Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — H1 FY2019 Earnings Presentation
30 slides from Baby Bunting's earnings presentation, Feb 15, 2019
Slide 1: Half Year Ended 30 December 2018 Results Presentation
® HALF YEAR ENDED 30 DECEMBER 2018 RESULTS PRESENTATION 15 FEBRUARY 2019 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 (15 February 2019). The information contained in this presentation is for general background inf
Slide 3: Agenda
AGENDA 1 Results summary 2 Financial and trading performance 3 Baby goods market 4 Invest to grow 5 Financial information 6 Outlook 7 Appendices 3
Slide 4: 1. Results Summary
1. RESULTS SUMMARY
Slide 5: 1H FY19 Results Summary
1H FY19 RESULTS SUMMARY 1 • Sales +17.2% to $177.7 million, transaction growth of 14.2% • Comparable store sales +9.5% Trading (1) • Gross profit income up 22.9%, gross margin up 160 bps to 34.6% (1H FY18: 33.0%) • Cost of doing business (pro forma) increased by 120 bps from 1H FY18, to 28.1% of sal
Slide 6: Recovery in a Changing Market
RECOVERY IN A CHANGING MARKET Immediate actions taken to grow market share and profitability in FY19 1 Capitalising on market share opportunities from competitor closures 2 Securing prime sites for our store network 3 Stabilising gross margin without compromising value • Limit fallout from liquidati
Slide 7: 2. Financial and Trading Performance
2. FINANCIAL AND TRADING PERFORMANCE
Slide 8: Sales - Market Share Growth Continues
SALES - MARKET SHARE GROWTH CONTINUES Significant market share growth has 200.0 Total sales $m 33.0% been achieved post competitor closures 180.0 - Comparable store sales growth % 151.7 177.7 28.0% 160.0 1H FY19 total sales growth of 17.2% driven by 135.1 23.0% 140.0 120.0 108.2 18.0% • Strong compa
Slide 9: Further Gross Margin Improvement Expected
FURTHER GROSS MARGIN IMPROVEMENT EXPECTED 80.0 Significant improvement in gross margin 70.0 Gross profit $m 39.8% 39.3% 60.0 - 61.5 achieved in 1H FY19 Gross margin % 38.8% 38.3% 50.0 37.8% 46.5 Gross margin of 34.6% is 160 bps above pcp 50.0 37.3% 37.6 36.8% 40.0 36.3% • Range improvements achieved
Slide 10: CODB Investment to Deliver Further Growth
CODB INVESTMENT TO DELIVER FURTHER GROWTH Cost of Doing Business metrics (% sales) (1) CODB (pro forma) in 1H FY19 was 28.1% of sales Store expenses • Store expenses increased by $6.7 million (vs pcp) 20.6% 20.2% 19.9% • $4.2 million relates to new and annualising stores 19.7% 19.8% • Timing impact
Slide 11: 3. Baby Goods Market
3. BABY GOODS MARKET sa" #
Slide 12: Large Market Opportunity
LARGE MARKET OPPORTUNITY Baby Bunting’s addressable market is a subset of the larger baby goods market The baby goods market is a $5.1bn market in Baby Bunting $2.4bn estimated Australia(1) addressable market breakdown by Other Cots, mattresses category $0.2 billion and nursery furniture $0.9Bn$0.6
Slide 13: Competitive Landscape Has Changed
COMPETITIVE LANDSCAPE HAS CHANGED Pure play online retailers & Specialty baby goods retailer store closures Bricks & mortar competitors in Australia market places Discount department stores and department stores (all have online presence) 303 ~76% (or 189 products) of Baby 4 Bunting’s top 250 sellin
Slide 14: 4. Invest to Grow
4. INVEST TO GROW
Slide 15: Growth Strategy - Grow Market Share
GROWTH STRATEGY – GROW MARKET SHARE 1 Invest in digital to deliver the best possible customer experience across channels • Engage and retain the customer through the customer journey and lifecycle • Aiming for same day online fulfillment (major metro markets) leveraging store network • Customer insi
Slide 16: Investment in Digital Delivering Growth
INVESTMENT IN DIGITAL DELIVERING GROWTH Website replatform in final stages of testing, expected to go live by March Online sales New gift registry sales growth of +68% ($3.4m in FY18) +61% vpcp now 11.5% of total sales CRM and Marketing Automation has driven 80% growth in email revenue Click and col
Slide 17: Investment to Grow Sales from Existing Stores
INVESTMENT TO GROW SALES FROM EXISTING STORES Focused strategies to continue comparable store sales growth include: • Investment in the customer experience • Team leadership and customer service training • In-store technology investment to improve service Store maturity profile at 30 December 2018 (
Slide 18: Growth from New Markets
GROWTH FROM NEW MARKETS 5 new stores opened and 1 relocation in 1H FY19 80+ 80 60 52 47 42 40 36 31 21 23 19 20 12 15 9 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1H FY19 Network Plan • Toowoomba (July), Chatswood (Sep), Hobart (Oct), Chadstone (Dec), Bankstown (Dec) and relocation of Canni
Slide 19: New Shopping Centre Format
NEW SHOPPING CENTRE FORMAT Chadstone Shopping Centre • Australia’s premier retail destination • 23m annual footfall • ~$2bn retail sales Clear demand for baby goods retailer in shopping centre format • Already our highest transaction volume store • High footfall driving a varied product mix • Promot
Slide 20: EBITDA Margin Improvement
EBITDA MARGIN IMPROVEMENT Program of business initiatives and managed investment in costs over time as the business builds scale to deliver the long term goal of 10% EBITDA margin • Supply chain evolution to improve gross margin, lower our cost to serve, improve the customer experience through speed
Slide 21: 5. Financial Information
5. FINANCIAL INFORMATION
Slide 22: Change to Revenue Accounting (AASB 15)
CHANGE TO REVENUE ACCOUNTING (AASB 15) AASB 15 “Revenue from contracts with customers” came into effect on 1 July 2018, superseding all previously existing revenue recognition criteria. The most significant impact(1) to Baby Bunting has been on accounting for layby sales. Layby sales are a key featu
Slide 23: Summary Pro Forma Income Statement
SUMMARY PRO FORMA INCOME STATEMENT Pro forma statement of profit or loss Summary Pro Forma Pro Forma Change 1H FY2019 1H FY2018 • Total sales of $177.7 million, up 17.2% $ million ̵ Comparable store sales growth +9.5% Sales 177.7 151.7 +17.2% Cost of sales (116.2) (101.6) • Gross margin of 34.6% 160
Slide 24: Balance Sheet
BALANCE SHEET Statement of financial position Capital structure Statutory Statutory • $6.6 million net debt position 30-Dec-18 24-Jun-18 $ million • Inventory increase reflects 5 new stores added Cash and cash equivalents 6.5 7.2 • Payables increase in line with inventory Inventories 66.9 63.0 Plant
Slide 25: Cash Flow
CASH FLOW Statement of cash flows Financial highlights Statutory Statutory • Change in working capital reflects 5 new store 1H FY19 1H FY18 openings $ million • Tax paid includes finalisation of FY18 tax return ($0.9m) and FY19 provisional tax ($1.6m) Underlying Statutory EBITDA1 11.6 9.3 Movement i
Slide 26: 6. Outlook
6. OUTLOOK
Slide 27: Outlook
OUTLOOK Trading year to date as at 14 February 2019 • Total sales growth was 17.9% and comparable store sales growth was 8.7% • 2H FY19 comparable store sales growth was 5.9%, noting: we cycled comparable store sales of 4.5% in the prior corresponding period (highest level for FY18 and which were fl
Slide 28: 7. Appendices
7. APPENDICES
Slide 29: Statutory - Pro Forma Income Statement Reconciliation
STATUTORY - PRO FORMA INCOME STATEMENT RECONCILIATION 1H FY2019 1H FY2018 Statutory Add Pro Forma Statutory Add Pro Forma 1H FY19 Pro Forma 1H FY19 1H FY18 Pro Forma 1H FY18 adjustments (a) adjustments (a) $ million Sales 177.7 177.7 151.7 151.7 Cost of sales (116.2) (116.2) (101.6) (101.6) Gross Pr
Slide 30: 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