Premier Investments Limited · ASX:PMV
Premier Investments — FY2016 Earnings Presentation
40 slides from Premier Investments's earnings presentation, Sep 22, 2016
Slide 1: 2016 Full Year Results Overview
PREMIER INVESTMENTS LIMITED 2016 Full Year Results Overview 22 September 2016
Slide 2: Agenda
Agenda Premier Investments 1 FY16 overview 8 Smiggle global expansion driving growth Premier Investments 2 FY16 consolidated financial results 9 Peter Alexander performing strongly 3 Premier Retail FY16 performance 10 Online strategy delivering 4 2H16 trading overview 11 Premier Retail summary 5 Gro
Slide 3: FY16 Overview
PREMIER INVESTMENTS LIMITED FY16 OVERVIEW
Slide 4: Premier Investments FY16 overview
1 Premier Investments FY16 overview • Group profit – Underlying net profit before tax $145.4 million, up 22.6% on FY151,3 – Reported net profit after tax $103.9 million, up 17.9% on FY151 – Earnings per share of 66.3c, up 17.3% on FY151,3 – Increased final fully franked dividend of 25 cps (FY15: 21
Slide 5: Premier Investments FY16 overview
1 Premier Investments FY16 overview • Premier Retail continuing to grow – Underlying EBIT up 26.1% to $133.3 million1,3 – Underlying net profit before tax up 28.1% to $129.2 million1,3 – Total sales increase of 10.9% on FY151,2 with annual sales passing $1 billion for the first time – LFL sales up 3
Slide 6: Premier Investments summarised consolidated income statement
2 Premier Investments summarised consolidated income statement 53 weeks to 52 weeks to $m 30 July 2016 25 July 2015 Premier revenue (ex Premier Retail) 22.5 23.5 Premier expenses (ex Premier Retail) (5.5) (4.9) Premier Retail EBIT – underlying 133.3 105.7 Finance costs (4.9) (5.7) Underlying net pro
Slide 7: Premier Investments summarised consolidated balance sheet
2 Premier Investments summarised consolidated balance sheet $m 30 Jul 2016 25 Jul 2015 Assets Cash and cash equivalents 283.2 281.6 Inventories 123.6 111.8 Property, plant and equipment 139.2 123.5 Other assets 48.7 66.7 Asset classified as held for sale - 1.0 Investment in associates 213.4 209.5 In
Slide 8: Premier Retail
PREMIER RETAIL
Slide 9: Premier Retail FY16 performance: highlights
3 Premier Retail FY16 performance: highlights • Underlying EBIT up 26.1% to $133.3 million1,3 • Underlying EBIT margin up 152 bps to 12.7%1,2,3 • Underlying profit before tax up 28.1% to $129.2 million1,3 • Total sales up 10.9%1,2 • LFL sales up 3.5%1 • All key growth initiatives delivering – Smiggl
Slide 10: Premier Retail performance
3 Premier Retail performance 53 weeks 52 Weeks $000 to 30 Jul 20163 to 25 Jul 2015 Var LY Sales1 1,049,226 945,707 +10.9% LFL sales +3.5% +2.2% Gross Profit1 670,280 596,769 +12.3% Gross margin (%)1 63.9% 63.1% +78 bps Employee Expenses2 (268,077) (239,831) +11.8% % sales 25.5% 25.4% +19 bps Rent2 (
Slide 11: 2H16 trading overview
4 2H16 trading overview Hottest Autumn on Record • Winter trading conditions for the apparel brands were impacted by one-off external events including: – Unseasonably warm weather – hottest Autumn on record in Australia1 in majority of store locations led to market-wide discounting across all winter
Slide 12: Gross margin strategies delivering
5 Gross margin strategies delivering • Premier Retail gross margin expanded by 78 bps Gross margin — 5 year history (despite the weaker AUD, the impact of external events on 2H16 and a highly competitive market) through the effective implementation of key gross margin 65.0% 1.05 strategies: 1.0278 6
Slide 13: Cost of doing business remains a focus
6 Cost of doing business remains a focus • Costs continue to be well controlled whilst investment continues into strategic growth initiatives, including Smiggle’s international growth markets (UK, Hong Kong, Malaysia), Online and Peter Alexander • The group’s two largest costs have grown less than s
Slide 14: Premier Retail investing in growth
7 Premier Retail investing in growth • Investment in rapid growth of Smiggle continues in Capital Investment international markets • Investment continues in Peter Alexander new stores, 50.0 45.0 refurbishments, refits, upsizing and back-of-house 36.1 40.0 34.3 • Significant investment continues in a
Slide 15: Premier Retail investing in growth
7 Premier Retail investing in growth Premier Retail continues to invest in new stores, upgrades and refurbishments to deliver sustainable sales growth: 251 stores received capital investment, including 81 new stores • 40 new stores opened in the United Kingdom • 7 new stores opened in Australia • 4
Slide 16: Premier Retail investing in growth
7 Premier Retail investing in growth • 3 new stores opened in Australia • 6 stores relocated and refurbished across Australia and New Zealand • 5 stores refurbished in existing locations in Australia • 7 new stores opened in Australia and New Zealand including a flagship Mid City store, which opened
Slide 17: Smiggle: global expansion driving growth
8 Smiggle: global expansion driving growth • FY16 sales of $188m, up 41.8% • Strong LFL sales recorded in all countries • More than 50% of total global revenue was generated outside Australia in FY16 • 52 new stores opened in FY16 • Sales have grown from $19m in FY08 to $188m in FY16 200 Smiggle Sal
Slide 18: Smiggle: Australia and New Zealand
8 Smiggle: Australia and New Zealand • Strong total and LFL sales growth in both Australia and New Zealand • Strong online sales and profit growth driven by further investment • All product categories have successfully grown • Opened 7 new stores in FY16, all of which have traded ahead of expectatio
Slide 19: Smiggle: United Kingdom
8 Smiggle: United Kingdom • UK market is very attractive, with personal stationery market size estimated at USD $2.4 billion • At end of FY16, Smiggle UK had 64 stores trading • Strong LFL sales growth in FY16 • 40 new stores opened during FY16, performing well ahead of expectations • Scotland perfo
Slide 20: Smiggle: United Kingdom – Brexit analysis
8 Smiggle: United Kingdom – Brexit analysis • Post the Brexit vote in June, significant analysis was undertaken to understand possible implications for the brand’s performance and continued store roll out. The analysis included: – a thorough review of trade by store – foreign exchange impacts to bot
Slide 21: Smiggle: United Kingdom - investment for growth continues
8 Smiggle: United Kingdom - investment for growth continues • Smiggle plans to open: – 1H17: 20–25 new stores for a total of 85-90 stores trading by Christmas 2016 – Calendar Year 2017: 30-40 stores – Calendar Year 2018: 40-60 stores – Calendar Year 2019: 40-60 stores • Smiggle confirms significant
Slide 22: Smiggle: Asia
8 Smiggle: Asia Singapore • Strong LFL sales result • Closed 1 store, Compass Point, in 1H16 due to full centre closure. Have now secured a prominent location in the newly redeveloped centre to open early in 1H17 • Still see opportunity for a further 3-4 store openings in the next 2-3 years Hong Kon
Slide 23: Smiggle: Asia
8 Smiggle: Asia Malaysia • Successfully launched Smiggle into the market in April 2016 • Exceptional results across all metrics with flagship store Suria KLCC • Close proximity to Singapore has provided immediate acceptance of the brand • Well embraced by both locals and international tourists • New
Slide 24: Peter Alexander performing strongly
9 Peter Alexander performing strongly • Sales up 20.4% with strong total and LFL sales in both Australia and New Zealand • Excellent results from Christmas and Mother’s Day trading periods continuing to cement brand as a key gifting destination • New Zealand delivered impressive growth on the back o
Slide 25: Peter Alexander future growth
9 Peter Alexander future growth The brand sees future growth opportunities including: • 3 new stores confirmed in 1H17: Greenwood Plaza, Macarthur Square and Noosa • 4 stores confirmed to be refurbished and upsized in 1H17: Pacific Fair, Spencer Street, Chadstone and Warringah • 5 – 7 new stores per
Slide 26: Online strategy delivering
10 Online strategy delivering • Online sales up 39.6% in FY16 – well ahead of market growth of Consistent Online sales growth ahead of market 8.0%1 for the 12 months ended July 2016 • Online channel delivers significantly higher EBIT margin than the 45.0% 39.6% Group average 40.0% • Strong performan
Slide 27: Premier Retail summary FY16
11 Premier Retail summary FY16 Smiggle achieves significant growth • Record year for Smiggle, with sales up 41.8% and strong LFL growth in all countries (Australia, New Zealand, Singapore and United Kingdom) • Asian expansion successfully executed with 5 stores opened across Hong Kong and Malaysia a
Slide 28: Premier Retail summary FY16
11 Premier Retail summary FY16 Peter Alexander performing strongly • Peter Alexander sales up 20.4% with strong total and LFL sales growth in Australia and New Zealand • New store roll out program in Australia and New Zealand delivering profitable growth • Key investments continue in marketing and o
Slide 29: Premier Retail summary FY16
11 Premier Retail summary FY16 Core brands strategies on track • Targeted investment in refurbishments and new store formats continues across the store network and is delivering strong results • Core brands capital investments during FY16: – 18 new stores – 33 store relocations and refurbishments –
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Slide 31: Ordinary Final Dividend
12 Ordinary Final Dividend • The Premier Board has declared an increased final fully franked dividend of 25 cps (FY15 Final: 21 cps) • The Board’s decision to pay ordinary dividends is always shaped by: – Assessment of the result – Outlook for the market – Confidence in the operational performance o
Slide 32: Premier Retail Brand by Brand Performance
owe eT hay Saeeses* PREMIER RETAIL BRAND BY BRAND PERFORMANCE
Slide 33: Smiggle
13 Highlights • Record year with sales growth of 41.8% to $188.0m • Strong LFL growth in all countries • 52 stores opened • Successful entry into Hong Kong and Malaysia in 2H16 • Smiggle reaffirms UK expansion plan to have 200 stores and annual sales of $200m by 2019 • Smiggle reaffirms Hong Kong an
Slide 34: Peter Alexander
13 Highlights • Sales growth of 20.4% • Strong LFL sales growth in both Australia and New Zealand • Online continues to be a driver for growth in both markets • Strong gross margins maintained • Concession stores continue to improve delivering growth • Successful launch of a new ‘plus size’ range, w
Slide 35: Dotti
13 Highlights • Strong sales growth of 8.8% • LFL sales growth and significant margin expansion was achieved • Benefit of new sourcing initiatives continue to improve margin • Online initiatives drove online sales up 33% • Investment in Jess Hart as brand ambassador continues • Clean inventory posit
Slide 36: Portmans
13 Highlights • Total sales growth of 2.5% • 6 new stores opened • Online sales growth of 24.9% • Reinvigorated ‘Special Occasion Collection’ delivered double digit incremental growth during Christmas extending into 2H16. • Successful implementation of new direct sourcing channel to enhance margin •
Slide 37: Just Jeans
13 Highlights • Total sales growth of 3.3% • Total denim sales across men’s and women’s continue to be strong, with Own Brand, Levis & Guess all achieving strong growth • Investment in new retail store format across 7 new store openings delivering positive results • Investment in Ashley Hart & Stenm
Slide 38: Jay Jays
13 Highlights • New store format continuing to perform well, delivering improved profitability and customer experience • Ongoing focus on driving an increase in full price sales together with sourcing initiatives has delivered further brand profit growth on prior years • Significant improvement in L
Slide 39: Jacqui E
13 Highlights • Total sales growth of 1.8% • LFL sales growth higher than total sales growth • 2 unprofitable stores closed during the year • Investment in flagship store in Lambton Quay (NZ) which opened in September 2015 delivering positive results • New fashion direction introduced in 2H16 offeri
Slide 40: Appendix: Overview of Premier's non-IFRS financial information
A Appendix Overview of Premier’s non–IFRS financial information • IFRS financial information is financial information that is presented in accordance with all relevant accounting standards. • Non-IFRS financial information is financial information that is presented other than in accordance with all