FR ES Country of destination Criteria for choice of logistics center 1 :» No. of products in parcel» Top seller/long-tail» DSP chosen» Available stock 1 selective Investor & Analyst Presentation - Annual Report 2017 page 96

97 Logistics cost differ by countries overall unit economics will further improve in logistics Logistics costs 1) % 18.4% best-in-class 23.2% 20.7% 12.2% 13.4% 15.5% (19.4%) (17.6%) (12.6%) (13.3%) (14.9%) (21.5%) zooplus logistics all-in zooplus logistics only variable (19.5%) PL CZ DE ES IT 2016 in % of sales Higher logistics cost ratios due to lower basket unit costs further improved 1) Inbound & outbound logistics, line haul, distribution, packaging as a percentage of sales Investor & Analyst Presentation - Annual Report 2017 page 97

98 Further logistics expansion and key priorities Three major focus points:» Set up sufficient capacity for expected growth in next years» Improve customer experience in terms of delivery speed» Increase efficiency Structural points:» Continue collaboration with external partners» Potentially integrate part of external assets for new fulfillment centers over next five years» Keep focus on asset light approach / Fulfillment center (FC) Potential FC under investigation Investor & Analyst Presentation - Annual Report 2017 page 98

99 IT infrastructure and resources

100 Technology environment specifically designed for zooplus business model» One central platform» Inhouse developed systems and standard systems» SAP Finance for Accounting since 01/2017» Central data warehouse on SAP Hana» Inhouse developed algorithms for: Google bidding Replenishment Pricing Order routing Parcel building Other Sales Channel Catalog Management Customer Relationship Management Business Analytics Sales Order Processing Finance Supplier and Article Management Operations zooplus specific/scalable - differentiation factor Investor & Analyst Presentation - Annual Report 2017 page 100

101 IT: ramp up and productivity of additional software development capacities» Significant IT development capacity built-up since 2017 will continue during 2018» Additional fourth internal IT hub in Vienna established beginning 2018» IT development organized into four separate product development centers (PDCs) IT product development (software development, DevOps) IT infrastructure incl. workplace Data & analytics incl. business intelligence Production systems and database operating Investor & Analyst Presentation - Annual Report 2017 page 101

102 Strong internal IT development teams as driving force for future developments and differentiation Munich, DE Krakow, PL Madrid, ES Vienna, AT Bucarest, RO (External partner)» Four internal IT hubs plus one external hub» More than 150 IT developers further built-up planned» Additionally external experts as freelancers» Focus on internal systems, processes & algorithms and product features Strong differentiating factor towards the competition 1 1 excluding amazon Investor & Analyst Presentation - Annual Report 2017 page 102

103 Most efficient operator

104 zooplus supply chain Inbound Website Fulfillment Delivery Customer service» More than 200 suppliers» 8,000 SKUs» 5 logistic partners» 9 major sourcing countries» One platform» 30 countries and 25 languages» zooplus, bitiba» 12 currencies» 11 fulfillment centers» > 80,000 parcels per day» 2,500 logistics people» Line hauls» Leading local postal service providers» Low returns (< 2% of sales)» Around 400 customer agents» All relevant languages» 7 days a week Investor & Analyst Presentation - Annual Report 2017 page 104

105 Continued focus on retention and strong sales growth as main drivers for future profitability Retention Sales growth Margin & cost structure Profitability Strong sales growth means» Keep the competition including amazon at a distance» Faster reach of dominant market position» Better purchasing terms in all areas (COGS & other services)» More efficiency gains» More scale in overhead Investor & Analyst Presentation - Annual Report 2017 page 105

106 Markets continue to be price competitive zooplus well prepared to defend its strategic position Gross margin & Total margin 1) (% of sales) 40.9% Other income Gross margin 5.0% 35.9% 32.8% 31.6% 5.2% 4.4% 27.6% 27.2% 29.8% 29.2% 4.8% 4.8% 25.0% 24.4%» Continued focus on sustainable dog/cat food customers for higher lifetime value» Margin reduction impacted by higher food share and exchange rate effects» Ongoing price competition in the markets» zooplus will defend its high customer retention ) gross margin + other income on sales Investor & Analyst Presentation - Annual Report 2017 page 106

107 Product categories have different impact on gross margin development Target Continued strong sales growth in all categories Gross margin drivers Food» Core assortment/ main driver for retention» Focus: competitive pricing Non-Food» Supplementary assortment» Focus: gross margin improvement Private label» Differentiating assortment» Focus: mid-term gross margin driver Share on zooplus sales % 17% 13% of food and cat litter Investor & Analyst Presentation - Annual Report 2017 page 107

108 Long-term margin uplift drivers will prevail Limiting factors Driving factors Retention» Price transparency» Strong competition» Fights for market share» Channel shift to online» Purchasing power» Private label share» Product differentiation» Market consolidation» Commoditized products Investor & Analyst Presentation - Annual Report 2017 page 108

109 zooplus will continue its strong effort to further improve cost leadership position in the category Total margin & Cost structure (in % of sales) 40.9% 32.8% 31.6% 29.8% 29.2% Total margin % 6.1% 24.0% 31.1% 1.8% 29.8% 1.5% 21.2% 20.1% 27.8% 28.8% 1.4% 1.7% 19.4% 19.8% 1.7% 5.6% 1.3% 1.1% 1.1% 1.0% 2.9% 3.5% 2.7% 3.0% 5.0% 3.9% 3.5% 3.2% 3.2% Advertising/ Marketing Logistics 2 Payment IT/Admin/ (incl. depreciation Personnel 3 & interest) 1 gross margin + other income on sales 3 all in, including LTI & SOP m logistics costs of 2017 reclassified to depreciation according to IAS 17 Investor & Analyst Presentation - Annual Report 2017 page 109

110 Comparison of cost structure significant advantage for zooplus Cost ratio - selected competitors 40% 43% 41% 48% 43% 29% Cost advantage for zooplus of more 10%-points Source: annual reports 2016 Fressnapf 2015: all costs except for costs of goods sold, including depreciation and interest Investor & Analyst Presentation - Annual Report 2017 page 110

111 Over the next years zooplus will continue to drive down costs 1 Marketing» Slightly higher spending in 2018» Continued focus on high efficiency 2 3 Logistics IT / Admin» Further cost efficiency and scale in FC costs and last mile» Value per parcel important cost driver» 2018 integration of additional FCs» Further scale expected 4 Personnel» Further scale expected» 2018 continued ramp-up of IT development resources and some other major functions Investor & Analyst Presentation - Annual Report 2017 page 111