Frasers Group Plc · LSE:FRAS
Frasers — Sports Direct International — FY2014 Earnings Presentation
36 slides from Frasers's earnings presentation, Jul 17, 2014
Slide 1: Preliminary Results Presentation
SPORTS DIRECT INTERNATIONAL PLC Preliminary Results Presentation For the 52 weeks ended 27 April 2014 Thursday 17 July 2014
Slide 2: Dave Forsey, Chief Executive
SPORTS _COM Dave Forsey CHIEF EXECUTIVE « _-
Slide 3: FY14: Group Highlights
FY14: Group Highlights • Group Revenue up 23.8% to £2,706m, largely driven by growth in Sports Retail division • Sports Retail like for like stores gross contribution increased by 10.5% • Further growth in online revenue of 26.8% - now representing 17.1% of total Sports Retail sales (FY13: 15.0%)* •
Slide 4: Financial Review
SPORTSDIRECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Slide 5: Group Revenue Bridge
FY14: Group Revenue Bridge +49.4% +4.1% £2,706m +26.8% +23.6% Revenue (£m) £2,186m • Sports Retail growth includes the acquisition of EAG and SIG • Premium Lifestyle growth includes a full year of Republic, which was acquired in February 2013 (1) Includes Wholesale and Other SPORTS DIRECT INTERNATIO
Slide 6: Sports Retail Overview
FY14: Sports Retail Overview Sports Retail Revenue Sports Retail Gross Margin * 2,400 £2,274m Online Stores * 2,200 43.5 £335m 42.9 2,000 43.0 43.2 £1,833m 42.5 Revenue (£m) 1,800 Gross Margin (%) 42.0 £264m 41.5 41.2 1,600 41.4 41.0 1,400 40.9 £1,939m 40.5 40.3 40.3 40.0 1,200 £1,569m FY'11 H1'12 F
Slide 7: FY14: Sports Retail Operating Costs
FY14: Sports Retail Operating Costs FY14 FY13 Change (£m) (£m) (%) Store Wages 211 154 +37.0 Premises Costs 193 145 +33.1 Other Retail costs 246 186 +32.8 Operating costs (currency impact) 6 (5) +220.0 Sports Retail Operating Costs 656 480 +36.7 Sports Retail Underlying EBITDA pre associates 319 259
Slide 8: Premium Lifestyle
FY14: Premium Lifestyle(1) FY13 • July 2012: acquired 51% of Flannels • February 2013: acquired certain assets of Republic FY14 • May 2013: acquired remaining 20% of Cruise 250 £214.1m • July 2013: acquired 51% of Pulp, a six store retail fashion chain Pulp 200 Delima Cruise FY14 FY13 Change Revenue
Slide 9: Brands Division
FY14: Brands Division 250 £209.0m £217.5m 200 32.3 30.7 Revenue (£m) 150 Licensing 178.3 185.2 100 Wholesale 50 0 FY13 FY14 • Revenue: up 4.1% – Licensing: up 5.2% – Wholesale: up 3.9% • Wholesale margin: 33.2% – Down 220 bps • Licensing: – FY14: 84 deals completed / contractual minimum royalties of
Slide 10: Brands Operating Costs
FY14: Brands Operating Costs FY14 FY13 Change (£m) (£m) (%) Wages 22.9 25.2 -9.1 Advertising & promotion 15.0 17.3 -13.3 Other Brands Costs 25.2 24.1 +4.6 Total Brands Operating Costs 63.1 66.6 -5.0 Brands Underlying EBITDA 30.2 27.0 +11.9 • New acquisitions include: Gelert • Decrease in operating c
Slide 11: Underlying EBITDA Bridge
FY14: Underlying EBITDA Bridge +23.6% 340 -46.2% (£21.4m) +12.3% 330 UNDERLYING EBITDA (£M) (£11.9m) 320 £61.4m £3.2m 310 300 290 £331.1m £319.2m 280 270 £287.9m 260 250 FY13 pre Share Sports Retail Premium Lifestyle Brands FY14 pre Share Share Schemes' FY14 Schemes' non-cash Schemes' non-cash non-c
Slide 12: PBT / PAT / EPS
FY14: PBT / PAT / EPS FY14 FY13 Change (£m) (£m) (% ) Underlying EBITDA (pre share scheme) 331.1 287.9 +15.0 Bonus share scheme charge (11.9) (22.1) -46.2 Depreciation (excl. impairment) (63.7) (52.6) +21.3 Interest (7.8) (6.6) +18.2 Investment Income 1.6 1.5 +6.7 Underlying PBT 249.3 208.1 +19.8 Un
Slide 13: Depreciation & Amortisation
FY14: Depreciation & Amortisation FY14 FY13 Change (£m) (£m) (% ) Sports Retail - Stores, warehouse and amortisation of goodwill 49.7 37.0 +34.3 Sports Retail - Change in estimated useful life – fixtures & 2.2 2.1 +4.8 fittings Total Sports Retail 51.9 45.9 +13.1 Premium Lifestyle 5.4 1.9 +184.2 Bra
Slide 14: Taxation
FY14: Taxation FY14 FY13 (£m) (£m) Reported PBT 239.5 207.2 Standard rate of corporation tax (1) 55.1 49.7 Non-qualifying depreciation 4.9 3.8 Other differences (0.2) 2.0 Effective tax 59.8 55.5 Actual effective tax rate 25.0% 26.8% The effective rate for next year is expected to be in the region of
Slide 15: Cash Flow
FY14: Cash Flow FY14 FY13 (£m) (£m) EBITDA (pre scheme costs) 331.1 287.9 Realised (loss)/profit on fx contracts 1.8 2.3 Taxes paid (55.7) (44.7) Underlying free cash flow 277.2 245.5 Working capital Inventory (54.8) (102.0) Debtors / Creditors, other (55.3) (29.2) Acquisitions (including debt) (1)
Slide 16: Capital Expenditure
FY14: Capital Expenditure FY14 FY13 (£m) (£m) Freehold acquisitions 13.4 0.5 Warehouse and Shirebrook store expansion 5.2 20.2 New stores (leasehold) 16.1 14.8 Maintenance capex 11.9 5.0 Other 11.0 2.0 Sports Retail 57.6 42.5 Premium Lifestyle 7.0 2.1 Brands 4.5 5.3 69.1 49.9 Proceeds on disposal of
Slide 17: Net Debt Bridge
FY14: Net Debt Bridge -200 332.9 -150 -100 -50 NET DEBT (£M) (114.7) 0 (69.1) 50 154.0 100 (55.7) 150 212.0 (144.2) 200 (7.2) 250 Net Debt EBITDA & FX Working Capital Acquisitions Interest Tax Net Debt FY13 capital & Expenditure FY14 other • Investment in working capital, particularly product range
Slide 18: Operational Review
SPORTSDIRECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Slide 19: Sports Retail: UK Property
Sports Retail: UK Property FY14 FY13 UK Stores 418 396 • Square footage has increased to c.4.5m sq. ft. (1) Openings 32 37 • Continued enhancement of the store portfolio Closures 10 36 • FY14: c.300,000 sq.ft of existing space refitted Freehold properties 59 52 • Leasehold expiry profile is now 5.1
Slide 20: Sports Retail: UK Property Targets for FY15
Sports Retail: UK Property Targets for FY15 include: • Target c.400,000 sq.ft. of existing space to be refitted • Target 30 – 40 store openings, 30% of which are expected to be relocations • Focus on further large format stores in key markets • Continued investment in specialist performance areas wi
Slide 21: Sports Retail: UK Property
Sports Retail: UK Property Shirebrook extension - completed Glasgow elevation drawing • Extended from 25,000 sq.ft to 57,000 sq.ft. • Addition of a 9,000 sq. ft. dedicated Nike area, one of the biggest Nike Marketplace Transformation Projects • Also includes enhanced football, outdoor, running and w
Slide 22: Sports Retail: Fitness Division Created
Sports Retail: Fitness Division Created • Recently took occupation of 13 former LA Fitness sites • Aintree sports retail and gym – Autumn 2014 • Planning granted for 40,000 sq.ft. retail space over 2 floors. • A separate 20,000 sq.ft. dry gym • Another two units opening in St Helens and Keighley thi
Slide 23: Sports Retail: International Overview
Sports Retail: International Overview Existing No. of Stores territories • European growth continues with the Belgium 44 acquisition of two key subsidiaries: Slovenia 15 Portugal (1) 15 o Sports Eybl and Sports Experts Group (EAG), a sports retailer with stores in Poland 7 Austria and Germany in Jun
Slide 24: Sports Stores: Austria Update
Sports Stores: Austria Update • Remaining 49% equity acquired in March 2014 • Sports Direct EPOS systems introduced to all stores • Continuing sell through of legacy stock • Category led merchandising layouts planned for Mega Stores, similar to recent UK large format stores • Objective to double the
Slide 25: Sports Retail: Karrimor Running TV Campaign
Sports Retail: Karrimor Running TV Campaign SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 17th July 2014 25
Slide 26: Marketing: Firetrap TV Campaign
Marketing: Firetrap TV Campaign SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 17th July 2014 26
Slide 27: Marketing: USA Pro TV Campaign
Marketing: USA Pro TV Campaign SPORTS DIRECT INTERNATIONAL PLC / Preliminary Results Presentation / Thursday 17th July 2014 27
Slide 28: Sports Retail: Online Overview
Sports Retail: Online Overview Overview Online Sports Sales Ecommerce 18.0% 17.1% £450m • Click & Collect being trialled within USC • Responsive design in progress, giving better user 16.0% 15.0% £400m experience for tablet and mobile devices 14.0% £335m £350m • Improved Search facility live • Check
Slide 29: Premium Lifestyle
Premium Lifestyle • Sales in existing fascias (excluding Republic and Pulp) up by 12.8% compared to FY13 • Consolidation of USC and Republic continues, with 53 former Republic stores converted to USC • Supply from major 3rd Party brands still very challenging • Republic brands introduced successfull
Slide 30: Brands: Wholesale
Brands: Wholesale • Wholesale division revenues of £185.2m were up 3.9% versus last year • The US wholesale business experienced mixed performance with tough winter trading suppressing Everlast equipment sales back to 2012 levels • Antigua’s licensed products division – notably NFL branded side-line
Slide 31: Brands: Licensing
Brands: Licensing • Licensing revenues were up 5.2% to £32.3m in the year to April 2014 • The Dunlop Slazenger group also remains a key contributor at £8.8m or 27% of global revenue. • Dunlop remains a key focus area for expansion into new categories, notably automotive accessories across the Americ
Slide 32: Outlook Statement
FY14: Outlook Statement • Trading since the year end has been in line with management’s expectation’s • Some stronger weeks offset by England’s disappointing World Cup matches • Group’s performance continues to benefit from: • Historic investment in gross margin • Investment in product range and ava
Slide 33: Questions?
SPORTSDIRECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Slide 34: FY14: Finance and Investment Income
FY14 : Finance and Investment Income FY14 FY13 Change (£m) (£m) (%) Bank Interest receivable 0.9 1.1 -18.2 Total finance income 0.9 1.1 -18.2 Dividend income from investments 1.6 1.5 +6.7 Fair value gain on disposal of Financial Assets 5.4 - - Total investment income 7.0 1.5 +366.7 SPORTS DIRECT INT
Slide 35: FY14: Finance Costs
FY14 : Finance Costs FY14 FY13 Change (£m) (£m) (%) Interest on bank loans and overdrafts 7.5 6.6 +13.6 Interest on other loans 0.6 0.6 - Interest on retirement benefit obligations 0.6 0.5 20.0 Fair value adjustment to forward foreign exchange contracts 11.2 2.0 460.0 Total finance costs 19.9 9.7 +1
Slide 36: EBITDA PBT
EBITDA PBT FY14 FY13 FY14 FY13 Reported EBITDA/PBT 321.0 268.7 239.5 207.2 Realised FX profit (1.8) (2.3) (1.8) (2.3) IAS 39 FX fair value adjustment on forward foreign currency - - 11.2 2.0 contracts Fair value adjustments within associates - - - (0.4) Bonus share scheme charge 11.9 22.1 Investment
Sports Direct International — FY2014 Earnings Presentation on 6ix