Slide 1: Adairs Limited FY21 Investor Presentation
Adairs Limited FY21 Investor Presentation Mark Ronan Ashley Gardner Managing Director & Chief Chief Financial Officer Executive Officer
Slide 2: FY21 highlights
FY21 highlights 1 Omni-channel ► Group Sales +28.5% to $499.8m strategy drives record ► Group online sales now $187.0m - represents 37.4% of total sales with 48% of sales sales facilitated by our digital platform1 ► Adairs online sales +33.2%; Mocka sales +30.9%2 ► Stores sales +18.1% with LFL store
Slide 3: Adairs sales growth drivers
Adairs sales growth drivers 2 1 Store floor space growth 2 Linen Lover membership growth 3 Omni conversion ► Store sales are highly correlated to store floor ► Linen Lover members account for >80% of sales ► The number of customers actively shopping across space with each additional m2 adding c.$4k
Slide 4: Mocka
Mocka 3 1 Attractive sales growth (A$m) 1 ► online retailer of furniture and home products $60.2 ► vertically integrated, proprietary product $26.0 ► operates in Australia and New Zealand $19.6 ► operates independently to Adairs $19.8 $16.3 $12.8 $9.6 $34.1 $26.4 $14.0 $18.7 $10.2 FY21: FY17 FY18 FY
Slide 5: Profit and loss
Profit and loss 4 Record sales and profit Adairs Mocka Group Underlying Underlying Underlying Underlying Change Underlying Underlying Change ► Group sales +28.5% ($ million) FY21 FY20 FY21 FY20 v FY20 (%) FY21 FY20 v FY20 (%) – Adairs online sales +33.2% to $126.9m (52 weeks) (30 weeks) Store sales
Slide 6: Sales growth across both channels and businesses
Sales growth across both channels and businesses 5 Group sales ($ million) 60% Sales growth breakdown $499.8 $500.0 ► Online sales growth helped offset lost sales during the $60.2 50% Greater Melbourne store closure period in 1H FY21 $126.9 $400.0 $388.9 ► LFL sales growth was strongly $344.4 $29.0
Slide 7: Looking through the COVID impact – sales up 32% over years
Looking through the COVID impact – sales up 32% over 2 years 6 Despite sporadic and at times lengthy disruptions to store trading over the last 18 months, customers have adapted how they shop with group sales growing by more than 30% since FY19 (Pre-COVID). In FY21 a third of all store trading days
Slide 8: Contribution margins have improved across both channels
Contribution margins have improved across both channels 7 Gross margin1 66.7% Group underlying gross margin +410bps to 64.8% 61.4% ► Margin growth for both businesses achieved through continued strong product execution; 59.2% 60.3% 59.2% continuation of price optimisation; reduced depth of discount;
Slide 9: Costs of doing business (CODB)
Costs of doing business (CODB) 8 Selling 1 (stores / online) CODB % Group CODB as % sales Selling CODB has been carefully managed throughout the period with operating leverage achieved in both Stores and Online 40.9% ► Store costs were managed in-line with planned sales with 3.0% 36.7% operating lev
Slide 10: Capital management
Capital management 9 Strong balance sheet and cash flow1 Dividend ► Inventory is clean and has returned to normal levels (compared to June 2020 ► A fully franked final dividend of 10.0 cents per share has been declared taking when both businesses were materially understocked), including additional t
Slide 11: Adairs profit growth drivers – our omni model
Adairs profit growth drivers – our omni model 10 Adairs operates a synergistic model – vertical supply chain, exclusive product, Linen Lover loyalty program, common back-end infrastructure and a highly engaged and capable team that support both online and stores. This delivers high levels of custome
Slide 12: Drivers of future growth
Drivers of future growth 11 1 Proven and resilient business model 2 Digital transformation and omni-channel leadership Strong brands (that we own and control) Our multi-channel model gives us a larger TAM, significant synergy across channels, ► Lower cost of customer acquisition and retention and de
Slide 13: Drivers of future growth
Drivers of future growth 12 3 Profitable store formats 4 Mocka growth ► All Stores are profitable with relatively short lease terms ► Australian brand awareness growing rapidly with AU website visits +35% in FY21 ► Store floor space (GLA) +8.2% in FY21 via new and upsized stores ► We are investing t
Slide 14: Drivers of future growth
Drivers of future growth 13 5 Omni Supply Chain Our DHL-operated National Distribution Centre (NDC) in Melbourne will be operational by end of September 2021. The project experienced some delays as a result of the COVID restrictions in Victoria in Aug/Sep 2020, and from overseas as a result of COVID
Slide 15: Trading update (first 7 weeks of FY22)
Trading update (first 7 weeks of FY22) 14 Group like-for-like1 sales up 5.2% in first 7 weeks of FY22 and up 50.5%2 on FY20 FY22 first 7 weeks v FY21 v FY202 3 (pre-COVID levels) Total Group -11.7% +13.5% Total Group (like-for-like) +5.2% +50.5% ► Total Adairs sales are down 16.1% on FY21 but +5.5%
Slide 16: Outlook for consumers
Outlook for consumers 15 While COVID-19 store closures will impact FY22 results we believe the underlying consumer conditions will remain positive Household savings Housing market Travel restrictions ► During COVID-19, households have accumulated ► House prices (wealth effect) and churn are ► Full r
Slide 17: Outlook
Outlook 16 Market perspective Gross margin ► Adairs and Mocka continue to benefit from consumers’ increased focus on ► Gross margin will be impacted by broader industry issues with supplier cost their homes as a sanctuary, and increasingly a place of work, entertainment increases and increased cost
Slide 18: Questions?
QUESTIONS?
Slide 19: Appendices
APPENDICES 1. Who we are 2. Store footprint 3. Like-for-like sales history 4. Profit and loss reconciliation 5. Balance Sheet reconciliation 6. Cashflow reconciliation and tax rate reconciliation 7. Glossary
Slide 20: Appendix 1 – Who we are
Appendix 1 – Who we are 19 Adairs Limited (ASX: ADH) is Australasia’s largest omni channel retailer of homewares and home furnishing products ► Own two fast growing and highly profitable businesses ► Vertical retail model – in-house design ► Specialty retailer of home furnishings with a large – excl
Slide 21: Appendix 2 – Store footprint
AppendixA2recap: – StoreOur footprint strategy 20 Store Activity (FY21) State/Territory Stores GLA % GLA Total Stores: 169 Victoria 54 22,074 33.0% New stores (4) Homemaker – Belmont (WA) GLA (m2) 752 NSW 44 16,042 24.0% ACT 3 1,177 1.8% Homemaker – Warragul (VIC) 840 Homemaker – Cranbourne (VIC) 99
Slide 22: Appendix 3 – Like-for-like sales history
Appendix 3 – Like-for-like sales history 21 Adairs LFL sales growth Mocka LFL sales growth 15.9% 35.5% 14.3% 14.5% 30.8% 31.4% 30.9% 7.2% FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 Note 1: Includes the period prior to December 2019 which was outside of Adairs ownership.
Slide 23: Appendix 4 – Profit and loss reconciliation
AppendixA4recap: – Profit Ourand loss reconciliation strategy 22 FY21 reconciliation FY20 reconciliation ($ million) Mocka NDC Mocka Underlying AASB 16 transaction transition Statutory Underlying AASB 16 JobKeeper transaction Statutory FY21 impact costs costs FY21 FY20 impact benefit costs FY20 Sale
Slide 24: Appendix 5 – Cash flow and tax rate reconciliation
Appendix 5 – Cash flow and tax rate reconciliation 23 FY21 reconciliation ($ million) Underlying AASB 16 Statutory Underlying Notes: FY21 impact FY21 FY20 1. AASB 16 impact: The impact of AASB 16 (Leases) results in a reclassification of Opening cash 23.9 - 23.9 16.7 cash flows between operating and
Slide 25: Appendix 6 – Balance Sheet summary
Appendix 6 – Balance Sheet summary 24 ($ million) Statutory Statutory FY21 FY20 Cash and cash equivalents 26.0 23.9 Trade and other receivables 2.3 2.9 Inventories 68.0 43.4 Property, plant and equipment 21.2 20.8 Intangibles 197.3 196.1 Right-of-use assets 89.6 94.4 Other assets 10.5 7.5 Total asse
Slide 26: Appendix 8 – Glossary
AppendixA8recap: Our strategy – Glossary 25 Term Meaning ASP Average selling price ATV Average transaction value CODB Cost of doing business DC Distribution centre EBIT Earnings before interest and tax EPS Earnings per share GLA Gross lettable area (floor space in square metres - excludes any offsit
Slide 27: Disclaimer
Strong Omni Channel Execution Disclaimer Some of the information contained in this presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Adairs Limited current intentions, plans, expectations, ass