Afg International Company · TADAWUL:4240
Afg International — Fawaz Abdulaziz Alhokair — Investor Presentation (March 2022)
46 slides from Afg International's investor presentation, March 2022
Slide 1: Investor Presentation
Investor Presentation March 2022 Fawaz Abdulaziz Alhokair Co. (Tadawul: 4240)
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for use as an investor presentation for Fawaz Abdulaziz Alhokair Co. (the “Company”). By attending or by reading this presentation, you agree to be bound by the following limitations. The information contained in this presentation is for backgrou
Slide 3: About Alhokair
About Alhokair
Slide 4: The leading retail franchiser
The leading retail franchiser The leading franchise retailer in Saudi Arabia, and the first choice for brand partners seeking exposure to strategic markets 1,684 stores* c.471k sqm Kazakhstan Balkans 11 countries** Georgia Armenia Azerbaijan Leaders in KSA Lebanon Morocco Iraq 1,047 Saudi stores Jor
Slide 5: Differentiated brand portfolio; diverse revenues
Differentiated brand portfolio; diverse revenues Our Brand Portfolio Is Our Competitive Advantage & Transformation Driver to a Lifestyle Destination Targeting most consumer Diversifying Successful relationship Evolving brand mix 85 brands* segments through economy and fast fashion F&B offering with
Slide 6: Our market
Our market The Saudi retail and F&B sectors enjoy strong fundamentals underpinned by favorable demographics, evolving lifestyles and low e-commerce penetration Supportive Growing F&B Retail growth driven Supportive demographics sector by e-commerce infrastructure 62% of Saudis between 6% p.a. growth
Slide 7: Revenue breakdown – 9M-FY22
Revenue breakdown – 9M-FY22 Revenue by division Revenue by channel Revenue by geography 3.8% 4.0% 17.2% 9.8% 3.4% 8.1% 96.2% 74.7% 82.8% KSA Retail F&B Int'l Retail Store Online KSA CIS Egypt Others Fawaz Abdulaziz Alhokair Co. Investor Presentation 7
Slide 8: Our vision
Our vision Our vision is to be the leading lifestyle retailer of choice in Saudi Arabia and our selected strategic markets 01 02 03 04 Expand scale and reach to become franchisor of .Expand portfolio, modernize network and improve Improve omnichannel capabilities by Develop effective and efficient o
Slide 9: Operational Upgrade Strategy
Operational Upgrade Strategy
Slide 10: Our Operational Upgrade Strategy
Our Operational Upgrade Strategy Portfolio optimization 01 02 Operational excellence Optimize store network Ongoing FY22 IT, finance and other optimization initiatives Exit weak/non-performing markets FY22 FY22 Revamp inventory & supply chain management Expand portfolio – unique brand experience FY2
Slide 11: Retail: Key brand & store openings
Retail: Key brand & store openings 9M-FY22 new 88% of 9M-FY22 total gross capex 22 stores opened Q3-FY22 brand store on 11 STAR existing brands Aleph, Lefties, Zara, Pull & Bear, Retail 30 stores closed openings LC Waikiki and new brands like Net 8 closures Decathlon H2-FY22 9M-FY22 63 sto
Slide 12: Omnichannel transition
Omnichannel transition Ongoing integration of our brands on Vogacloset & new Monobrand platforms rollout in KSA and abroad Vogacloset Monobrand Platforms KSA International 51 Alhokair fashion brands are now live 14 5 Total stock on hand of 126.7K units Q3 - FY22 Decathlon KSA – KSA Introduce
Slide 13: Financial review Q3-FY22 and 9M-FY22
Financial review Q3-FY22 and 9M-FY22
Slide 14: At-a-glance
At-a-glance Q3-FY22 SAR 1,466 mn SAR 245 mn SAR 102 mn SAR 16 mn Revenue Gross Profit EBITDA* Net Profit 8.6% vs Q3-FY21 55.3% vs Q3-FY21 936.4% vs Q3-FY21 Q3-FY21 SAR -128.1 mn 9M-FY22 SAR 4,528 mn SAR 809 mn SAR 369 mn SAR 83 mn Revenue Gross Profit EBITDA* Net Profit 46.1% vs 9M-FY21 9M-FY21 SAR
Slide 15: Top line surpass pre-pandemic levels
Top line surpass pre-pandemic levels Revenues, SAR million LFL consolidated sales growth, % Sales +9% Y-o-Y and exceed pre-pandemic levels despite Improving LFL growth performance. Q3 partially clouded by softened demand in December on renewed Covid worries. Omicron. Up until end-November, LFL growt
Slide 16: Strategic delivery drives sustainable profitability
Strategic delivery drives sustainable profitability Gross Profit (SAR million) – GPM (%) EBITDA (SAR million) – EBITDA Margin (%) 12.7% 20.0% 8.5% 11.7% 6.9% 17.1% 16.7% 0.7% 258 157 232 245 163 116 102 10 Q3-FY20 Q3-FY21 Q2-FY22 Q3-FY22 Q3-FY20 Q3-FY21 Q2-FY22 Q3-FY22 Gross profit and GPM exceed
Slide 17: Balance sheet optimization
Balance sheet optimization Aggressive inventory management and working capital optimization to improve liquidity and increase efficiency Inventory balance (SAR million) Inventory efficiency ratios 2,029 -46% 1,656 40% 37% 1,263 1,257 1,168 1,099 24% 23% 22% 24.3 25.6 18.2 18.1 17.3 Q3-FY20 Q4-FY20 Q
Slide 18: Balance Sheet Management
Balance Sheet Management Capital alternation to restructure capital and further strengthen financial position 1. 2. 3. 4. 5. Share Capital of SAR 2.1 Board recommends Capital increase by bn with accumulated capital decrease Capital reduction way of a SAR 1.0 bn Capital alteration file losses of SAR
Slide 19: Segmental review Q3-FY22 and 9M-FY22
Segmental review Q3-FY22 and 9M-FY22
Slide 20: Revenue breakdown - Q3-FY22
Revenue breakdown - Q3-FY22 Revenue by division Revenue by channel Revenue by geography 9% 4% 9% 5% 20% 12% 13% 80% 88% 3% 4% 6% 4% 79% 71% 4% 95% 96% Q3-FY22 - Outer circle Q3-FY22 - Outer circle Q3-FY22 - Outer circle Q3-FY21 - Inner circle Q3-FY21 - Inner circle Q3-FY21 - Inner circle KSA CIS Egy
Slide 21: LFL Revenue Growth
LFL Revenue Growth Saudi retail International retail Saudi LFL revenues down 8.6% vs. pre pandemic levels due to LFL improvement due to gradual removal of Covid-19 restrictions. Covid-19 restrictions during the quarter. Target low single digit LFL growth. Q3-FY20 Q4-FY20 Q1-FY21 Q2-FY21 Q3-FY21 Q4-F
Slide 22: Store base rationalization slowing down
Store base rationalization slowing down Return to parent slide Store network evolution Gross Floor Area, SQM vs Sales Density, SAR Net store openings of 2 stores in Q3-FY22, mainly driven by Annualized 9M-FY22 revenue per sqm (+58% yoy) on an upward F&B store openings trajectory as we continue to ge
Slide 23: Saudi Arabia remains core market, key focus
Saudi Arabia remains core market, key focus Saudi retail store network evolution Gross Floor Area, SQM vs Sales Density, SAR Annualized 9M-FY22 KSA revenue per sqm up +53% yoy and +3.4 % compared to 9M-FY20 1,202 13,656 1,171 13,211 17 22 12 13 15 8 -22 8,907 (29) -44 1,120 1,089 -50 -59 348 -48 336
Slide 24: Rapid growth in online sales
Rapid growth in online sales Online revenues, SAR million E-commerce, % of total retail sales 82 5.1% 4.4% 4.1% 63 3.7% 3.9% 5.6% 55 55 3.2% 4.1% 38 34 0.8% 12 Q3-FY20 Q1-FY21 Q2-FY21 Q3-FY21 Q4-FY21 Q2-FY22 Q3-FY22 Q2-FY21 Q3-FY21 Q4-FY21 Q1-FY22 Q2-FY22 Q3-FY21 FY20 FY21 9M-FY22 Ecommerce normaliz
Slide 25: F&B segment poised for recovery and growth
F&B segment poised for recovery and growth Total number of transactions (million) F&B store network evolution 17% 3.3 3.3 322 3.1 3.3 2.7 2.8 5% 5% 314 2% 312 19 15 13 0% 8 8 7 304 4 -3 303 303 -4 -5 -5 -4 300 -9 -17 -17% Q2-FY21 Q3-FY21 Q4-FY21 Q1-FY22 Q2-FY22 Q3-FY22 Q1-FY21 Q2-FY21 Q3-FY21 Q4-FY2
Slide 26: Outlook FY22
Outlook FY22
Slide 27: Key takeaways and messages
Key takeaways and messages Name of the Game: Topline and Margins Key Takeaways from 9M FY22 Sustained profitability Significant top-line Operational Upgrade Ongoing Inventory Strategy on track; despite renewed Covid recovery, sales surpass optimization with 17 Ramping up our worries and non-
Slide 28: Financials Q3-FY22 and 9M-FY22
Financials Q3-FY22 and 9M-FY22
Slide 29: Income Statement Q3-FY22 and 9M-FY22
Income Statement Q3-FY22 and 9M-FY22 SAR Million Q3-FY21 Q3-FY22 Change y-o-y 9M-FY21 9M-FY22 Change y-o-y Revenue 1,350 1,466 8.6% 3,100 4,528 46.1% Cost of Revenue (1,192) (1,222) 2.5% (3,134) (3,719) 18.7% Gross Profit 157 245 55.3% (33.4) 809.5 - Gross Profit Margin 11.7% 16.7% 5.0 -1.1% 17.9% 1
Slide 30: Balance Sheet Q3-FY22
Balance Sheet Q3-FY22 SAR Million 31 December 2021 31 March 2021 Change Assets Property, Plant and Equipment 1,338 1327 1% Right-of-Use Assets 3,182 3,402 -6% Goodwill and Intangible Assets 1,140 1,111 3% Investment Property 2 2 0% Equity-accounted investees 3 3 -3% Other investments 372 300 24% Rec
Slide 31: Appendix
Appendix
Slide 32: Operational Developments
Operational Developments
Slide 33: Our operational upgrade strategy
Our operational upgrade strategy 01 Portfolio optimization 02 Operational excellence IT, finance and other Launch shared service Optimize store network Increase revenue per SQM optimization initiatives center Revamp inventory and Exit weak/non-performing Expand portfolio – Dispose of non-core supply
Slide 34: Our Operational Upgrade Strategy
Our Operational Upgrade Strategy 03 Building a lifestyle brand 04 Commitment to digital New and differentiated Stores roll-out for new Launch “Buy Now Pay Later” Launch customer brand identity brands for new brands service center Grow F&B network Launch loyalty & CRM program Enhance Vogacloset portf
Slide 35: Supplementary Information
Supplementary Information M
Slide 36: Intensive balance sheet restructuring
Intensive balance sheet restructuring Return to parent slide Alhokair continues to rationalize inventory balances. Shrinkage and ageing provisions to be in line with guidance of c.1-2% of sales Phase Target Income statement impact Q4-FY2020 Asset impairments SAR 239.4 million Q1-FY2021 Q4-FY2020 Q1-
Slide 37: Debt management in focus
Debt management in focus Actively addressing our capital structure to boost liquidity position and operational / strategic flexibility Summarized credit metrics YTD % SAR million Mar’21 Dec’21 change 9M-FY22 financial SAR 186 million of charges down 27% debt paid down YTD Total Interest-Bearing Debt
Slide 38: Strengthening our corporate governance
Strengthening our corporate governance An ongoing governance and leadership journey Board of Directors Executive management Refreshed board with a healthy balance of skills & experience Strong executive team delivering on a clear strategy Four independent NEDs appointed in August 2020 Recent
Slide 39: Vogacloset: value accretive for Alhokair
Vogacloset: value accretive for Alhokair Strengthening our omnichannel experience to extend our leadership position Transition to lifestyle retailer E-commerce arm Positive financial impact Omnichannel offering Proven leadership Profitable player Mitigate risk, gain market share Additional
Slide 40: Vogacloset: an enriched, integrated ecosystem
Vogacloset: an enriched, integrated ecosystem BACK-END FRONT-END POST SALES MERCHANDISING SYSTEM UNMATCHED CUSTOMER SERVICE Data driven sorting and recommendation engine Vogacloset AlHokair Brands Tenant Bilingual CRM Brands Brands Free returns BACK-BONE OPERATING picked up by SYSTEM A unique omnich
Slide 41: Inventory optimization action plan | ongoing
Inventory optimization action plan | ongoing Systems Policies & Procedures Logistics Digitalization/Technology Streamlined three different ERPs into Developed and drafted with PwC Consolidated three different Post ERP stabilization, the Company will one comprehensive ERP (Oracle V16) for updated
Slide 42: Alhokair Brand Portfolio – 85 Brands*
Alhokair Brand Portfolio – 85 Brands* Return to parent slide Fawaz Abdulaziz Alhokair Co. Investor Presentation 42
Slide 43: Adjusted key profitability measures
Adjusted key profitability measures Return to parent slide Comparable periods are clouded with excessive or insufficient inventory provisions & write-offs, one-off credits, VAT & Zakat provisions. Adjusting for these while accounting for normalized inventory provision at 1.5%, profitability metrics
Slide 44: Adjusted key profitability measures
Adjusted key profitability measures Return to parent slide Comparable periods are clouded with excessive or insufficient inventory provisions & write-offs, one-off credits, VAT & Zakat provisions. Adjusting for these while accounting for normalized inventory provision at 1.5%, profitability metrics
Slide 45: Adjusted key profitability measures
Adjusted key profitability measures Return to parent slide Comparable periods are clouded with excessive or insufficient inventory provisions & write-offs, one-off credits, VAT & Zakat provisions. Adjusting for these while accounting for normalized inventory provision at 1.5%, profitability metrics
Slide 46: Thank you
Thank you Investor Relations investors.relations@fahretail.com
Fawaz Abdulaziz Alhokair — Investor Presentation (March 2022) on 6ix