Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — FY2016 Earnings Presentation
34 slides from Baby Bunting's earnings presentation, Aug 12, 2016
Slide 1: Baby Bunting Group Limited Year Ended 26 June 2016 Results Presentation
Baby Bunting Group Limited Year Ended 26 June 2016 Results Presentation 12 August 2016 Matt Spencer Chief Executive Officer & Managing Director Darin Hoekman Chief Financial Officer
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This document is a presentation of general background information about the activities of Baby Bunting Group Limited (Baby Bunting) current at the date of the presentation (12 August 2016). The information contained in this presentation is for general background infor
Slide 3: Baby Bunting
Baby Bunting Baby Bunting is Australia’s largest specialty retailer of baby goods, aiming to provide customers with the widest range of products, high levels of service and low prices every day • Founded in 1979, Baby Bunting is Australia’s largest specialty baby goods retailer IN STOCK AND • Operat
Slide 4: Agenda
Agenda 1 FY16 Results highlights 2 Industry overview 3 Business overview 4 Growth strategy 5 Financial information 6 Outlook 7 Appendix – pro forma reconciliation 4
Slide 5: FY16 Results Highlights
1. FY16 Results Highlights
Slide 6: FY2016 Results Highlights
FY2016 Results Highlights 1 • Sales of $236.8 million, up 31.4% on the prior corresponding period • Comparable store sales growth of 12.5%, including 15.7% in the second half TRADING • Gross profit income up 31.2%, gross margin of 34.3% is consistent with FY2015 • Cost of doing business (pro forma)
Slide 7: Industry overview
FURNITURE » PARENTS ROOM al Industry overview
Slide 8: Industry Overview
Industry Overview Estimated addressable Large number of small, Strict Australian mandatory Changing competitive market is ~$2.4bn pa / specialty players & product safety standards landscape ~1 million 0 to 3 year olds Department stores provide barriers to entry SPECIALTY BABY GOODS RETAILERS IN AUST
Slide 9: Business overview
3. Business overview
Slide 10: Drivers of Competitive Advantage
Drivers of Competitive Advantage Consistent Retail Format Widest Product Offering, In Stock Convenient Network and Available of Stores and Online Competitively Cost Effective Priced Marketing Comprehensive Range of Ancillary Scale Platform Services Customer Centric Team Culture 10
Slide 11: Baby Bunting's Store Network
Baby Bunting’s Store Network 36 stores across Australia, with significant roll-out potential to over 80 stores Queensland Helensvale Booval (29 Jul ‘15) Kawana North Lakes (18 Sep ‘15) Fortitude Valley Burleigh Waters (14 Nov ‘15) Townsville Capalaba (12 Feb ‘16) Macgregor New South Wales and ACT Pe
Slide 12: Store Experience
Store Experience Stores are consistent in branding, range, operations and customer service • The widest range of products with over 6,000 products in store • Price match guarantee and continued investment in value for the customer • Increasing range of Private Label and Exclusive Products • Ser
Slide 13: Online
Online www.babybunting.com.au continues to evolve & grow as the leading specialty baby goods website • 47% increase in website visits (FY2016), and a 66% TOTAL WEBSITE SESSIONS BY MONTH (babybunting.com.au) (1) increase for the month of June year-on-year 1,200 1,050 • Significant increase in online
Slide 14: Sales and Marketing Strategy
Sales and Marketing Strategy Baby Bunting’s sales and marketing strategy delivering value to our customers every day, every visit • Integrated promotions across traditional channels (catalogue, regional and pay TV, radio and print media), online (email, search and digital) as well as social media •
Slide 15: Logistics & Supply Chain
Logistics & Supply Chain Continuous improvement in the Distribution Centre (DC) supporting the growth of the business • Implementation of the “Paperless” Warehouse LOGISTICS CONTROLLED FOR KEY PRODUCTS (FY2016) Management System driving efficiency % of products % of sales DC to store 25% • ~1,500 pr
Slide 16: Supplier Relationships
Supplier Relationships Strong growth in Private Label and Exclusive Products(1) • Network of more than 245 suppliers across third party SUPPLIER BREAKDOWN BY SALES (FY2016) brands, private label and exclusive products • Top 10 suppliers represent 46% of sales Top 10 • A focus of the business has bee
Slide 17: Building the Best Team
Building the Best Team Continued focus on the development of our growing team • Implementation of a Learning Management System BREAKDOWN OF EMPLOYEES (including casuals) • Building the talent pipeline FUNCTION Dec 2014 Jun 2015 Dec 2015 Jun 2016 • Inductions, training & development Stores 499 550 64
Slide 18: Growth strategy
4. Growth strategy
Slide 19: Growth Priorities
Growth Priorities Multiple drivers of organic growth 1 Growth from existing stores and online • 45% of stores are less than 3 years old (at 26 June 2016) • Multiple initiatives to improve customer experience across all channels • Growing brand awareness across all states and territories • Increased
Slide 20: Growth from Existing Stores and Online
Growth from Existing Stores and Online Strong FY2016 comparable store sales growth1 of 12.5% • Significant comparable store sales growth across STORE MATURITY PROFILE AT 26 JUNE 2016 (YEARS OPENED) the network. 45% of stores were less than 3 years old at the end of FY2016 • Average comparable store
Slide 21: Growth from New Store Roll-Out
Growth from New Store Roll-Out 5 new stores opened in FY2016, 4-8 planned for FY2017 NUMBER OF STORES 80+ 80 60 40 36 31 21 23 19 20 15 12 9 0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Network Plan • Opened 5 new stores in FY2016. Preston (Victoria) opening in August 2016 • Pipeline of
Slide 22: EBITDA Margin Improvement
EBITDA Margin Improvement Product mix has shaped gross profit performance Gross Margin • Gross profit income up 31.2% to $81.2 million • Gross profit as a percentage of sales is consistent with FY2015 • Strong growth in prams, car seats, nappies and consumables • Market dynamics and competitor chang
Slide 23: EBITDA Margin Improvement
EBITDA Margin Improvement Further operating leverage achieved Cost of Doing Business Metrics (% sales) Store expenses Leverage investment in Technology, Support Office and the 20.5% Distribution Centre 20.2% 20.0% 19.3% • Cost of doing business (pro forma) improvement of 109bps in FY2016 to 26.4% of
Slide 24: Financial information
5. Financial information
Slide 25: Strong Financial Track Record
Strong Financial Track Record FY2016 sales growth of +31.4% and pro forma EBITDA growth of +51.1% SALES GROSS MARGIN ($ million) (%) +310 ~24% bps CAGR 236.8 34.3% 34.3% 180.2 33.3% 150.2 125.5 31.2% FY2013 FY2014 FY2015 FY2016 FY2013 FY2014 FY2015 FY2016 PRO FORMA CODB (%) 1 PRO FORMA EBITDA ($ mil
Slide 26: Summary Pro Forma Income Statement
Summary Pro Forma Income Statement Pro forma statement of profit or loss Financial highlights Pro Forma Pro Forma Change • Total sales of $236.8 million, up 31.4% FY16 FY15 ̵ Comparable store sales growth of 12.5%, including $ million Sales 236.8 180.2 31.4% 15.7% in the second half Cost of sales (1
Slide 27: Balance Sheet
Balance Sheet Statement of financial position Capital structure Statutory Statutory • $7.4 million net cash position 26-Jun-16 28-Jun-15 $ million • Inventory increase reflects 5 new stores added ($4.0 million), and $1.5 million of inventory to Cash and cash equivalents 7.4 3.6 support the remaining
Slide 28: Cash Flow Statement
Cash Flow Statement Statement of cash flows Statutory Statutory • Change in working capital reflects new store FY16 FY15 openings and investment in inventory to support strong sales growth $ million Tax paid includes finalisation of FY2015 tax return • ($2.4m) and FY2016 provisional tax ($3.8m) Unde
Slide 29: Outlook
6. Outlook
Slide 30: Outlook
Outlook FY2017 outlook reflecting continuing strong trading performance and new store rollout • FY2017 guidance: • EBITDA expected to be in the range of $21.5 million to $24.5 million, representing growth of between 15% to 31%. This excludes employee equity incentive expenses • Anticipate between 4
Slide 31: Appendix
7. Appendix
Slide 32: Statutory - Pro Forma Reconciliation
Statutory - Pro Forma Reconciliation Statutory Pro Forma Pro Forma Prospectus FY16 adjustments FY16 pro forma FY16 fct $ million Sales 236.8 236.8 218.6 Cost of sales (155.7) (155.7) (141.8) Gross Profit 81.2 81.2 76.8 Cost of doing business: Store expenses (45.6) (45.6) (43.8) Marketing expenses (4
Slide 33: Glossary
Glossary Comparable Store Sales Growth • Calculated as a percentage change of the total sales generated from stores (including the online store) in a relevant period, compared to the total sales from the same set of stores in the prior corresponding period, provided the stores were open at the begin
Slide 34: Thank You!
Thank You! 34