Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — H1 FY2021 Earnings Presentation
34 slides from Kmd Brands's earnings presentation, Mar 23, 2021
Slide 1: Kathmandu Holdings 1H FY21 Results Presentation
For personal use only Kathmandu Holdings 1H FY21 Results Presentation Mick Fanning 3 x WSL World Surfing Champion 23 March 2021
Slide 2: Strong Rip Curl performance underpinned 1H Group result
Strong Rip Curl performance underpinned 1H Group result For personal use only Rip Curl achieved strong sales and profits • Increased participation in surfing and beach-related activities • Global footprint delivered sales growth in key global markets • Wholesale forward orders above pre-COVID-19 lev
Slide 3: 1H Group highlights
1H Group highlights For personal use only Diversified portfolio of brands Sales Mix 1H FY21 • Rip Curl sales performance despite COVID-19 impacts in key Oboz Other Rest of World 1% 6% global markets, validates the diversification strategy 8% Europe Wholesale 8% Kathmandu 29% Record sales 31% • Total
Slide 4: Step change in online penetration
Step change in online penetration For personal use only 60.0 Group online sales up 18.5% to $36.0m 16.0% Online sales % of DTC % of DTC 12.7% 14.0% (NZD $m) sales sales 50.0 Online sales (NZD $m) 1H FY21 1H FY20 12.0% % of DTC sales 40.0 8.8% 10.0% 30.0 7.1% 36.0 8.0% 17.4 11.2% 6.4% 6.1% 30.3 5.2%
Slide 5: Sustainability is at the core of our brands
Sustainability is at the core of our brands For personal use only B+ SCORED B+ IN THE ETHICAL COMMITTED TO LONG TERM FASHION REPORT TWO YEARS COLLABORATED WITH KATHMANDU ON 3.3 PARTNERSHIPS WITH ETHICAL DEVELOPING OUR SUSTAINABILITY JOURNEY RUNNING SUPPLIERS CARBON NEUTRAL CERTIFIED LAUNCHED THE SYP
Slide 6: COVID-19 impact and response
COVID-19 impact and response For personal use only COVID-19 has substantially impacted Rapid response to changes in consumer the global business: preference: • 60 Greater Melbourne stores closed for over 11 • Rip Curl responded quickly to demand for wetsuits and weeks related surfing products, as pa
Slide 7: Group Financials
For personal use only Group Financials 7 || KATHMANDU 7 KATHMANDU HOLDINGS HOLDINGS 1H FY20 RESULTS FY21 PRESENTATION RESULTS PRESENTATION
Slide 8: 1H Group result underpinned by strong Rip Curl performance
1H Group result underpinned by strong Rip Curl performance GROUP Statutory Underlying For personal use only • 1H FY21 result includes a full six months of Rip Curl, NZD $m *2 1H FY21 1H FY21 1H FY20 Var % compared to 1H FY20 which includes three months of SALES 410.7 410.7 363.7 12.9% Rip Curl post-
Slide 9: Positive Cash Flow
Positive Cash Flow Cash Flow (NZD $m) 1H FY21 1H FY20 For personal use only NPAT 22.3 7.6 Change in working capital (17.9) (9.4) Non-cash items 6.3 22.7 Adjusted operating cash flow *1 10.7 20.9 Key Line Items: Net interest paid (including facility fees)*1 (2.7) (2.5) Income taxes paid (13.9) (15.1)
Slide 10: Robust Balance Sheet
Robust Balance Sheet Balance Sheet (NZD $m) Jan 21 Jul 20 Jan 20 • Inventory balance broadly in line with FY20 year end For personal use only Inventories 229.6 228.8 251.9 Property, plant and equipment 82.6 88.5 90.8 • Inventory well placed in COVID-19 demand environment, with low Right of Use Asset
Slide 11: Strong capital structure
Strong capital structure For personal use only 400 Net Debt 28.0% 350 • Net Debt $10.1m at end of January Net Debt 273.2 23.0% • Significant headroom to current facility of c. $380m 300 Net Debt to Equity • Historically the second half year for Kathmandu brand generates 250 16.5% 18.0% strong cash i
Slide 12: Interim dividend resumes
Interim dividend resumes For personal use only • NZ 2.0 cents per share interim dividend • Dividend will not be imputed for New Zealand shareholders • Dividend will be fully franked for Australian shareholders • Record date 21 May 2021 • Payment date 4 June 2021 25.0 Dividends (NZ cents per share) 2
Slide 13: For personal use only
For personal use only 13 | KATHMANDU HOLDINGS 1H FY21 RESULTS PRESENTATION
Slide 14: Rip Curl achieved strong sales and profits
Rip Curl achieved strong sales and profits Rip Curl owned for a full six months in 1H FY21 compared to three months in 1H FY20 • Total sales 4.3% below pcp, with sales growth achieved in key For personal use only markets of Australia, USA, and Europe Pre IFRS 16 RIP CURL 1H FY21 1H FY20 • Direct to
Slide 15: Group synergies and technology drive product innovation
Group synergies and technology drive product innovation For personal use only Salt Water Culture: Paradise Calling Anti-Series Puffer Collection Anti Series Heatseeker Jacket Continuing with market leading swim collections, Every Surfer needs a quality Puffer A new jacket design utilising technology
Slide 16: Investing to enhance Rip Curl's global brand leadership
Investing to enhance Rip Curl’s global brand leadership For personal use only Tyler Wright 2 x WSL Champion 2016, 2017 World Surf League Sponsorship New three-year partnership of the Rip Curl WSL Finals, a season-ending one-day competition that will decide the men’s and women’s World Surfing Champio
Slide 17: For personal use only
For personal use only 17 | KATHMANDU HOLDINGS 1H FY21 RESULTS PRESENTATION
Slide 18: Kathmandu impacted by lockdowns, low footfall, and lack of travel
Kathmandu impacted by lockdowns, low footfall, and lack of travel KATHMANDU Pre IFRS 16 For personal use only NZD $m 1H FY21 1H FY20 Var % • Total sales by market (at constant exchange rates): • Australia -40.5%, with 27 Greater Melbourne stores closed for 11 weeks SALES 127.3 195.5 (34.9%) • New Ze
Slide 19: Leading innovation in sustainable technology
Leading innovation in sustainable technology For personal use only World’s first Biodegradable Fleece Built in partnership with Primaloft, a great looking, versatile pair of everyday right- priced silhouettes: • In modern landfills, the fabric will mostly biodegrade into natural elements within abou
Slide 20: Building on strong engagement, personalisation and brand loyalty
Building on strong engagement, personalisation and brand loyalty For personal use only Active and engaged customer base • Net promoter score 76 across all customer groups, +3% above 2H last year • Increase in conversion of footfall to sales in-store • 2.2 million active Summit Club members • Represe
Slide 21: For personal use only
For personal use only 21 | KATHMANDU HOLDINGS 1H FY21 RESULTS PRESENTATION
Slide 22: Oboz continued sales growth
Oboz continued sales growth OBOZ Pre IFRS 16 • For personal use only Oboz sales above last year, driven by successful product USD $m 1H FY21 1H FY20 Var % innovation strategy and diversification of customer base SALES 22.1 21.3 3.8% • Increased participation in hiking GROSS PROFIT 7.2 8.5 (15.1%) Gr
Slide 23: New online store and broader product appeal
New online store and broader product appeal True to the Trail™ brand offering supplemented with For personal use only products targeting younger, more diverse, and more active customers Online sales opportunity: • New online store launching imminently Product highlights: • Sypes Franchise explosion:
Slide 24: Strategy and Outlook
For personal use only Strategy and Outlook 24 || KATHMANDU 24 KATHMANDU HOLDINGS HOLDINGS 1H FY20 RESULTS FY21 PRESENTATION RESULTS PRESENTATION
Slide 25: Group strategy
Group strategy We are a global outdoor, lifestyle and sports company underpinned by iconic brands, For personal use only technical products and a focus on sustainability Diversify the Leverage the Grow Each Promote Our Business Portfolio Brand Values Build a portfolio of brands that: • Deliver opera
Slide 26: Delivering on our strategy
Delivering on our strategy The Group remains committed to delivering the strategic imperatives For personal use only Diversify the Leverage the Grow Each Promote Our Business Portfolio Brand Values 1H Performance: 1H Performance: 1H Performance:: 1H Performance: • Rip Curl 1H FY21 • Rip Curl EBITDA
Slide 27: Outlook
Outlook For personal use only 2H Outlook • Kathmandu enters the traditionally strong winter season well prepared • Oboz investment in new product sees it enter 2H FY21 with an order book well above pre-COVID-19 levels • Rip Curl continues to trade in line with strong first half trends, and wholesale
Slide 28: Questions
For personal use only Questions 28 | KATHMANDU HOLDINGS 1H FY21 RESULTS PRESENTATION
Slide 29: Appendix 1: Statutory to Underlying Profit & Loss
Appendix 1: Statutory to Underlying Profit & Loss GROUP 1H FY21 1H FY20 For personal use only NZD $m IFRS 16 Transaction Other IFRS 16 Transaction Other *1 *2 *1 *3 Statutory Leases Costs one-offs Underlying Statutory Leases Costs one-offs*3 Underlying Sales 410.7 - - - 410.7 363.7 - - - 363.7 Gross
Slide 30: Appendix 2: Segment Note
Appendix 2: Segment Note For personal use only SALES EBIT 1H FY21 (NZD $'000) Outdoor Surf Corporate Total 1H FY21 (NZD $'000) Outdoor Surf Corporate Total SALES per segment note 159,633 251,080 - 410,713 EBIT per segment note 1,176 45,102 (7,091) 39,187 - IFRS 16 Leases Adjustment (4,627) (1,140) -
Slide 31: Appendix 3: Segment Summary
Appendix 3: Segment Summary For personal use only NZD $m 1H FY21 1H FY20 Var % Gross Profit $ Mix 1H FY21 Kathmandu sales 127.3 195.5 (34.9%) Oboz Other Rest of World (2.7%) 4% 9% Oboz sales 32.4 33.3 4% Wholesale Europe Outdoor segment sales 159.6 228.7 (30.2%) Kathmandu 22% 7% Surf segment sales 2
Slide 32: Appendix 4: Brands with global reach
Appendix 4: Brands with global reach Total Group RC KMD Oboz Total Europe RC KMD Oboz Total For personal use only Owned stores 162 162 - 324 Owned stores 20 - - 20 Licensed stores 220 - - 220 Licensed stores 17 - - 17 JV stores 28 - - 28 Online sites 1 1 - 2 Online sites 6 4 - 10 Wholesale doors 2,0
Slide 33: Brand strengths more relevant than ever before
Brand strengths more relevant than ever before For personal use only • Leading outdoor brand in • Established and distinctive • Iconic, inspirational, and Australasia American Montana-based brand authentic brand • Original, sustainable, engineered, • Focused, efficient product range • Renowned for h
Slide 34: Important Notice and Disclosure
Important Notice and Disclosure This presentation prepared by Kathmandu Holdings Limited (the “Company” or the “Group”) (ASX/NZX:KMD) dated 23 March 2021 provides additional comment on For personal use only the financial statements of the Company for the 6 months ended 31 January 2021, and accompany