Woolworths Holdings Limited · JSE:WHL
Woolworths — Merger or Acquisition (May 2014)
29 slides from Woolworths's merger presentation, May 10, 2014
Slide 1: Woolworths Roadshow Presentation: Acquisition of David Jones
WOOLWORTHS ROADSHOW PRESENTATION ACQUISITION OF DAVID JONES 9 & 10 MAY 2014 1
Slide 2: Basis of Disclosure
BASIS OF DISCLOSURE The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restricti
Slide 3: Strategic Rationale
STRATEGIC RATIONALE 3
Slide 4: Acquisition Supports Our Strategy
ACQUISITION SUPPORTS OUR STRATEGY n Be a leading southern hemisphere fashion retailer DAVID JONES IS A PARADIGM-CHANGING ACQUISITION THAT n Drive synergies and efficiencies across the group DELIVERS ON 3 OF OUR 6 STRATEGIC INITIATIVES n Build stronger, more profitable customer relationships n Become
Slide 5: Changing Dynamics in Southern Hemisphere Retail
CHANGING DYNAMICS IN SOUTHERN HEMISPHERE RETAIL n WHL continues to pursue aggressive growth plans across Africa (including South Africa) to benefit from forecast sub-Saharan WHL HISTORIC REVENUE AND NPAT (R'M) GDP growth of ~5% § Opening new stores 45 000 3 000 § Expanding existing stores § Launchin
Slide 6: Australian Expansion the Optimal Next Step
AUSTRALIAN EXPANSION THE OPTIMAL NEXT STEP n WHL has conducted an extensive analysis of all relevant southern hemisphere markets HOUSEHOLD SPEND § Being a leading fashion retailer in the southern hemisphere is one AND POPULATION GROWTH 1 of WHL’s strategic objectives § Southern hemisphere expansion
Slide 7: David Jones: An Iconic Australian Brand
DAVID JONES FOOTPRINT AN ICONIC AUSTRALIAN BRAND n Founded in Sydney, Australia in 1838 and first listed in 1920 QLD: 8 STORES n Department store retailer focused on aspirational and premium customer segments § Strong player in the premium segment WA: 4 STORES SA: § >35% market share of high-end and
Slide 8: David Jones 3Q14 Sales
DAVID JONES 3Q14 SALES n On 6 May 2014, David Jones announced its 3Q14 Sales n Total Sales up 4.1% n Like-for-Like (LFL) Sales up 2.4% n Online Sales continued to grow; up 190% on previous year comparative period n Womenswear, Menswear, Shoes, Accessories, Beauty and Homeware all delivered positive
Slide 9: The Perfect Platform for Australian Expansion
THE PERFECT PLATFORM FOR AUSTRALIAN EXPANSION HIGHER INCOME AUSTRALIAN CUSTOMER SEGMENT DEPARTMENT STORE LANDSCAPE ILLUSTRATIVE ONLY LOWER INCOME BUDGET PRODUCT OFFERING PREMIUM 1 MEANINGFUL IN SIZE 2 A MIRROR IMAGE OF WHL 3 ALIGNED VALUES 4 ALIGNED CUSTOMER >R55bn market capitalisation1 Iconic Sout
Slide 10: Store Portfolio Comparison by Number of Stores
STORE PORTFOLIO COMPARISON BY # OF STORES 3% 3% 17% 39% 42% 35% 19% 62% 17% 29% 26% 44% 12% 33% 27% 24% 14% 15% 11% 11% 8% 8% 1% Major CBD High Income Medium Income Low Income Regional Source: Pitney Bowes MapInfo, Port Jackson Partners analysis. 10
Slide 11: Compelling Strategic Rationale
COMPELLING STRATEGIC RATIONALE Strong platform for continued expansion – a mirror image of WHL with meaningful size, aligned values and 1 aligned customers in an attractive market, well known to WHL Ensures strong defensive position against northern hemisphere entrants in both South Africa and Austr
Slide 12: Synergies
SYNERGIES 12
Slide 13: Value Creation Opportunities in Excess of ~R1.4bn per Annum
VALUE CREATION OPPORTUNITIES IN EXCESS OF ~ R1.4BN PER ANNUM WITHIN 5 YEARS1 EBIT IMPACT TIMING OF BENEFITS 1 INTRODUCTION OF WHL PRIVATE LABEL A$70m -A$80m FY15E - FY17E 2 GROWTH OF CRG CONCESSION BRANDS A$30m -A$40m FY15E - FY17E 3 INTRODUCTION OF DAVID JONES LOYALTY SCHEME Nil assumed FY16E - FY1
Slide 14: 1. Introduction of WHL Private Label
1. INTRODUCTION OF WHL PRIVATE LABEL n David Jones private label contribution only ~3.5% of sales EBIT IMPACT TIMING OF BENEFITS (all sourced through 3rd parties so not ‘true’ private label ) A$70m-$A80m FY15E – FY17E n Opportunity to increase this to at least 20% (international department store ben
Slide 15: Introduction of RE: (Mens, Womens, Kids)
INTRODUCTION OF RE: (MENS, WOMENS, KIDS) BACK TO PRIVATE LABEL 15
Slide 16: Introduction of Studio W (Mens, Womens, Home)
INTRODUCTION OF STUDIO W (MENS, WOMENS, HOME) BACK TO PRIVATE LABEL 16
Slide 17: Introduction of JT One
INTRODUCTION OF JT ONE BACK TO PRIVATE LABEL 17
Slide 18: 2. Growth of CRG Concession Brands
2. GROWTH OF CRG CONCESSION BRANDS n David Jones and the CRG customer: § CRG affinity with David Jones of 3.2x FASHION § CRG return per sqm significantly above David Jones average DAVID JONES SASS & BIDE ALANNAH SCANLAN HILL AND n Expansion of existing pads: TOPSHOP GREEN WITH ENVY THEODORE SPORTSGI
Slide 19: Trenery: A Significant Opportunity
TRENERY A SIGNIFICANT OPPORTUNITY n Trenery stands for beautiful, simple, sophisticated collections that provide customers with affordable luxury every day n The increased life expectancy trends in Australia have translated to a growing ‘lifestyle’ and wealthier customer segment n Launched in Austra
Slide 20: Trenery: A Significant Opportunity (cont.)
TRENERY A SIGNIFICANT OPPORTUNITY (CONT.) n Trenery now has 24 standalone stores across Australia and New CR / TR RSA GROWTH TRAJECTORY Zealand, with 4 standalone and 21 concession stores in South Africa FY13: A$75.6 n Following the successful launch of Country Road in Woolworths, Trenery was launch
Slide 21: Trenery: A Significant Opportunity (cont.)
TRENERY A SIGNIFICANT OPPORTUNITY (CONT.) n CRG customers are 3.2x more likely to shop at David Jones than the base population (19.9%), with 63.8% of our customers shopping at David Jones n This affinity and penetration is even higher for Trenery customers, who are 4.1x more likely to shop at David
Slide 22: Mimco: Successful Transformation within David Jones
MIMCO SUCCESSFUL TRANSFORMATION WITHIN DAVID JONES n Mimco was launched as a wholesale brand in David Jones close to a decade ago n In August 2012, Mimco transferred to a concession agreement with David Jones, giving us full brand control across price and promotional activity, store experience, serv
Slide 23: 3. Introduction of David Jones Loyalty Scheme
3. INTRODUCTION OF DAVID JONES LOYALTY SCHEME n David Jones currently has a relationship with Amex EBIT IMPACT TIMING OF BENEFITS Nil assumed FY16E – FY18E through a combination of store card and branded credit cards n Opportunity exists to introduce a tiered loyalty scheme, through these channels,
Slide 24: 4. Enhance Omni-Channel Performance
4. ENHANCE OMNI-CHANNEL PERFORMANCE n Enhance online performance, driven by EBIT IMPACT TIMING OF BENEFITS Nil assumed FY15E – FY19E the introduction of private label, and a broader catalogue (will increase online sales as a percentage of total revenue) n WHL analysis takes into consideration the ca
Slide 25: 5. Optimise Group Real Estate Portfolio
5. OPTIMISE GROUP REAL ESTATE PORTFOLIO n Increased productivity through improved EBIT IMPACT TIMING OF BENEFITS A$20m-A$30m FY17E – FY19E profiling and allocation n Introduction of further village store formats to build on current success of this model 25
Slide 26: 6. Improved Margin through Group Sourcing Strategy
6. IMPROVED MARGIN THROUGH GROUP SOURCING STRATEGY n In addition to lower product costs from the EBIT IMPACT TIMING OF BENEFITS A$10m-A$20m FY16E – FY19E private label shift, WHL group sourcing strategy will further lower cost of goods through volume based pricing benefits n Migrate sourcing of Davi
Slide 27: Attractive Owned Property Portfolio
ATTRACTIVE OWNED PROPERTY PORTFOLIO SYDNEY n David Jones owns the four properties that house its flagship stores in each of Sydney and Melbourne n They have been independently valued at ~A$612m (R6.1bn1 , as at late 2012) § Elizabeth Street (GLA ~39,000m2) § Market Street (GLA ~32,000m2) MELBOURNE §
Slide 28: Indicative Transaction Timetable
INDICATIVE TRANSACTION TIMETABLE INDICATIVE DAVID JONES SCHEME TIMETABLE 2014 First Australian court hearing MID - LATE MAY Distribution of Scheme Booklet to David Jones shareholders LATE MAY Scheme meeting LATE JUNE Notice of second Australian court hearing LATE JUNE Second Australian court hearing
Slide 29: Thank You
THANK YOU 29
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