Lovisa Holdings Ltd. · ASX:LOV
Lovisa — FY2017 Earnings Presentation
23 slides from Lovisa's earnings presentation, Aug 24, 2017
Slide 1: 2017 Full Year Results Presentation
LOVISA HOLDINGS LIMITED 2017 FULL YEAR RESULTS PRESENTATION STEVE DOYLE CHIEF EXECUTIVE OFFICER GRAEME FALLET CHIEF FINANCIAL OFFICER 24TH AUGUST 2017 1
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: FY2017 Highlights
FY2017 HIGHLIGHTS EBIT up 68% $29.0M $40.7M NPAT up 75% Like for Like Sales Revenue up 16.5% +10.3% $178.7M Total Stores Final Dividend 288 7.6 CPS Net increase of 38 stores Fully Franked 3
Slide 4: Contents
CONTENTS FULL YEAR OVERVIEW FINANCIAL OVERVIEW TRADING PERFORMANCE CASHFLOW AND BALANCE SHEET STORE GROWTH MERCHANDISING LOVISA STORE DISCIPLINES STRATEGY RECAP TRADING OUTLOOK SUMMARY 4
Slide 5: Full Year Overview
FULL YEAR OVERVIEW • EBIT up 68% to $40.7m • Comparable store growth of 10.3% following price increases and delivery of on trend product • Gross margin increased to 78.8% due to disciplined inventory management and product optimisation • Continued global rollout strategy with a further net 38 stores
Slide 6: Financial Overview
FINANCIAL OVERVIEW STRONG LIFT IN EARNINGS FOLLOWING INCREASE IN LFL SALES AND MARGIN ($000) FY17 FY16 Variance Actual Actual Actual Revenue 178,746 153,461 16.5% Gross profit 140,822 113,562 24.0% EBITDA 46,243 30,256 52.8% EBIT 40,704 24,222 68.0% NPAT 29,046 16,553 75.5% EPS cents 27.7 15.8 11.9
Slide 7: Trading Performance Sales
TRADING PERFORMANCE SALES COMPARABLE SALES UP 10.3% 100 $178.7m $153.5m 80 $134.3m 60 $105.7m 40 20 FY14 FY15 FY16 FY17 • Total Global Sales up 16.5% to $178.7m • Comparable sales up 10.3% driven by retail price increases and the benefit of some key trends in the fashion jewellery sector • Retail pr
Slide 8: Trading Performance Sales: International sales increase across all regions
TRADING PERFORMANCE SALES INTERNATIONAL SALES INCREASE ACROSS ALL REGIONS • Segment note now reflects international Country ($AUD) FY17 FY16 Variance regions with all countries reflecting Australia / NZ 122,577 108,401 13.0% positive comparable store growth other than Singapore Asia 28,320 25,500 11
Slide 9: Trading Performance Gross Margin
TRADING PEFORMANCE GROSS MARGIN GROSS MARGIN INCREASED TO 78.8% • Gross profit increased 24% to $140.8m Gross Margin at Constant Currency* • Gross Margin was 78.8% up from 74.0% FY17 FY17 FY16 in the prior year Currency USD 0.72 0.74 0.74 • Gross Margin on a constant currency Sales 178,746 178,746 1
Slide 10: Trading Performance Cost of Doing Business
TRADING PERFORMANCE COST OF DOING BUSINESS COST OF DOING BUSINESS (CODB)% REDUCED TO 53% • CODB as a percentage to sales reduced 60% to 53% notwithstanding investing in the business preparing for continued global 50% growth 40% • Operating costs remaining well controlled with any CODB increases in l
Slide 11: Cash Flow
CASH FLOW STRONG CASH CONVERSION AND INVENTORY MANAGEMENT • Cashflow from operations lifted 55% to $50.4m with operating cash (A$000s) FY17 FY16 conversion at 109% Cash from operating activities 50,364 32,416 Net interest paid (262) (674) • Capital expenditure of $8.8m during the year Tax paid (10,4
Slide 12: Balance Sheet
BALANCE SHEET STRONG BALANCE SHEET WITH FINANCE FACILITIES INCREASED (A$’000s) FY17 FY16 • Disciplined inventory management Net Cash 11,039 4,729 with inventory levels below prior Receivables 3,615 2,293 periods despite store growth and Inventories 13,127 15,034 currency increases Total current asse
Slide 13: Store Growth
STORE GROWTH INTERNATIONAL ROLLOUT CONTINUES WITH A NET INCREASE OF 38 STORES • Number of international stores growing with offshore territories now 50% of Store number growth the network Estimated • Net increase of 38 stores for the year Country FY17 FY16 VAR Store Capacity • Pilot store opened in
Slide 14: Merchandising
MERCHANDISING • Proven success in bringing on-trend new products to market • Our vertical model allows us to be fast to market and to react to sale patterns quickly, with concept to store in six to eight weeks • We deliver circa 120 new lines each week providing freshness to customer offer • Bulk of
Slide 15: Lovisa Store Disciplines
LOVISA STORE DISCIPLINES • Average store size - 50sqm • Stores are designed for high intensity merchandising to maximise sales potential • Standardised fit-outs maintain customer experience and facilitate efficient roll-out programs • Centralised sales and inventory management systems • High pedesti
Slide 16: Strategy Recap
STRATEGY RECAP • Lovisa is an ultra-niche, vertically integrated fast fashion jewellery retailer with end to end product development capabilities, that delivers on-trend ranges at low cost to the customer • Emerging global brand with reach across a multitude of countries • We enjoy high gross margin
Slide 17: Trading Outlook
TRADING OUTLOOK • Pleasing start to the year with same store sales growth to date above our long term target of between 3% and 5%, however we are mindful that over the next few months we’re cycling some particularly successful ranges • We plan to open 20-30 new stores for the year • The Companys inv
Slide 18: Summary
SUMMARY • EBIT of 40.7m and 78.8% gross margin • Comparable store sales growth of 10.3% • Strong lift in margin following price increases and reduced mark downs • CODB costs well managed as network grows • Tight stock and cost control with cash conversion at 109% • International expansion continued
Slide 19: Questions
QUESTIONS Avis 19
Slide 20: Appendix 1: 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 Holding Limited is required to make a clear statement about the non-IFRS information included in the Profit announcement and Full Year p
Slide 21: Appendix 2: Profit and Loss Statement
APPENDIX 2 PROFIT AND LOSS STATEMENT ($’000) FY17 FY16 Variance Actual Actual Actual Revenue 178,746 153,461 16.5% Cost of sales (37,924) (39,899) (4.9%) Gross profit 140,822 113,562 24.0% Employee expenses (45,276) (39,980) 13.2% Property expenses (28,683) (25,881) 10.8% Distribution expenses (4,46
Slide 22: Appendix 3: Key Risks
APPENDIX 3 KEY RISKS Foreign Currency • Majority of goods that are imported are priced in USD. Consequently Lovisa is exposed to movements in the USD exchange rate • As international growth continues Lovisa will be exposed to movements in the exchange rates of the countries it operates in • Products
Slide 23: Appendix 4: Global Brand Strategy
APPENDIX 4 GLOBAL BRAND STRATEGY Vision • Internationally recognised brand • Global footprint • Brand of choice for fast fashion jewellery Growth Engine • High Margin business operating in small store footprint • Fit out cost generally low with compelling return and pay back period • Inexpensive ent