Michael Hill International Ltd. · ASX:MHJ
Michael Hill International — Shareholder Meeting (October 2020)
46 slides from Michael Hill International's shareholder meeting presentation, Oct 27, 2020
Slide 1: Annual General Meeting presentations
27 October 2020 For personal use only Company Announcements Office ASX Limited Annual General Meeting presentations In accordance with the Listing Rules, enclosed are the presentations of the Chair, Chief Executive Officer and Chief Financial Officer, which will be delivered today at the Michael Hil
Slide 2: Chair's address
CHAIR’S ADDRESS Today I’d like to give you an overview of how we view the year that’s closed. Following that Daniel and Andrew will give more detail on our 2020 results, our current and future focus and a trading update for the recent quarter. 2020 was extraordinary. We started the year strongly, de
Slide 3: Dividends and CEO's address
As shareholders, you will be interested in Michael Hill’s position on dividends. Given the uncertain economic environment, and our desire to maintain a resilient balance sheet to withstand stress, the Board decided to not declare an end of FY20 dividend, as well as defer payment of the FY20 interim
Slide 4: Loyalty program and digital initiatives
Pleasingly, our long-awaited loyalty program was soft-launched digitally in October last year, and already has more than 260,000 members. This gives us the ability to capture customer data for future engagement. And as a result of the successful member pricing aspect of the program, we are experienc
Slide 5: FY20 digital sales, margin and COVID-19 store closures
• We delivered record digital sales for the year of $24.7m, up 54.7% against prior year, and representing a milestone 5% of total sales • Our focus on reimagining branded collections saw them represent a record 37.3% of total sales • Group gross margin declined for the year from 62% to 60.6%, predom
Slide 6: Retail fundamentals and Canadian opportunities
And next, Retail Fundamentals. We will further leverage our loyalty program to drive segmentation and personalisation with a focus on growing repeat purchasing customers and lifting margins. • The new Retail Incentive Scheme will continue to be a key driver for increasing profitable sales and reinvi
Slide 7: First quarter trading update
For the quarter, online sales were up 129% against FY20Q1, with digital initiatives delivering increased sales and margin across all markets and providing a favourable impact on group margin mix. For the quarter, digital channels represented 5.3% of total sales. Branded collections represented 43.3%
Slide 8: October 2020
For personal use only AGM presentation 27 October 2020
Slide 9: Important notice and disclaimer
For personal use only Important notice and disclaimer Certain statements in this announcement constitute forward-looking statements. Forward-looking statements are statements (other than statements of historical fact) relating to future events and the anticipated or planned financial and operational
Slide 10: Board of directors
For personal use only Gary Smith Independent NED Emma Hill Sir Michael Hill Chair, Audit & Risk Management Chair Founder Committee Rob Fyfe Independent NED Chair, People Jacquie Naylor Development & Janine Allis Independent NED Remuneration Committee Independent NED 3
Slide 11: Management and auditor
For personal use only Daniel Bracken, CEO Andrew Lowe, CFO Alison de Groot, Ernst & Young 4
Slide 12: Questions
Questions For personal use only Jewellery from our Mark Hill Collection 5
Slide 13: Voting
Voting For personal use only Rings from the Fenix Created Diamonds 6 for Michael Hill Collection
Slide 14: Chair's address
For personal use only Chair’s address Emma Hill From left: Grand Arpeggio and Grand Aria from our Sir Michael Hill Designer Bridal Collection, and a three stone ring from our Evermore Collection
Slide 15: CEO presentation: FY20 performance overview
For personal use only CEO presentation FY20 performance overview Rings from our Southern Star Collection
Slide 16: FY20 performance overview
FY20 performance overview For personal use only Strong retail fundamentals embedded within a disciplined framework providing a robust platform to enable a true omni-channel customer experience • Building on strong heritage foundations - evolving into a modern, differentiated, omni-channel jewellery
Slide 17: FY20 strategy execution: Unwavering focus on costs
FY20 strategy execution For personal use only • Unwavering focus on costs • Optimised retail and support office structures • Decisive cash preservation and cost management throughout COVID-19 store closure period and beyond • Consolidation of repairer network, delivering lower costs and improved cus
Slide 18: FY20 strategy execution: Loyalty
FY20 strategy execution For personal use only • Loyalty • Online roll-out in October 2019 • Over 260,000 members • Delivering higher ATV and gross margin • Member pricing attracting new customers and increasing gross margins • Building customer insights and segmentation customer ability Model wears
Slide 19: FY20 strategy execution: Digital explosion
FY20 strategy execution For personal use only • Digital explosion • Enhanced website with improved customer experience, checkout process and navigation • Launch of virtual appointments, virtual sales and virtual “try ons” • Direct selling from social media platforms and digital catalogues • Deliveri
Slide 20: FY20 strategy execution: Retail fundamentals
FY20 strategy execution For personal use only • Retail fundamentals • Launch of new retail incentive scheme delivering positive early results and improved gross margins • Deployed customer satisfaction program (NPS) • Completion of our cloud enabled ERP platform to optimise inventory and store profi
Slide 21: CFO presentation: FY20 results
For personal use only CFO presentation FY20 results Rings from the Fenix Created Diamonds for Michael Hill Collection
Slide 22: FY20 financial snapshot
FY20 financial snapshot For personal use only • Positive same store sales growth momentum FY20 FY19 Change continued throughout the year until COVID-19: o FY20Q1: AU +6.3%, NZ +9.8%, CA +13.4% Revenue $492.1m $569.5m -13.6% o FY20Q2: AU +1.4%, NZ +4.8%, CA +1.0% o FY20Q3 9wks: AU +1.8%, NZ +3.5%, Un
Slide 23: FY20 key performance results
FY20 key performance results For personal use only $25.7m +2.7% GROUP UNDERLYING TRADING1 EBIT SAME STORE SALES2 FY19: $34.6m GROWTH 6.3% 60.6% 37.3% $24.7m GROUP SAM E STORE 1 17 BR A N D E D GROUP D IGITASALES L SA L E S C O L L E CTIO N STO R E STO R E S G ROSS MARGI N +54.7% C LOSE D SA L E S O
Slide 24: Impact of COVID-19: Store trading days
Impact of COVID-19: Store Trading Days For personal use only • COVID-19 store closure periods: • AU: from 24 March for 5 to 10 weeks • NZ: from 24 March for 8 to 9 weeks • CA: from 20 March for 10 to 13 weeks • Australia progressively opened from May, with the store closure period representing ~15%
Slide 25: Group results
Group results For personal use only • Group revenue decreased by 13.6%, largely due to COVID-19 store closures • Estimated impact of COVID-19 store closure period ~$80m of revenue • Same store sales2 up 2.7% • Digital sales increased by 54.7% to a record $24.7m (FY19: $16.0m) • Gross margin decline
Slide 26: FY21 key initiatives – emphasis on Growth and Margin
For personal use only CEO presentation FY21 key initiatives – emphasis on Growth and Margin Rings from our Evermore Collection
Slide 27: Omni-Channel Opportunities
Emphasis on Growth and Margin For personal use only • Omni-Channel Opportunities • click and collect, click and reserve, ship from store, contactless collection, drop ship with key vendors • Expand online marketplace opportunities • Personal in-store and online jeweller appointments • Bespoke custom
Slide 28: Digital-First
Emphasis on Growth and Margin For personal use only • Digital-First • Leverage our loyalty program, Brilliance by Michael Hill • Enhance site user experience and navigation • Roll-out: virtual selling globally; new payment platforms; customer-centric delivery capabilities • Continue marketing invest
Slide 29: Building on retail fundamentals
Emphasis on Growth and Margin For personal use only • Building on retail fundamentals • Leverage loyalty program data to drive segmentation and personalisation to grow repeat purchasing customers and lift margins • Embed new retail incentive scheme, increasing profitable sales and reinvigorating ret
Slide 30: Canadian new frontiers
Emphasis on Growth and Margin For personal use only • Canadian new frontiers • New retail leadership structure delivering on retail fundamentals • Canadian productivity remains a genuine near term opportunity with ~ 8% increase in FY20H1 • Execute Canadian third party supply chain solution to accele
Slide 31: Product evolution
Emphasis on Growth and Margin For personal use only • Product evolution • Optimised merchandise structure with enhanced capabilities • Range and assortment rationalisation strategy aligned to refreshed product newness calendar and higher inventory turns • Leverage new ERP platform: right product, ri
Slide 32: Cost conscious culture
Emphasis on Growth and Margin For personal use only • Cost conscious culture • Disciplined fiscal mindset as a pillar of company culture • Implement global supply chain strategy to deliver significant operational efficiencies and cost benefits • Maintain cash preservation focus, while continuing to
Slide 33: FY21Q1 update: same store sales growth
FY21Q1 update For personal use only • Strong same store sales growth in all markets and channels. Same store sales for the quarter were up 7.3%, against FY20Q1 • Strong same store sales growth in all markets and channels Q1 same store sales (percentage variance to prior year) Same store sales reflec
Slide 34: FY21Q1 update: increased margin and gross profit
FY21Q1 update For personal use only • Increased margin and gross profit – margin growth in all markets and channels of 100 to 200 bps for the quarter, against FY20Q1, with gross profit growth outpacing sales • Strong same store sales growth in all markets and channels • Increased margin and gross pr
Slide 35: FY21Q1 update: sustained growth in digital sales
FY21Q1 update For personal use only • Sustained growth in digital sales. Online sales represented 5.3% of total sales, up 129% against FY20Q1, with digital initiatives delivering increased sales and margin across all markets and providing a favourable impact on group • Strong same store sales growth
Slide 36: FY21Q1 update: branded collection sales growth
FY21Q1 update For personal use only • Branded collection sales growth. Branded collections represented 43.3% of total product sales • Strong same store sales growth in all markets and channels • Increased margin and gross profit • Sustained growth in digital sales • Branded collection sales growth 1
Slide 37: FY21Q1 update: loyalty program
FY21Q1 update For personal use only • Brilliance by Michael Hill loyalty program. Membership now exceeds 260,000, an 80.9% lift from June 2020 year end • Strong same store sales growth in all markets and channels • Increased margin and gross profit • Sustained growth in digital sales • Branded colle
Slide 38: FY21Q1 update: robust balance sheet and cost focus
FY21Q1 update For personal use only • Robust balance sheet and disciplined cost focus. Diligent management of capital expenditure, working capital, inventory and a sustained, deliberate focus on CODB helped to maintain a healthy net cash position at quarter end • Strong same store sales growth in al
Slide 39: Questions
For personal use only Questions Bridal sets from our Evermore Collection
Slide 40: Business of the Annual General Meeting
For personal use only Business of the Annual General Meeting Ring from our Solitaire by Michael Hill Collection
Slide 41: Financial statements and reports
Financial statements and reports For personal use only • Audited financial statements • Directors’ report • Auditor’s report. Jewellery from our Spirits Bay Collection 34
Slide 42: Resolution 1: Remuneration report
Resolution 1: Remuneration report For personal use only To consider and if thought fit, pass the following advisory resolution: Pendants from our Everlight Collection “That the Remuneration Report for the year ended 28 June 2020 (as set out in the Directors’ Report) is adopted.” FOR AGAINST OPEN ABS
Slide 43: Resolution 2: Election of Jacqueline Naylor as a director
Resolution 2: Election of Jacqueline Naylor as a director For personal use only To consider and if thought fit, pass the following resolution as an ordinary resolution: “That Ms Jacqueline Naylor (appointed as a director of the Company on 15 July 2020) who retires in accordance with ASX Listing Rule
Slide 44: Resolution 3: Re-election of Rob Fyfe as a director
Resolution 3: Re-election of Rob Fyfe as a director For personal use only To consider and if thought fit, pass the following resolution as an ordinary resolution: “That Mr Robert Fyfe who retires by rotation in accordance with ASX Listing Rule 14.4 and Rule 38.6 of the Company’s Constitution and, be
Slide 45: Resolution 4: Amendments to the Constitution
Resolution 4: Amendments to the Constitution For personal use only To consider and if thought fit, pass the following resolution as a special resolution: “That in accordance with section 136(2) of the Corporations Act, the Company’s Constitution be amended as set out in the Explanatory Notes with im
Slide 46: Thank you
For personal use only Thank you
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