Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — H1 FY2021 Earnings Presentation
33 slides from Baby Bunting's earnings presentation, Feb 12, 2021
Slide 1: Half year ended 27 December 2020 Results Presentation
Half year ended 27 December 2020 Results Presentation Matt Spencer CEO & Managing Director Darin Hoekman CFO 12 February 2021
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 (12 February 2021). The information contained in this presentation is for general background inf
Slide 3: Supporting new and expectant parents in the early years of parenthood
Supporting new and expectant parents in the early years of parenthood Our vision is to be the most loved Strategic priorities baby retailer for every family, 1. Investment in Digital everywhere 2. Grow market share 3. Growth from new markets 4. Profit Margin improvement Long-term goal of being a 10%
Slide 4: 1H FY21 pro forma results summary
1H FY21 pro forma(1) results summary Total sales growth up 16.6% vs pcp SALES SALES Comparable store sales(2) growth of 15.0% $217.3M $186.4M Total online sales growth of 95.9% Click & Collect sales growth of 218% GROSS Gross Profit income $81.2m, up 17.9% GROSS PROFIT Gross Profit % up 41 bps to 37
Slide 5: Growing market share in a less discretionary category
Growing market share in a less discretionary category Maternity & baby goods are essential products for parents & parents-to-be and are less discretionary in nature Strong comparable store sales and total sales growth driven by increase in transactions and items per transaction demonstrating marke
Slide 6: FY21 operational objectives
FY21 operational objectives Keeping our Team & Customers safe 1 • All stores remained open • Thank-you to our great Team Progress our transformation program & 2 strategic investments to plan • Significant progress toward delivering the changes to support our long-term growth objectives Grow gross ma
Slide 7: Building our platform for future growth
Building our platform for future growth We remain focused on executing our growth strategy of growing market share: • Building out our network to 100+ stores, including alternative store formats • International expansion - launching into New Zealand • Growing our Exclusive Product offering • Expandi
Slide 8: Launching into New Zealand
Launching into New Zealand We have completed our assessment of the New Zealand opportunity. We now plan to: • Launch an omni-channel retail chain in New Zealand • Anticipate opening first New Zealand store in FY22 • Network plan of 10+ stores
Slide 9: Launching into New Zealand – NZ$450m+ opportunity
Launching into New Zealand – NZ$450m+ opportunity Factors supporting our decision Platform for growth NZ$450m+(1) New Zealand market opportunity Grow our Private Label & Exclusive product offering Customer research identified: Expand our services offer to the 76% of respondents surveyed said t
Slide 10: Financial & Trading Performance
1. Financial & Trading Performance
Slide 11: Strong market share growth continues
Strong market share growth continues 1H FY21 total sales growth of 16.6% driven by: • Strong comparable store sales growth of 15.0% • Excluding Victorian stores(1) comparable store sales growth of 21.8% during 1H FY21 • Total online sales grew 95.9%, now making up 19.7% of total sales (up from 11.7%
Slide 12: Observations through COVID
Observations through COVID Sales mix (% of total sales) COVID-19 changed some consumer behaviours: • At the commencement of lock-downs, significant sales 20% 19% 20% 26% 21% growth in baby essentials (ie. nappies, baby wipes) • During lock-downs, sales mix shifted from Travel (Car Safety, Prams & St
Slide 13: Total online sales up 95.9%, now 19.7% of sales
Online Sales ($m) $42.8 25.00% Total online sales up Sales $m % of total sales 20.00% 95.9%, now 19.7% of sales 30.00 $19.8 $21.9 19.7% 15.00% $12.5 • Website visits continue to grow, unique visits exceeded $8.0 11.5% 11.7% 10.00% 14 million for the half, up 39% vs pcp 10.00 5.8% 8.4% • Conversion r
Slide 14: Gross Margin growth continues – now 37.4%
Gross Margin growth continues – now 37.4% Gross Margin % up 41 bps vs pcp: 100.00 40.00% $ GP GP% • Range improvements with supplier partners delivering 39.00% $81.2 great products at sustainable margins 80.00 $68.9 37.4% 38.00% • Continued focus on growing our Private Label & Exclusive $59.9 Produc
Slide 15: Value is the number one driver to purchase in our category
With the million and one things you have to worry about, price won’t be one of them. Value is the number one driver to purchase in our category • Competitive pricing with the widest range to: • Deliver great value to our customers • Build trust with our customers through ‘Our Price Promise’ – find a
Slide 16: CODB leverage achieved
Cost of Doing Business metrics (% sales) (1) CODB leverage achieved Store expenses Store expense leverage achieved 21.0% 20.5% of 120 bps vs pcp 19.7% 19.8% 19.8% Store expenses of 19.8% of sales decreased by 120 bps (vs pcp) as we leverage fixed store costs and investments in process and technology
Slide 17: Maternity & Baby Goods Market
2. Maternity & Baby Goods Market
Slide 18: Competitive landscape - our market expansion continues
Competitive landscape - our market expansion continues Baby Bunting leads the industry in a fragmented market Baby Bunting $2.5bn estimated addressable market (1) Baby Bunting store numbers by state (breakdown by category) Other $0.2 billion Cots, mattresses 100+ STORE Food, Nappies, and nursery fur
Slide 19: Transformation Update
3 Transformation { eS } J | * , 7 . A — _
Slide 20: Transformation – investing to grow
Transformation – investing to grow FY20: $4m capex and $4m project expenses $2.6m write down of old brand assets FY21: ~$9m capex and ~$6m project expenses ~$1m write down of PPE (old support office) Significant business transformation project pipeline continues Brand Modernisation Core Systems Supp
Slide 21: Supply Chain Strategy
Supply Chain Strategy Supply chain evolution to improve gross margin. Lowers our cost to serve. Improves the customer experience through speed to market and increased on-shelf stock availability. New Distribution Centre & Support Office opening in 2H FY21 We are entering into a lease for a new purpo
Slide 22: Financial Information
4. Financial Information
Slide 23: Summary Pro Forma Income Statement
• Total pro forma sales of $217.3 million, up 16.6% vs pcp Summary Pro Forma Income Statement • Comparable store sales growth of 15.0% Summary Pro Forma Income Statement • Gross margin of 37.4%, up 41 bps above pcp, the result of: Pro Forma Pro Forma Change 1H FY21 1H FY20 • range improvements $ mil
Slide 24: Statement of Financial Position
Statement of Financial Position Statutory Statutory Statutory 27-Dec-20 28-Jun-20 29-Dec-19 • Inventory increase of $12m compared to 29 Dec 2019 reflects: $ million • New stores $3.5m Cash and cash equivalents 14.7 13.3 10.4 Inventories 92.8 65.1 80.8 • Higher inventory to service higher demand Plan
Slide 25: Cash Flow
Cash Flow Statutory Statutory 27-Dec-20 29-Dec-19 $ million • Change in working capital reflects short-term increase in inventory and three new stores Operating cash flow from trade 26.1 22.1 • Capital expenditure of $8.0m includes Movement in Working Capital (22.7) (11.4) investments in: Finance co
Slide 26: Outlook
5. Outlook
Slide 27: FY21 outlook
FY21 outlook Sales momentum continues We have seen positive trading momentum continue. Sales reflect the less discretionary nature of the maternity and baby goods category. As at 7 February 2021, comparable store sales growth of: • 15.7% year-to-date • 18.5% for the first 6 weeks of 2H FY21 Guidance
Slide 28: Questions
QUESTIONS 28
Slide 29: Appendices
6. Appendices
Slide 30: Appendix 1: Statutory - Pro Forma Income Statement Reconciliation
Appendix 1: Statutory - Pro Forma Income Statement Reconciliation 1H FY2021 1H FY2020 Statutory Add Pro Forma Statutory Add Pro Forma 1H FY21 Pro Forma Adj (1) 1H FY21 1H FY20 Pro Forma Adj 1H FY20 $ million Sales 217.3 217.3 186.4 186.4 Cost of sales (136.1) (136.1) (117.5) (117.5) Gross Profit 81.
Slide 31: Appendix 2: AASB 16 Transition Impact - Pro Forma Income Statement
Appendix 2: AASB 16 Transition Impact - Pro Forma Income Statement 1H FY2021 1H FY2020 Reversal of AASB Reversal of AASB 16 Pro Forma 16 Depreciation Add Operating Pre-AASB 16 Pro Forma Depreciation and Add Operating Pre-AASB 16 1H FY21 and Interest Lease Expenses 1H FY21 1H FY20 Interest Lease Expe
Slide 32: Appendix 3: Store Economics
APPENDIX 3: STORE ECONOMICS New Baby Bunting stores Group Average Store maturity profile as at 27 December 2020 (years opened) (all stores opened from (all stores opened (stores on average take 4 years to reach sales maturity) June 2008) > 4 years) YEAR 1 YEAR 2 FY2020 Revenue per store ($m) 4.9 5.4
Slide 33: 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 financial year, provided the stores were open at the beginning o