Lovisa Holdings Ltd. · ASX:LOV
Lovisa — FY2016 Earnings Presentation
25 slides from Lovisa's earnings presentation, Aug 23, 2016
Slide 1: 2016 Full Year Results Presentation
For personal use only LOVISA HOLDINGS LIMITED (LOV) 2016 full year RESULTS PRESENTATION shane fallscheer ceo graeme fallet cfo 23rd august 2016 1
Slide 2: For personal use only
Some of the information contained in this For personal use only presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect the current intentions, plans, expectations, assumptions and beliefs about fut
Slide 3: FY2016 Snapshot
fy2016 snapshot 250 TOTAL STORE NUMBERS For personal use only LFL SALES +5.5% REVENUE UP GROSS PROFIT UP 14.3% TO 9.8% TO $153M $114M EBIT SUCCESSFUL UK PILOT FINAL DIVIDEND OF 2.0CPS, $24.2M PROGRAM FULLY FRANKED 3
Slide 4: Contents
CONTENTS For personal use only Financial Highlights Profit and Loss Statement Trading Performance Store Network and Capital Expenditure Cashflow and Balance Sheet Capital Management UK Pilot Program Trading Outlook Summary 4
Slide 5: Financial Highlights
financial highlights LIFT IN UNDERLYING EARNINGS BEFORE FX AND IPO proforma ADJUSTMENTS • EBIT of $24.2m and Gross Margin of 74% as per prior guidance For personal use only • Result impacted by the devaluation of the Australian Dollar on inventory purchases and currency losses on translation of the
Slide 6: Profit and Loss Statement
PROFIT AND LOSS STATEMENT LIFT IN UNDERLYING EARNINGS BEFORE FX AND IPO proforma ADJUSTMENTS PROFORMA EARNINGS ADJUSTED FOR IPO AND PUT OPTION IN FY15 For personal use only ($’m) FY16 FY15 Variance (%) Actual Proforma Proforma Revenue 153.5 134.3 +14.3% Gross profit 113.6 103.5 +9.8% EBITDA 30.3 30.
Slide 7: Trading Performance: Sales
trading performance sales comparable sales up 5.5% $153.5m For personal use only 160 $134.3m 140 120 $105.7m 100 $70.3m 80 60 40 20 FY13 FY14 FY15 FY16 • Total Global Sales up 14.3% to $153.5m; • Australia and New Zealand up 6% to $108m • Rest of world expansion continues up 41% to $45m • Sales mome
Slide 8: Trading Performance: Sales by Country
trading performance sales international sales now 36% of group sales For personal use only • South African sales lifted by 71% to Country ($AUD) FY16 FY15 Variance $18.2m following full year of the 2015 Australia 98,823 94,839 4.2% acquisition New Zealand 9,578 7,373 29.9% • Some impact following th
Slide 9: Trading Performance: Gross Margin
trading performance gross margin gross margin buffeted by devaluation of aud • Gross profit increased 9.8% to $113.6m For personal use only Gross Margin at Constant Currency* • Gross Margin for the year was 74% as per FY16 FY16 FY15 guidance following significant foreign currency Currency USD 0.752
Slide 10: Trading Performance: Cost of Doing Business
TRADING PERFORMANCE COST OF DOING BUSINESS COST OF DOING BUSINESS (CODB)% MAINTAINED DURING THE YEAR For personal use only • Total operating costs remain well controlled 70% • During the year increased investment in 60% offshore rollout and bench strength 50% • Full year run rate of the FY16 investm
Slide 11: Store Growth
STORE GROWTH continued international expansion with a further 43 stores For personal use only opening during the year • Number of international stores growing with offshore markets now 42% of the network Store number growth FY16 FY15 VAR • Store closure program associated with the 2015 South African
Slide 12: Cash Flow
cash flow strong cash conversion and inventory management For personal use only • Cashflow from operations lifted 26% to $32m (A$’000s) FY16 FY15 with operating cash conversion at 107% Cash from operating activities 32,416 25,668 Net interest paid (674) (250) • Tax payments running ahead of earnings
Slide 13: Balance Sheet
balance sheet healthy balance sheet with low operating leverage For personal use only • Disciplined inventory management in the (A$’000s) FY16 FY15 second half with inventories maintained at Net Cash 4,729 2,343 Receivables 2,293 2,147 prior year levels despite store growth and Inventories 15,034 15
Slide 14: Capital Structure and Key Ratios
capital STRUCTURE AND KEY RATIOS investment in global footprint to increase For personal use only • Capital expenditure to increase to circa $12m (A$’000s) FY16 FY15 for 2017 Net Cash 4,729 2,343 Debt 12,000 12,000 • Store rollout particularly in the UK Net Debt 7,271 9,657 • Store refurbishment pro
Slide 15: UK Pilot Program Decision to Proceed
uk pilot program decision to proceed uk pilot program supports a continued rollout of the uk market For personal use only • Embarked on pilot program in November 2015 to determine feasibility of the UK market • Opened Leeds store in November 2015 with a further 2 stores at Bromley and Brighton in Ju
Slide 16: Outlook
outlook • We have experienced a positive start to FY17 For personal use only • In July we opened a new Vietnam franchise territory. • We expect FY17 to be a year of further growth and are targeting 20 to 30 new stores for the year • Same store sales target consistent with prior year targets of betwe
Slide 17: Summary
summary • EBIT of $24.2m and 74% gross margin as per guidance For personal use only • Lift in underlying earnings after adjusting for foreign currency and IPO adjustments following same store sales growth of 5.5% • International expansion continued with a further 43 stores opening during the year an
Slide 18: Questions
For personal use only questions 18
Slide 19: ASIC Regulatory Guide Disclosing non-IFRS financial information
APPENDIX 1 ASIC Regulatory Guide 230 Disclosing non-IFRS financial information In December 2011 ASIC issued Regulatory Guide 230. To comply with this Guide, Lovisa Holding Limited is required to make a clear statement about the non-IFRS For personal use only information included in the Profit announ
Slide 20: Reconciliation of statutory EBIT to proforma and constant currency EBIT
appendix 2 Reconciliation of FY15 statutory EBIT to proforma EBIT For personal use only (A$’000s) FY15 Consolidated statutory EBIT 37,470 Change in provision for share buy back (14,756) IPO costs 2,115 Proforma EBIT 24,829 Reconciliation of FY16 statutory EBIT to constant currency EBIT (A$’000s) FY1
Slide 21: Board and Management Changes
appendix 3 board and management changes For personal use only Michael Kay Michael is a qualified lawyer and brings a wealth of commercial experience to Lovisa. Michael was CEO and Chairman Independent Managing Director of listed salary packaging business McMillan Shakespeare, a position he held for
Slide 22: Board and Management Changes
appendix 3 board and management changes For personal use only Steve Doyle Steve has over 28 years of retail experience both in Australia and Internationally with the past 12 years at Super Global General Manager Retail Group. Most recently as Managing Director of BCF, Steve developed this chain thro
Slide 23: Customer Profile and Regional Pricing Structure
appendix 4 customer profile and regional pricing structure For personal use only ENTRY MEDIAN ELEVATED She’s fashion conscious and on trend. She shops AUD for everyday looks, key fashion trends and special $6.99 $9.99 $16.99 $49.99 occasions ENTRY MEDIAN ELEVATED GBP £3.5 £5 £9 £25 ENTRY MEDIAN ELEV
Slide 24: Store Network Operating Snapshot
appendix 5 store network operating snapshot For personal use only Country Stores Labour cost Occupancy cost Australia 146 New Zealand 18 Malaysia 14 Singapore 18 South Africa 34 United Kingdom 1 Middle East 16 N/A - Franchise territory N/A - Franchise territory Vietnam 0 N/A - Franchise territory N/
Slide 25: Global Brand Strategy
appendix 6 global brand strategy For personal use only Vision • Internationally recognized brand • Global footprint • Brand of choice for fast fashion jewellery Growth Engine • High Margin business operating in small store footprint • Fit out cost generally low with compelling return and pay back pe