Lovisa Holdings Ltd. · ASX:LOV
Lovisa — FY2020 Earnings Presentation
25 slides from Lovisa's earnings presentation, Aug 26, 2020
Slide 1: Lovisa Holdings Limited 2020 Full Year
Lovisa Holdings Limited 2020 FULL YEAR SHANE FALLSCHEER MANAGING DIRECTOR CHRIS LAUDER CHIEF FINANCIAL OFFICER
Slide 2: Forward-looking statements
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 the current intentions, plans, expectations, assumptions and beliefs about future events of Lovisa
Slide 3: Contents
CONTENTS 1. FULL YEAR OVERVIEW 2. FINANCIAL OVERVIEW 3. IMPACT OF COVID 4. TRADING PERFORMANCE 5. CASHFLOW AND BALANCE SHEET 6. STORE GROWTH 7. DIGITAL UPDATE 8. USA UPDATE 9. EUROPE UPDATE 10. TRADING UPDATE AND OUTLOOK 11. SUMMARY 12. APPENDICES 3
Slide 4: Strategy Recap
STRATEGY RECAP Our strategic plans remain in place OUR PAST OUR PRESENT OUR FUTURE 10 years ago we set out to develop a fast Although we have some short-term Continued expansion in our current fashion jewellery concept to meet challenges with COVID we are well on the markets with the same successful
Slide 5: Full Year Overview
FULL YEAR OVERVIEW1 • Performance on track prior to COVID-19 with 1H20 • US market up to 48 stores at year end tracking at 22.2% sales growth • Digital execution accelerated and geographic coverage • Lovisa was impacted by the economic lock-down in expanded delivering an increasing share of our busi
Slide 6: Financial Overview
FINANCIAL OVERVIEW1 FY20 FY20 FY19 Variance • Financial result impacted by COVID-19 economic lock-downs ($000) (Statutory) (pre AASB 16) (pre AASB 16) (pre AASB 16) during Q4 Revenue 242,176 242,176 250,282 -3.2% • Revenue down 3.2% with comparable store sales down 5.5% for the period after +22.2% g
Slide 7: Impact of COVID on Store Network
IMPACT OF COVID ON STORE NETWORK Store Count • Progressive closure of store network globally due to COVID-19, March to August with most stores closed by the end of March 2020 450 401 405 406 • Stores re-opened beginning in mid-April with the Australian 376 387 388 390 391 394 376 376 400 375 stores,
Slide 8: Trading Performance - Sales
TRADING PERFORMANCE - SALES Strong sales momentum slowed by COVID in Q4 280 260 • Total Global Sales Revenue down 3.2% to $242.2m 240 220 • Strong momentum from acceleration in store rollout 200 through 1H20 slowed by COVID-19 impact on 2H20 180 Sales ($AUDm) • 1H20 sales growth of 22.2% reflected c
Slide 9: Trading Performance - Sales by Region
TRADING PERFORMANCE - SALES Region ($AUD '000) FY20 FY19 Variance Sales growth continues to be driven by new regions Australia / NZ 124,081 137,684 -9.9% • Australia/New Zealand region delivered strong growth prior to COVID closures at +6.2% in 1H20, and have Asia 25,466 34,393 -26.0% recovered fast
Slide 10: Trading Performance - Gross Margin
TRADING PERFORMANCE - GROSS MARGIN HISTORICAL GROSS MARGINS Gross Margin at Constant Currency* 90.0% 80.0% FY20 FY20* FY19 70.0% Currency USD 0.71 0.76 0.76 60.0% 50.0% Sales 242,176 242,176 250,282 40.0% 77.1% 74.0% 78.8% 80.0% 80.5% 77.3% Cost of Sales (54,907) (50,918) (48,873) 30.0% Gross Profit
Slide 11: Cost of Doing Business
COST OF DOING BUSINESS1 Continued investment in global rollout • Acceleration of rollout in new territories has increased CODB 70% CODB % Sales1 in recent years with higher initial operating costs in these 60% markets compared to existing averages 50% • Work on improving these cost structures beginn
Slide 12: Cash Flow
CASH FLOW1 Continued investment in store rollout FY20 FY19 • Cash flow from operating activities was $51.7m with (A$000s) (pre AASB 16) (pre AASB 16) operating cash conversion at 115% as a result of tight working capital management during COVID impact Cash from operating activities 51,684 66,727 and
Slide 13: Balance Sheet
BALANCE SHEET1 Strong Balance Sheet remains in place (A$000s) FY20 (pre AASB 16)* FY19 Net Cash 20,434 11,192 • Significant actions taken to conserve cash during COVID closure Receivables 7,876 7,413 period Inventories 21,714 22,769 Derivatives 207 645 • Focus on disciplined inventory management con
Slide 14: Store Growth
STORE GROWTH International rollout continued with 66 new stores opened Store number growth • Number of international stores growing with offshore territories now 65% of the store network Country FY20 FY19 Var • 66 new stores opened with 21 store closures including the closure of Australia 152 154 (2
Slide 15: Digital Update
DIGITAL UPDATE • Focus on our digital capabilities was accelerated leading into lockdown • We now service all 8 major markets via digital store fronts across the globe • Total Online sales grew by 311% for FY20, with +382% during Q4 and that trend continuing since financial year end • We have appoin
Slide 16: USA Update
USA UPDATE • We were trading in the following states at the end of June 2020: California (20) Texas (8) Florida (5) Illinois (5) Minnesota (2) New Jersey (2) Oregon (1) Arizona (2) New York (2) Georgia (1) • Since the end of June we have opened our first stores in Louisiana, Miss
Slide 17: Europe Update
EUROPE UPDATE • At year end we were trading from 42 stores in the UK and 21 in France • Decision taken to exit Spanish market due to poor support from landlords through the lockdown period resulting in 9 store closures and an impairment charge of €2.1m (A$3.4m) • UK rollout has continued with 4 stor
Slide 18: Trading Update and Outlook
TRADING UPDATE AND OUTLOOK • Trading for the first 8 weeks of FY21 has seen continued challenging trading conditions as most markets continue to experience economic disruption with comparable store sales for this period of –19.0%, an improvement from comparable store sales in Q4 of -32.5% • We conti
Slide 19: Summary
SUMMARY • FY20 impacted by store network closures in Q4 as a result of COVID-19 • Solid progress made in digital with increasing contribution from online sales • Delivering an EBIT of $30.6m • Comparable store sales down 5.5% for the financial year after +2.1% in 1H20 • Reduction in gross margin imp
Slide 20: Appendices
APPENDICES 20
Slide 21: Appendix - Disclosing non-IFRS financial information
APPENDIX 1 ASIC Regulatory Guide 230 Disclosing non-IFRS financial information In December 2011 ASIC issued Regulatory Guide 230. To comply with this Guide, Lovisa Holdings Limited is required to make a clear statement about the non-IFRS information included in the Profit announcement and Full Year
Slide 22: Appendix - Impact of new lease accounting standard AASB 16
APPENDIX 2 – Impact of implementation of new lease accounting standard AASB 16 The implementation of AASB 16 has significantly changed reported results however does not have any economic impact on the company, its cash flows, debt covenants or shareholder value. The impact on transition and going fo
Slide 23: Appendix - Profit and Loss Statement
APPENDIX 2 – PROFIT AND LOSS STATEMENT1 Impact of FY20 FY19 Variance Variance ($’000) FY20 Statutory application of (pre AASB 16)* (pre AASB 16) (Statutory) (pre AASB 16*) AASB 16 Revenue 242,176 0 242,176 250,282 (3.2%) (3.2%) Cost of sales (54,907) 0 (54,907) (48,873) 12.3% 12.3% Gross profit 187,
Slide 24: Appendix - Balance Sheet
APPENDIX 2 – BALANCE SHEET FY20 Impact of application FY20 (A$000s) FY19 (Statutory) of AASB 16 (pre AASB 16)* Net Cash 20,434 0 20,434 11,192 Receivables 7,876 0 7,876 7,413 Inventories 21,714 0 21,714 22,769 Derivatives 207 0 207 645 Total current assets 50,231 0 50,231 42,018 Property Plant & Equ
Slide 25: Appendix - Cash Flow
APPENDIX 2 – CASH FLOW Impact of FY20 FY20 FY19 (A$000s) application of (Statutory) (pre AASB 16) (pre AASB 16) AASB 16 Cash from operating activities 83,570 31,886 51,684 66,727 Net interest paid (99) 0 (99) 134 Tax paid (3,471) 0 (3,471) (20,633) Net cash from operations 80,000 31,886 48,114 46,22