Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — H1 FY2017 Earnings Presentation
36 slides from Baby Bunting's earnings presentation, Feb 17, 2017
Slide 1: Baby Bunting Group Limited Half Year Results Presentation
Baby Bunting Group Limited Half Year Ended 1 January 2017 Results Presentation 17 February 2017 Matt Spencer Chief Executive Officer & Managing Director Darin Hoekman Chief Financial Officer
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This document is a presentation of general background information about the activities of Baby Bunting Group Limited (Baby Bunting) current at the date of the presentation (17 February 2017). The information contained in this presentation is for general background inf
Slide 3: Baby Bunting
Baby Bunting Baby Bunting is Australia’s largest specialty retailer of baby goods, aiming to provide customers with the widest range of products, high levels of service and low prices every day • Founded in 1979, Baby Bunting is Australia’s largest specialty baby goods retailer IN STOCK AND • Succes
Slide 4: Agenda
Agenda 1 Results highlights 2 Industry overview 3 Business overview 4 Growth strategy 5 Financial information 6 Outlook 7 Appendix – pro forma reconciliation 4
Slide 5: Results highlights
1. Results highlights
Slide 6: 1H FY2017 Results Highlights
1H FY2017 Results Highlights 1 • Sales of $135.1 million, up 18.1% on the prior corresponding 27 week period • Comparable store sales growth of 8.2% TRADING(1) • Gross profit income up 17.7%, gross margin of 34.4% is 11 bps below 1H FY2016 • Cost of doing business (pro forma) improved by 43 bps from
Slide 7: Industry overview
FURNITURE » PARENTS ROOM al Industry overview
Slide 8: Industry Overview
Industry Overview Estimated addressable Large number of small, Strict Australian mandatory Changing competitive market is ~$2.4bn pa / specialty players & product safety standards landscape ~1 million 0 to 3 year olds department stores provide barriers to entry SPECIALTY BABY GOODS RETAILERS IN AUST
Slide 9: Business overview
3. Business overview
Slide 10: Drivers of Competitive Advantage
Drivers of Competitive Advantage Consistent Retail Format Widest Product Offering, In Stock Convenient Network and Available of Stores and Online Competitively Cost Effective Priced Marketing Comprehensive Range of Ancillary Scale Platform Services Customer Centric Team Culture 10
Slide 11: Baby Bunting's Store Network
Baby Bunting’s Store Network 40 stores across Australia, with significant roll-out potential to over 80 stores Queensland Helensvale Booval Kawana North Lakes Fortitude Valley Burleigh Waters Townsville Capalaba Macgregor New South Wales and ACT Penrith West Gosford Warners Bay Campbelltown 9 stores
Slide 12: Store Experience
Store Experience Stores are consistent in branding, range, operations and customer service • The widest range of products with over 6,000 products in store • Price match guarantee and continued investment in value for the customer • Increasing range of Private Label and Exclusive Products • Ser
Slide 13: Online
Online www.babybunting.com.au continues to evolve & grow as the leading specialty baby goods website • Online is the largest store in the network TOTAL WEBSITE SESSIONS BY MONTH (babybunting.com.au) (1) 1,350 • 55% increase in website visits on prior comparative 1,200 period, and a 44% increase for
Slide 14: Investment in Digital and the Customer Journey
Investment in Digital and the Customer Journey Staying ahead of our customers’ expectations across all channels is an investment priority • CRM – invest to better understand and engage with Average processing May December our customers across all channels times 2016 2016 Order to 89% • Digital Team
Slide 15: Sales and Marketing Strategy
Sales and Marketing Strategy Baby Bunting’s sales and marketing strategy delivering value to our customers every day, every visit • Integrated promotions across both traditional channels (catalogue, regional and pay TV, radio and print media), and digital channels (email, search and digital) as well
Slide 16: Logistics & Supply Chain
Logistics & Supply Chain Continuous improvement in the Distribution Centre (DC) supporting the growth of the business • ~1,500 products held in the DC for store and online fulfilment and a further ~3,100 products held for online fulfilment only LOGISTICS CONTROLLED FOR KEY PRODUCTS (1H FY2017) • Sup
Slide 17: Supplier Relationships
Supplier Relationships Strong growth in Private Label and Exclusive Products(1) • Network of more than 230 suppliers across third party SUPPLIER BREAKDOWN BY SALES (1H FY2017) brands, private label and exclusive products • Top 10 suppliers represent 48% of sales • A focus of the business has been to
Slide 18: Building the Best Team
Building the Best Team Continued focus on the development of our growing team • Building the talent pipeline BREAKDOWN OF EMPLOYEES (including casuals) • Inductions, training & development FUNCTION Jun 2015 Dec 2015 Jun 2016 Dec 2016 • Succession planning and performance coaching Stores 550 644 700
Slide 19: Growth strategy
4. Growth strategy
Slide 20: Growth Priorities
Growth Priorities Multiple drivers of organic growth 1 Growth from existing stores and online • 43% of stores are less than 3 years old (at 1 January 2017) • Multiple initiatives to improve customer experience across all channels • Growing brand awareness across all states and territories • Increase
Slide 21: Growth from Existing Stores and Online
Growth from Existing Stores and Online Strong 1H FY2017 comparable store sales growth(1) of 8.2% • Significant comparable store sales growth across STORE MATURITY PROFILE AT 1 JANUARY 2017 (YEARS OPENED) the network. 43% of stores were less than 3 years old at the end of 1H FY2017 • Average comparab
Slide 22: Growth from New Store Roll-Out
Growth from New Store Roll-Out 4 new stores opened in 1H FY2017, 3 planned for 2H FY2017 NUMBER OF STORES 80+ 80 60 40 40 36 31 21 23 19 20 15 12 9 0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 1H FY2017 Network Plan • Opened 4 new stores in 1H FY2017 • Pipeline of new store opportunitie
Slide 23: New Store Economics
New Store Economics On average, new stores deliver positive returns from year 1 and strong ROIC by year 4 NEW BABY BUNTING STORES GROUP AVERAGE (ALL STORES OPENED FROM JUNE 2008) (ALL STORES OPENED > 4 YEARS) YEAR 1 YEAR 2 FY2016 Revenue per store ($m) 4.7 5.5 8.0 EBITDA per store ($m) 0.3 0.5 1.2 S
Slide 24: EBITDA Margin Improvement
EBITDA Margin Improvement Product mix has shaped gross profit performance Gross Margin • Gross profit income up 17.7% to $46.5 million on a comparable 27 week basis • Gross profit as a percentage of sales 34.4% is 11 bps lower than 1H FY2016 due to product sales mix • Continued growth in prams, car
Slide 25: EBITDA Margin Improvement
EBITDA Margin Improvement Further operating leverage achieved Cost of Doing Business Metrics (% sales) Leverage investment in Technology, Support Office and the Store expenses Distribution Centre • Cost of doing business (pro forma) improvement of 20.2% 20.0% 19.7% 19.7% 43bps in 1H FY2017 to 26.8%
Slide 26: Financial information
5. Financial information
Slide 27: Strong Financial Track Record
Strong Financial Track Record 1H FY2017 sales growth of +18.1% and pro forma EBITDA growth of +23.3% 1 SALES (1) GROSS MARGIN (1) ($ million) (%) 11 300 bps ~26% CAGR 236.8 34.6% 34.3% 34.3% 34.4% +18.1% 200 180.2 33.3% 150.2 135.1 114.4 100 0 FY2014 FY2015 FY2016 1H FY2016 1H FY2017 FY2014 FY2015 F
Slide 28: Summary Pro Forma Income Statement
Summary Pro Forma Income Statement Pro forma statement of profit or loss Financial highlights Pro Forma Pro Forma 1H FY2017 1H FY2016 Change • Total sales of $135.1 million, up 18.1% 27 weeks 27 weeks $ million ̵ Comparable store sales growth of 8.2% Sales 135.1 114.4 18.1% • Gross margin of 34.4%,
Slide 29: Balance Sheet
Balance Sheet Statement of financial position Statutory Statutory Capital structure 01-Jan-17 26-Jun-16 • $3.2 million net cash position $ million Cash and cash equivalents 3.2 7.4 • Inventory increase reflects 4 new stores added Inventories 50.0 41.0 ~$3 million, and ~$6 million of inventory to Pla
Slide 30: Cash Flow Statement
Cash Flow Statement Statement of cash flows Statutory Statutory • Working capital maintained despite 4 new store 1H FY2017 1H FY2016 openings and investment in inventory to support $ million 27 weeks 26 weeks strong sales growth • Tax paid includes finalisation of FY2016 tax return EBITDA1 10.4 7.9
Slide 31: Outlook
6. Outlook
Slide 32: Outlook
Outlook FY2017 outlook reflecting continuing strong trading performance and new store rollout • FY2017 guidance: • Anticipate a further 3 new stores to be opened in 2H FY2017 • EBITDA expected to be in the range of $21.5 million to $24.5 million, representing growth of between 15% to 31%. This exclu
Slide 33: Appendix – pro forma reconciliation
7. Appendix – pro forma reconciliation
Slide 34: Statutory - Pro Forma Income Statement Reconciliation
Statutory - Pro Forma Income Statement Reconciliation 1H FY2017 1H FY2016 Statutory Add Pro Forma Statutory Add Pro Forma Add Pro Forma 1H FY2017 Pro Forma 1H FY2017 1H FY2016 Pro Forma 1H FY2016 1H FY2016 1H FY2016 adjustments (a) 27 weeks 26 weeks adjustments (a) 26 weeks Week 27 (a) 27 weeks $ mi
Slide 35: Glossary
Glossary Comparable Store Sales Growth • Calculated as a percentage change of the total sales generated from stores (including the online store) in a relevant period, compared to the total sales from the same set of stores in the prior corresponding period, provided the stores were open at the begin
Slide 36: Thank You!
Thank You! 36