Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — FY2020 Earnings Presentation
37 slides from Kmd Brands's earnings presentation, Sep 23, 2020
Slide 1: Kathmandu Holdings FY20 Results Presentation
For personal use only Kathmandu Holdings FY20 Results Presentation 23 September 2020 Tyler Wright 2 x WSL World Surfing Champion 2016, 2017
Slide 2: Well positioned in response to COVID-19
Well positioned in response to COVID-19 For personal use only Prudent operational and capital management Long-term brand strength • COVID-19 response was swift and strong • Consumer trends towards outdoor and recreation activities • $207m capital raised to provide balance sheet strength, • Retail sa
Slide 3: COVID-19 short-term impact
COVID-19 short-term impact For personal use only Short-term business impact Immediate response • FY20 revenue impact estimated at c. $135m • Senior management and support office wage (Retail c. $80m and Wholesale c. $55m) reductions through lockdown period • Full global retail store network closures
Slide 4: Brand strengths more relevant than ever before
Brand strengths more relevant than ever before For personal use only • Iconic, inspirational, and • Leading outdoor brand in • Established and distinctive authentic brand Australasia American Montana-based brand • Renowned for high quality • Original, sustainable, engineered, • Focused, efficient pr
Slide 5: Brands with global reach
Brands with global reach Total Group RC KMD Oboz Total Europe RC KMD Oboz Total For personal use only Owned stores 160 165 - 325 Owned stores 20 - - 20 Licensed stores 196 - - 196 Licensed stores 2 - - 2 JV stores 22 - - 22 Online sites 1 1 - 2 Online sites 6 4 - 10 Wholesale doors 2,146 28 97 2,271
Slide 6: Rapid acceleration in online sales
Rapid acceleration in online sales Group online sales up 63% to $106.4m For personal use only 140.0 18.0% 15.7% Online sales Growth year % of DTC 120.0 16.0% (NZD $m) on year sales Online sales (NZD $m) 14.0% 100.0 % of DTC sales 106.4 12.0% 80.0 8.8% 10.0% 7.6% 25.5 52% 10.6% 60.0 8.0% 5.8% 65.1 5.
Slide 7: Group Financials
For personal use only Group Financials 7 | KATHMANDU HOLDINGS FY20 RESULTS PRESENTATION
Slide 8: Profit results reflect COVID-19 impact
Profit results reflect COVID-19 impact GROUP Statutory *1 Underlying *3,4 For personal use only NZD $m *2 FY20 FY20 FY19 Var % SALES 801.5 801.5 538.9 48.7% • FY20 result includes 9 months of Rip Curl GROSS PROFIT 467.0 467.0 332.5 40.5% • Government wage assistance (globally) contributed a net bene
Slide 9: Strong cash generating brands
Strong cash generating brands Cash Flow (NZD $m) FY20 FY19 For personal use only NPAT 8.9 57.6 Change in working capital 55.6 (13.0) Non-cash items 28.6 17.1 Adjusted operating cash flow *1 93.1 61.7 Key Line Items: Net interest paid (including facility fees)*2 (12.7) (2.6) Income taxes paid (15.5)
Slide 10: Balance sheet well positioned
Balance sheet well positioned Balance Sheet (NZD $m) as at 31 July FY20 FY19 • Inventory well placed in uncertain demand environment, with low Kathmandu For personal use only Inventories 228.8 122.8 clearance stock levels Property, plant and equipment 90.7 60.3 Right of Use Asset (IFRS 16) 258.0 - •
Slide 11: Net debt reduced by capital raise and strong cash flows
Net debt reduced by capital raise and strong cash flows For personal use only 32.0% • Net Debt of $9.4m at year-end 300.0 Net Debt 33.0% Net Debt • Cash generation in 2H FY20 $63.8m despite lockdowns 250.0 273.2 28.0% Net Debt to Equity • Significant headroom to current facility of c. $380m 23.0% 20
Slide 12: Rip Curl
For personal use only Mick Fanning 3 x WSL World Surfing Champion 12 | KATHMANDU HOLDINGS FY20 RESULTS PRESENTATION
Slide 13: Diversified channels and geographies
Diversified channels and geographies RIP CURL (NZD $m) Pre IFRS 16 Rip Curl Sales Mix (last 12 months) For personal use only Nine months since acquisition Nov 19 to Jul 20 Other Rest of SALES 315.7 1% World 13% GROSS PROFIT 178.5 Wholesale 43% Gross margin 56.5% Europe OPERATING EXPENSES (166.8) BY
Slide 14: Strong European summer and Australian winter for retail channels
Strong European summer and Australian winter for retail channels Direct to consumer same store sales growth was stronger post-lockdown +14.4%*1 than pre-lockdown +2.6% For personal use only Pre-lockdown During lockdown Post-lockdown FY20 4 November 2019 to 9 March to 18 May to 38 full weeks 8 March
Slide 15: Accelerating growth in online sales
Accelerating growth in online sales For personal use only 40.0 Online sales up 52% to $25.5m 10.6% 12.0% 35.0 Online sales (NZD $m) 10.0% 30.0 • Online sales growth pre-COVID-19 from August to March +12.9% % of DTC sales 25.0 6.5% 8.0% above last year 25.5 20.0 4.3% 6.0% • Online sales growth during
Slide 16: Technical excellence and innovation in core surf categories
Technical excellence and innovation in core surf categories For personal use only Mirage 3-2-ONE Playa Blanca Collection E-Bomb E7 Won the highly sought after Boardshort of the Unique in house designed artwork contributed Breakthrough in high stretch neoprene Year award at the recent SBIA Surf and t
Slide 17: Reinforcing brand through social media
Reinforcing brand through social media For personal use only E-Bomb E7 Rip Curl Women take on Hawaii 135 posts across Facebook, Instagram, Twitter To showcase their pure awesomeness! and YouTube generated 6.4m views and 112k 284k views on Rip Curl’s YouTube channel, bolstering our comments, likes or
Slide 18: For personal use only
For personal use only 18 | KATHMANDU HOLDINGS FY20 RESULTS PRESENTATION
Slide 19: Performance reflects COVID-19 impact
Performance reflects COVID-19 impact KATHMANDU Pre IFRS 16 Kathmandu Sales Mix FY20 Kathmandu Gross Profit $ Mix FY20 For personal use only NZD $m FY20 FY19 Var % SALES 426.4 472.3 (9.7%) Online Online 19% 18% GROSS PROFIT 265.1 306.1 (13.4%) Gross margin 62.2% 64.8% OPERATING EXPENSES (198.2) (216.
Slide 20: Strong same store sales after lockdown
Strong same store sales after lockdown Direct to consumer same store sales growth was stronger post-lockdown +6.9%*1 than pre-lockdown +1.2% For personal use only Pre-lockdown During lockdown Post-lockdown FY20 29 July 2019 to 9 March to 18 May to 8 March 2020 17 May 2020 26 July 2020 Same store sal
Slide 21: Accelerating growth in online sales
Accelerating growth in online sales For personal use only 100.0 Online sales up 67% to $80.9m 18.5% 20.0% Omni channel strategy leverages brand strength 90.0 18.0% 80.0 Online sales (NZD $m) 16.0% • Consumer preference moved towards online during lockdown. % of DTC sales 80.9 Infrastructure and plat
Slide 22: Personalisation driving strong customer loyalty and engagement
Personalisation driving strong customer loyalty and engagement Active and engaged Summit Club members For personal use only • 2.2 million active Summit Club members, 4yr CAGR +8.1% • Represent over 70% of total Kathmandu sales • Summit Club members spend 27% more per transaction than non-members • N
Slide 23: Brand relevance strengthened with agile and effective digital marketing
Brand relevance strengthened with agile and effective digital marketing Increasing brand relevance and engagement For personal use only • Due to COVID-19, switched to a local adventure focus and launched “Adventure Near, Not Far” encouraging the safe return to local travel • Launched a Sustainabilit
Slide 24: Innovative products and sustainable technology
Innovative products and sustainable technology For personal use only Making our best even better Better for the oceans Longline and synthetic versions of our most popular insulation styles Made with Durable Bionic® DPX®, a unique, ground-breaking fabric containing polyester made from recovered plast
Slide 25: For personal use only
For personal use only 25 | KATHMANDU HOLDINGS FY20 RESULTS PRESENTATION
Slide 26: Strong momentum with key customers despite COVID-19
Strong momentum with key customers despite COVID-19 OBOZ Pre IFRS 16 • COVID-19 impacted revenue in 2H FY20: For personal use only USD $m FY20 FY19 Var % • COVID-19 revenue impact estimated at c. $15m (USD c. $10m) SALES 37.8 44.6 (15.2%) • Pre-COVID-19 sales for 8 months to end of Mar 2020 +4.6% YO
Slide 27: Successful range expansion and enhanced digital marketing
Successful range expansion and enhanced digital marketing True to the Trail™ brand offering supplemented with Product highlights: For personal use only products targeting younger, more diverse, and more • Fast and Light: Arete collection achieved impressive sell-in and exposure active customers • Wh
Slide 28: Growth strategy and key priorities for FY21
For personal use only Growth strategy and key priorities for FY21 28 || KATHMANDU 28 KATHMANDU HOLDINGS HOLDINGS FY20 FY20 RESULTS RESULTS PRESENTATION PRESENTATION
Slide 29: Sustainability highlights
Sustainability highlights For personal use only 40 M 30 PLASTIC BOTTLES M+ B+ BOTTLES WORTH OF FRESH WATER RECYCLED THROUGH SAVED BY MOVING TO SOLUTION OUR REPREVE PRODUCT SCORED A B+ IN THE ETHICAL FASHION REPORT COLLABORATED WITH KATHMANDU ON 3.3 TWO YEARS RUNNING DEVELOPING OUR SUSTAINABILITY JOU
Slide 30: 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 31: Group strategy: operating model anchored by pillars
Group strategy Our operating model is anchored by 6 pillars For personal use only Decentralised Synergies Organic Growth Seamless Digital Enhanced Organisation The brands leverage customer journey Acceleration Customer We place priority on Our structure and respective strengths organic growth and an
Slide 32: FY21 key priorities and outlook
FY21 key priorities and outlook Key priorities For personal use only • Brand differentiation and product innovation • Online and digital acceleration • Loyalty, personalisation, and data analytics Outlook • COVID-19 has continued to impact some key markets at the start of FY21 with Melbourne, Auckla
Slide 33: Questions
For personal use only Questions 33 | KATHMANDU HOLDINGS FY20 RESULTS PRESENTATION
Slide 34: Appendix 1: Statutory to Underlying Profit & Loss
Appendix 1: Statutory to Underlying Profit & Loss FY20 FY19 For personal use only IFRS 16 Transaction Other IFRS 16 Transaction Other Statutory Leases*1 Costs*2 one-offs*3 Underlying Statutory Leases Costs one-offs*3 Underlying Sales 801.5 801.5 538.9 538.9 Gross profit 467.0 467.0 332.5 332.5 Gross
Slide 35: Appendix 2: Segment Note
Appendix 2: Segment Note SALES EBIT For personal use only FY20 (NZD $'000) Outdoor Surf Corporate Total FY20 (NZD $'000) Outdoor Surf Corporate Total SALES per segment note 485,785 315,739 - 801,524 EBIT per segment note 64,901 (602) (18,435) 45,864 - IFRS 16 Leases Adjustment (7,787) 1,892 - (5,895
Slide 36: Appendix 3: Segment Summary
Appendix 3: Segment Summary For personal use only FY20 FY19 Var % Kathmandu Holdings Group Gross Profit $ Mix FY20 Kathmandu sales 426.4 472.3 (9.7%) Oboz Other Rest of World 5% Wholesale 0% Europe 5% Oboz sales 59.4 66.5 (10.7%) 6% 17% Outdoor segment sales 485.8 538.9 (9.8%) North America Surf seg
Slide 37: 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 September 2020 provides additional comment For personal use only on the financial statements of the Company for the 12 months ended 31 July 2020, and accompa