Woolworths Holdings Limited · JSE:WHL
Woolworths — FY2014 Earnings Presentation
34 slides from Woolworths's earnings presentation, 2014
Slide 1: Woolworths Holdings Limited 2014 Year End Results
Slide 2: Slide 2
Slide 3: Disclaimer and Presentation Outline
DISCLAIMER This presentation is not for distribution, directly or indirectly, in or into the United States (including its territories and dependencies, any State of the United States and the District of Columbia), Canada and Japan. This presentation includes certain “forward-looking statements” that
Slide 4: Review of the Year (52:52)
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 REVIEW OF THE YEAR (52:52) • Food had another year of exceptional outperformance • Good performance by Clothing in a highly competitive market • Country Road Group profits increased over 50% • Solid above-market performance from WF
Slide 5: Clothing & GM (52:52)
WOOLWORTHS CLOTHING & GM (52:52) • Clothing sales in South Africa (including Country Road Group brands) up 10.6%, with comparable sales up 8.6% - Grew market share in highly promotional market • Gross profit margin increased from 46.4% to 46.7% - Sourcing gains continue - Offset by investment in ent
Slide 6: Food (52:52)
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 WOOLWORTHS FOOD (52:52) • Strong performance well ahead of the market, with total sales up 14.8% and comparable sales up 10.7% - Supermarket strategy working well • Growth ahead of the market every month since September 2011 • Gros
Slide 7: Stores and Country Road Group
WOOLWORTHS STORES • Building scale and reach - Highest space growth in Woolworths history - “Make big bigger” strategy and new supermarkets (Waterstone) highly successful - Africa and local franchise conversions almost complete • Renewed focus on the customer and service - Leveraging SA capability i
Slide 8: Financial Review and Financial Overview
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 FINANCIAL REVIEW REEZA ISAACS WHL / 10 FINANCIAL OVERVIEW 52:52 weeks 52:53 weeks Group turnover Up 14.4% to R39.7bn Up 12.7% Adjusted profit before tax Up 20.1% to R4.4bn Up 18.2% HEPS – Adjusted Up 17.1% to 398.0 cps Up 15.2% HEP
Slide 9: Group Income Statement
GROUP INCOME STATEMENT 52 weeks 52 weeks Jun 2014 Jun 2013 % change Rm Rm Woolworths Clothing & GM 2 029 1 816 11.7 Woolworths Food 1 259 1 043 20.7 Country Road Group 891 588 51.5 WFS (50% of PAT) 181 180 0.6 Woolworths Treasury 15 16 (6.3) Adjusted profit before tax 4 375 3 643 20.1 Adjustments (2
Slide 10: Income Statement: Woolworths Clothing & GM
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 INCOME STATEMENT WOOLWORTHS CLOTHING & GM 52 weeks 52 weeks Jun 2014 Jun 2013 % Rm Rm change Turnover 11 505 10 552 9.0 Cost of sales 6 132 5 659 8.4 Gross profit 5 373 4 893 9.8 Other revenue 18 14 Expenses 3 364 3 096 8.7 Store c
Slide 11: Income Statement: Woolworths Food
INCOME STATEMENT WOOLWORTHS FOOD 52 weeks 52 weeks Jun 2014 Jun 2013 % change Rm Rm Turnover 19 694 17 149 14.8 Cost of sales 14 711 12 758 15.3 Gross profit 4 983 4 391 13.5 Other revenue 73 74 Expenses 3 799 3 426 10.9 Store costs 2 555 2 269 12.6 Other operating costs 1 244 1 157 7.5 Operating pr
Slide 12: Woolworths Expenses
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 WOOLWORTHS EXPENSES 52 weeks 52 weeks Jun 2014 Jun 2013 % Rm Rm change Store costs 4 683 4 159 12.6 Other operating costs 2 480 2 363 5.0 General operating costs 2 145 2 011 6.7 Amortisation of reacquired rights 84 76 IFRS 2 charge
Slide 13: Income Statement: Country Road Group
INCOME STATEMENT COUNTRY ROAD GROUP 52 weeks Jun 2014 Jun 2013 % A$m A$m change Turnover 849 706 20.3 Cost of sales 323 269 Gross profit 526 437 20.4 Other revenue 4 3 Expenses 432 373 15.8 Store costs 308 264 16.7 Other operating costs 124 109 13.8 Adjusted operating profit 98 67 46.3 Investment in
Slide 14: Income Statement: Woolworths Financial Services
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 INCOME STATEMENT WOOLWORTHS FINANCIAL SERVICES Consolidated pro forma Jun 2014 % to Jun 2013 % to % income statement Rm book Rm book change Interest income 1 473 17.7 1 250 17.0 17.8 Interest paid 416 5.0 352 4.8 18.2 Net interest
Slide 15: Woolworths Financial Services Book Performance
WOOLWORTHS FINANCIAL SERVICES BOOK PERFORMANCE 8 821 9 000 10% 7 958 8 000 6 872 8% 7 000 6 344 6 000 6% 5 000 4.8% 4 000 3.2% 3.0% 4% 3 000 2.7% 1 858 1 870 1 927 1 930 2 000 2% 1 000 Jun 11 Jun 12 Jun 13 Jun 14 Gross book value (Rm) Total active accounts (000's) Impairment charge* (%) * Restated t
Slide 16: Balance Sheet
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 BALANCE SHEET Jun 2014 Jun 2013 % Rm Rm change Assets Property, plant and equipment, intangible assets and loans 6 571 5 312 23.7 Investment in JVs and associate 801 773 3.6 Inventories 3 436 2 901 18.4 Accounts receivable, tax and
Slide 17: Cash Generation and Capital Expenditure
CASH GENERATION R5 636m 5 500 5 000 (R474m) (R106m) 4 500 4 000 (R1 047m) 3 500 3 000 2 500 (R1 314m) 2 000 1 500 1 000 500 (R2 072m) (R396m) (R72m) (R169m) Cash flow Working Finance Taxation Net capex Dividends BNSG & Share David Jones from capital, net costs franchise scheme debt & operating borro
Slide 18: Return on Equity and Earnings and Distribution
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 RETURN ON EQUITY 49.5% 50% 46.3% 46.7% 44.6% 39.4% 40% 30% 20% 13.6% 13.2% 13.2% 12.4% 13.4% 10% 0% Jun 10 Jun 11* Jun 12* Jun 13* Jun 14* ROE* WACC * Unrealised forex losses/gains excluded from June 2011 WHL / 29 EARNINGS AND DIST
Slide 19: Guidance
GUIDANCE WOOLWORTHS • Food inflation to moderate slightly from FY2014; Clothing & GM price movement expected to continue at higher levels (especially in H1) due to weak rand • Space growth planned for FY2015: 4.8% in Clothing & GM; 9.1% in Food • Gross profit margins to be broadly maintained • Posit
Slide 20: Guidance: Group
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 GUIDANCE GROUP • Taxation - effective tax rate of 28% in SA and 30% in Australia • Capex – R2.7bn planned for FY2015, including investment in distribution centres in SA and Australia • Preference dividend – BEE scheme reaches matur
Slide 21: Strategic Focus
STRATEGIC FOCUS IAN MOIR WHL / 34 STRATEGIC FOCUS 1 BUILD STRONGER, MORE PROFITABLE, CUSTOMER RELATIONSHIPS 2 BE A LEADING FASHION RETAILER IN THE SOUTHERN HEMISPHERE 3 BECOME A BIG FOOD BUSINESS 4 BECOME AN OMNI-CHANNEL BUSINESS 5 EXPAND INTO AFRICA 6 SIMPLE, CONVENIENT AND REWARDING FINANCIAL SERV
Slide 22: Build Stronger, More Profitable Customer Relationships
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 1 BUILD STRONGER, MORE PROFITABLE CUSTOMER RELATIONSHIPS Data analytics enable us to drive sales and cross-sell opportunities, and gain a better understanding of our customers WOOLWORTHS • 3m active cardholders tracking 71% of sale
Slide 23: Be a Leading Fashion Retailer in the Southern Hemisphere
2 BEIN THE A LEADING FASHION RETAILER SOUTHERN HEMISPHERE COUNTRY ROAD GROUP • Drive and grow four clearly differentiated brands • Growth of David Jones concession business - Increase existing pads within David Jones to allow appropriate representation - Introduce Woolworths brands to the majority o
Slide 24: Become a Big Food Business
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 3 BECOME A BIG FOOD BUSINESS COMPLETE THE SHOP • Total SKUs now at 11 000 from 6 400 five years ago – to grow to 12 000 to enhance depth and breadth of range • Continue to build big stores and make stores bigger • Expand convenienc
Slide 25: Expand into Africa; Financial Services
5 EXPAND INTO AFRICA • Significant growth in sales and profits • All franchise conversions completed smoothly • Zambia now wholly owned • Aggressively seeking new space and investing in extensions / modernisations in all 11 markets • Price reductions driving volumes • Successful trials of loyalty pr
Slide 26: Drive Synergies and Efficiencies; Good Business Journey
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 7 DRIVE SYNERGIES AND EFFICIENCIES DRIVE SCALE BENEFITS ACROSS THE SOUTHERN HEMISPHERE • Single sourcing approach with combined volumes to drive improved product development, price accessibility and margins DISTRIBUTION CAPACITY •
Slide 27: David Jones Acquisition
DAVID JONES ACQUISITION COMPELLING STRATEGIC RATIONALE • Strong platform for continued expansion – a mirror image of WHL with meaningful size, aligned values and aligned customers in an attractive market, well known to WHL • Ensures strong defensive position against northern hemisphere entrants in b
Slide 28: Outlook
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 OUTLOOK IAN MOIR WHL / 48 OUTLOOK • South African economy will continue to be constrained • Expect the upper income consumer to be relatively resilient • Australian economy and retail environment gaining traction • First 8 weeks of
Slide 29: Questions? Thank You
QUESTIONS? THANK YOU WHL / 50 ADDITIONAL INFO WHL / 51
Slide 30: Trading Space and Store Locations
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014 TRADING SPACE Projected Projected Projected Jun 2014 Jun 2013 % Jun 2015 % Jun 2016 % Jun 2017 % 000m2 000m2 change 000m2 change 000m2 change 000m2 change Woolworths Clothing & GM 414 398 4.0 434 4.8 468 7.8 493 5.3 South Africa 37
Slide 31: Contribution to Sales; Country Road Group Income Statement
CONTRIBUTION TO SALES WOOLWORTHS FINANCIAL SERVICES % of sales spent on Woolworths cards Jun 2014 Jun 2013 Clothing & GM 25.9% 27.6% Food 12.3% 13.2% Aggregate Woolworths card contribution 17.5% 18.9% Credit card 1.3% 1.1% Aggregate Woolworths and credit card contribution 18.8% 20.0% WHL / 54 INCOME
Slide 32: Woolworths Holdings Limited Annual Results Analyst Presentation 2014
WOOLWORTHS HOLDINGS LIMITED ANNUAL RESULTS ANALYST PRESENTATION 2014
Slide 33: Slide 33
Slide 34: www.woolworthsholdings.co.za
www.woolworthsholdings.co.za