Shaver Shop Group Limited MARKET EYE CONFERENCE 11 April 2018 Cameron Fox CEO & Managing Director 1
INTRODUCTION TO SHAVER SHOP Market leading specialist personal care retailer founded in 1986 115 stores across AU and NZ market (106 corporate owned and operated) No store closures in over 30 years of operation All mature stores store in AU market are profitable Unique and differentiated business model Majority of best selling product lines are exclusive to Shaver Shop Average store sales in excess of $25,000 psm with 41.5% gross profit margin Strong consumer brand awareness of 87% (up from 83% 12 months ago) Strong female clientele base accounting for 53% of Shaver Shop customers Experienced management team with average tenure ~ 6 years Diverse & experienced Board of Directors Strong cash flow business with low gearing 2
PERFORMANCE TRENDS Sales up 19% to $93.4m Normalised* EBITDA up 16.3% to $11.7m 100.0 93.4 14.0 Sales (A$m) 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 33.7 62.2 78.5 Pro Forma EBITDA (A$m) 12.0 10.0 8.0 6.0 4.0 2.0 4.6 9.5 10.0 11.7 0.0 1H FY15 1H FY16 1H FY17 1H FY18 0.0 1H FY15 1H FY16 1H FY17 1H FY18 * 1H FY18 reported results adjusted for one off impact of supplier liquidations ($0.49m). 3
KEY GROWTH DRIVERS Product New Stores Customer Service Excellence Omni Retail Capabilities Store Buy backs Customers want to look and feel good & we offer a range of product solutions to support their needs; Continue to bring to market product innovation that drives category growth Continue to develop exclusive product range offering Continue to expand into high growth (low market share) categories including female beauty and wet shaving New store locations provide greater convenience for our customers whilst driving earnings growth On average 8 10 new store per annum Greenfield stores generally delivering in line with business case proposal and expectations Plans for 140 145 stores across AU and NZ market within the next 2 to 3 years (currently 116 stores) Team service standard remains a key differentiator in our business; Technical products in nature requiring significant investment in staff training and education Strong emphasis of driving product knowledge & customer service excellence across our store network Introduction of multiple support tools to drive consistency in brand standards e.g. customer conversion Systems selling approach supports increased basket size and value Evolving our omni retail capabilities remains a key imperative; On line sales +67% on prior year and now account for ~10% of total sales Introduction of Click and Collect across select stores Continued website enhancements to drive improved user experience culminating in conversion Optimisation of SEM activity to drive improved ROI and conversion rates Introduction of Buy Now Pay later payment options Continue to assess the opportunity to buy back franchise stores on a case by case basis Company has largely transitioned from franchise to corporate store network (16 corporate stores in FY 13 to 106 today) 9 franchise stores remaining in network with estimated consolidated annual earnings $2.5M+per annum Remaining franchise stores are general A grade locations (strong trading stores) Company will remain disciplined in its approach minimum ROCE expectations on buy backs of 20% 4
1H FY18 KEY HIGHLIGHTS Solid like for like sales and earnings growth in 1H FY18 in a challenging December retail environment Store sales Total Sales up 19.0% to $93.4m on prior corresponding period (pcp) 1H FY18 LFL Corporate Store Sales growth +5.5% (pcp 0.6%) supported by multi unit reseller channel, Franchise +0.8% (pcp +0.4%) YTD network web sales growth +66.6% on the back of continued investments in e commerce capability 7 new greenfield stores launched in 1H FY18 Earnings Normalised EBITDA up 16.3% to $11.7m in 1H FY18 (pcp $10.0m) Normalised gross profit margin 41.5% (pcp 42.5%) down c.100 bps (product/category mix & multi unit sales) Normalised Cost of Doing Business 30.4% of sales (pcp 32.2%) down c.180 bps Normalised cash NPAT $8.1m up 16.9% (pcp $6.9m) Growth Net CAPEX $1.9m opened 7 new greenfield sites, ongoing e commerce and technology investments Completed 4 franchise buybacks net investment $4.5m (including net working cap) Moderation in Multi unit reseller channel contribution (versus 2H FY17) Omni channel technology transformation continuing across CRM, e commerce, finance & operations Capital Structure 1H FY18 operating cash flow up 44% to $21.8m (pcp $15.1m) Net cash $2.2m at 31 December 2017 (gross debt $7.3m) Low gearing gross debt $7.3m following $4.5m debt repayment in 1H FY18 Interim dividend up 12.5% 1.8 cents per share fully franked (pcp 1.6 cents per share fully franked) On market share buyback announced in Oct 2017 5 Variances refer to FY18 actual and normalised (where applicable) results compared to actual and pro forma FY17 results
KEY PRIORITIES H2 FY18 1. Major new supplier launch (Q4) 2. Evolving our omni retail capabilities 3. Evolution of store design 4. Continued expansion across female beauty category 5. Introduction of buy now pay later option in store (Q4) 6. Technology transformation project 7. Phase II of subscription program 8. Continued development & focus across new sales channels 6
SHAVER SHOP TO LAUNCH > Good Hair Day, commonly known as ghd, is a manufacturer of hair care products & leads the market for hair straightening irons > Leading global beauty brand known to women worldwide > A leader in hair styling innovation > Significantly increases Shaver Shop s relevance and range for women > Range includes: stylers, dryers, curlers, brushes and hair styling accessories > Dedicated merchandising module in store > The addition of ghd range complements Dyson Supersonic, Dafni, StylPro, Parlux as well as core range offered by other global brands (e.g. Philips & Braun) > No material impact to FY 18 earnings expected (noting launch date of end of May 18) 7
EVOLVING OMNI RETAIL CAPABILITIES > 1H FY18 network web sales growth up 67% driven by significant e commerce enhancements both in online user experience and fulfilment efficiencies > Continue website enhancements to improve traffic flow & create unique and engaging customer experiences > Launch foundational CRM capability to deliver 360 degree view of customer and improved customer journeys > Enhanced subscription offering (wet shave) > Use CRM data to inform launch of loyalty program and increased targeted and personalised content > Launch leading buy now, pay later solution in store 8
NEW STORE DESIGN > Store designs continue to evolve to support an engaging in store customer experience. Refer latest store design planned for Southland VIC. > Touch and feel units across men s electric shavers > In store display signage to better segment product categories > Increased presence and linear wall space dedicated to female beauty & hair styling products. > Selectively review opportunities to upsize stores in high performing locations (pending negotiation of suitable terms) 9
IMPORTANT NOTICE AND DISCLAIMER 10 This management presentation ( Presentation ) has been prepared by Shaver Shop Group Limited ACN 150 747 649 ( Shaver Shop ) and contains general background information about Shaver Shop, its subsidiaries and their activities which is current at the date of this Presentation. Summary Information The information contained in this Presentation is of a general nature and does not purport to be complete nor does it contain all the information which a prospective investor may require in evaluating a possible investment in Shaver Shop or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Cth). This Presentation should be read in conjunction with Shaver Shop s other periodic and continuous disclosure announcements lodged with ASX, which are available at www.asx.com.au (Shaver Shop ASX Code: SSG). This Presentation is not intended to be relied upon as advice to investors or potential investors in Shaver Shop and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with our without professional advice, when deciding if an investment is appropriate. Disclaimer Neither Shaver Shop, its related bodies corporate nor any of their respective officers, directors, employees, advisers and agents (Shaver Shop Parties) warrant the accuracy or reliability of the information contained in this Presentation. To the maximum extent permitted by law, each of the Shaver Shop Parties disclaims any responsibility and liability flowing from the use of the information contained in this Presentation by any party. To the maximum extent permitted by law, the Shaver Shop Parties do not accept any liability to any person, organisation or entity for any loss or damage suffered as a result of reliance on this Presentation. Past performance Past performance, including past share price performance and historical information in this Presentation, is given for illustrative purposes only and cannot be relied upon as an indicator of, and provides no guidance as to, future performance of Shaver Shop, including future share price performance. The historical information contained in this Presentation is not represented as being indicative of Shaver Shop s views on its future financial condition and/or performance. Forward looking statements This Presentation contains certain forward looking statements and comments about future events, including Shaver Shop s expectations about the performance of its business. Forward looking statements can generally be identified by the use of forward looking words such as expect, anticipate, likely, intend, should, could, may, predict, plan, propose, will, believe, forecast, estimate, target and other similar expressions. Indications of and any guidance on future earnings or financial position or performance of Shaver Shop are also forward looking statements. Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward looking statements will not be achieved. Shaver Shop s IPO Prospectus dated 7 June 2016, a copy of which is available at www.asx.com.au (Shaver Shop ASX Code: SSG), contains details of a number of key risks associated with an investment in Shaver Shop. Many of these risks are beyond the control of Shaver Shop. Should one or more of these risks or uncertainties materialise, or should any assumption underlying any forward looking statement contained in this Presentation prove incorrect, Shaver Shop s actual results may differ materially from the plans, objectives, expectations, estimates, and intentions expressed in the forward looking statements contained in this Presentation. As such, undue reliance should not be placed on any forward looking statement. Shaver Shop is providing the information contained in this Presentation as at the date of this Presentation and, except as required by law or regulation (including the ASX Listing Rules), does not assume any obligation to update any forward looking statements contained in this Presentation as a result of new information, future events or developments or otherwise. Pro forma and normalised financial information This Presentation contains pro forma and normalised financial information. The pro forma and normalised financial information and past information provided in this Presentation is for illustrative purposes only and is not represented as being indicative of Shaver Shop s views on its future financial condition and/or performance. The pro forma and normalised financial information has been prepared by Shaver Shop in accordance with the measurement and recognition requirements, but not the disclosure requirements, of applicable accounting standards and other mandatory reporting requirements in Australia. Shaver Shop uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are referred to as non IFRS financial information. Shaver Shop considers that this non IFRS financial information is important to assist in evaluating Shaver Shop s performance. The information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. In particular this information is important for comparative purposes with pro forma information in Shaver Shop s Prospectus. For a reconciliation of the non IFRS financial information contained in this Presentation to IFRS compliant comparative information, refer to the Directors Report that forms part of the Shaver Shop Group Limited Consolidated Financial Report that has been lodged with the ASX. All dollar values in this Presentation are in Australian dollars (A$), unless otherwise specified. 10
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