Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — H1 FY2015 Earnings Presentation
30 slides from Kmd Brands's earnings presentation, Mar 24, 2015
Slide 1: 1H FY15 Results Presentation
For personal use only 1H FY15 Results Presentation March 2015
Slide 2: Contents
Contents For personal use only 1 Results Overview 2 Key Line Items 3 Country Results 4 Cash Flow, Balance Sheet, Dividend 5 Growth Strategy Update 6 FY15 Outlook and Actions 7 Questions A Appendices 2
Slide 3: Results Overview
For personal use only Results Overview
Slide 4: Results Overview: Highlights
1 Results Overview: Highlights Earnings For personal use only • EBITDA $6.8m (LY $22.6m) • EBIT $0.6m (LY $17.6m) • NPAT loss of $1.8m (LY profit of $11.4m) Key Points • December/January trading weaker compared to FY14 • 1H gross margin also adversely impacted by increased weighting of clearance sal
Slide 5: Results Overview: Year-on-Year
1 Results Overview: Year-on-Year RESULTS NZD $m*1 1H FY15 1H FY14 Var $ Var % For personal use only SALES 179.4 167.6 11.8 7.0% GROSS PROFIT 106.3 107.1 (0.8) (0.7%) Gross margin 59.3% 63.9% OPERATING EXPENSES*2 (99.5) (84.5) (15.0) 17.8% % of Sales 55.5% 50.4% EBITDA 6.8 22.6 (15.8) (69.9%) EBITDA
Slide 6: Key Line Items
For personal use only Key Line Items
Slide 7: Sales
2 Sales For personal use only SALES: +7.0% to $179.4m Group Sales (NZD $m)*1 • Sales growth year on year:*2 $165.9 $167.6 $179.4 AU 11.7%, NZ 4.7%, UK 28.5%; $146.7 $127.1 • At constant exchange rates sales $106.6 growth $15.6m / 9.3%; • Online sales 5.8% of total sales; • Sales growth weighted to Q
Slide 8: Same Store Sales Growth
2 Same Store Sales Growth AU NZ For personal use only 14.1% 12.4% 12.7% 9.9% 9.6% • Same store sales: *1, 2 6.4% 6.6% +0.6% actual 6.5% 4.8% +2.7% constant currency: 3.2% • Stores only +1.2% 0.9% 1.3% • Online only +34.6% 1H FY10 1H FY11 1H FY12 1H FY13 1H FY14 1H FY15 • UK SSS +26.8% GROUP - Actual
Slide 9: Gross Margin %
2 Gross Margin % AU NZ UK GROUP For personal use only 68.1% 67.4% 66.1% 66.1% 64.7% 63.9% 63.2% 62.7% 62.7% 61.4% 61.3% 59.9% 59.7% 59.3% 58.9% 58.6% 58.4% 57.7% 57.3% 56.0% 55.6% 53.1% 50.4% 50.7% 1H FY10 1H FY11 1H FY12 1H FY13 1H FY14 1H FY15 1H FY15 SHARE OF BUSINESS*1 (GROSS PROFIT $) • Reduced
Slide 10: Cost of Doing Business
2 Cost of Doing Business For personal use only OPERATING EXPENSES: +17.8% to $99.5m NZD $m 1H FY15 1H FY14 Var $ Var % • Operating expenses were in line with our Rent 25.3 21.8 3.5 16.1% forecasts; % of Sales 14.1% 13.0% Other operating expenses 74.2 62.7 11.5 18.3% • Rent increase from additional s
Slide 11: Earnings Summary
2 Earnings Summary For personal use only EBITDA $6.8m EBIT*1 $0.6m NPAT*2 -$1.8m -69.9% -96.6% - 115.8% 23.2 22.6 19.9 20.9 17.6 17.6 15.1 15.8 17.0 12.7 11.4 10.5 10.3 6.8 6.0 4.4 0.6 -1.8 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY12 FY13 FY14 F
Slide 12: Country Results
For personal use only Country Results
Slide 13: Australia
3 Australia For personal use only SALES: +11.7% to $104.9m AUD $m 1H FY15 1H FY14 Var % • 18 new stores: • 10 in 2H FY14: Sales 104.9 93.9 11.7% • Melbourne (Chadstone, Emporium); • Brisbane (Indooroopilly); Same store sales growth 0.9% 6.6% • Perth (Belmont); • Regional VIC (Shepparton, Traralgon);
Slide 14: New Zealand
3 New Zealand For personal use only SALES: +4.7% to $65.2m NZD $m 1H FY15 1H FY14 Var % • Same store sales growth 4.8%; Sales 65.2 62.3 4.7% • Major refurbishments: Botany and Queen St (Auckland); Same store sales growth 4.8% 3.2% • Gross margin reduction 2.6% points; EBITDA (trading result)*1 8.8 1
Slide 15: United Kingdom
3 United Kingdom GBP £m 1H FY15 1H FY14 Var % For personal use only SALES: +28.5% to £1.5m Sales 1.5 1.2 28.5% • Same store sales growth 26.8% (incl. Online); • Gross margin met expectations; Same store sales growth*1 16.2% (1.1%) • Increased promotional advertising £0.7m; Online sales growth*2 92.9
Slide 16: Cash Flow, Balance Sheet, Dividend
For personal use only Cash Flow Balance Sheet 16 Dividend
Slide 17: Cash Flow
4 Cash Flow For personal use only Capital expenditure $9.8m (LY $8.1m): NZD $m 1H FY15 1H FY14 NPAT (1.8) 11.4 • New stores capex $3.8m (LY $1.9m): • 8 new stores; Change in working capital (10.1) (35.2) • 1 relocation. Change in non-cash items 6.1 7.8 • Existing stores capex $2.1m (LY $2.0m). Opera
Slide 18: Balance Sheet
4 Balance Sheet For personal use only • Other Assets increase primarily foreign NZD $m 1H FY15 1H FY14 currency hedging ($10.5m); Inventories 97.3 102.5 • Stock turns expected to improve further Property, plant and equipment 50.5 42.2 by year end; Intangible assets 236.3 231.8 • Increase in debt lev
Slide 19: Balance Sheet – Inventory
4 Balance Sheet – Inventory For personal use only • Year on year decrease in stock per store Stock Per Store *1 NZD $m 15.8%; • Reduction due to effective Q1 clearance $0.732 campaign and better buying policies; $0.651 $0.640 $0.616 $0.544 • Summer ranging and length of season provides greater scope
Slide 20: Dividend
4 Dividend For personal use only • NZ 3.0 cents per share interim dividend; • Dividend will be fully franked and fully imputed; • Non-NZ shareholders will receive a supplementary dividend of NZ 0.529 cents per share; • Record date 5 June 2015; • Payment date 19 June 2015; • Final dividend is expecte
Slide 21: Foreign Currency
4 Foreign Currency For personal use only • Effective USD hedge rates 1H FY15: FORWARD HEDGING POSITION 2H FY15 1H FY16 • AUD/USD 0.892 1H FY15 vs 0.984 1H FY14; • NZD/USD 0.799 1H FY15 vs 0.808 1H FY14. % covered 90%+ 90%+ AUD/USD Effective Rate 0.901 0.841 • Weakening currencies against USD are lik
Slide 22: Growth Strategy Update
For personal use only Growth Strategy Update
Slide 23: Growth Strategy Update
5 Growth Strategy Update For personal use only GROWTH STRATEGY UPDATE • Will open 11 new stores in FY15. Originally targeted 15 New store • 180 stores targeted for Australia and New Zealand • Anticipate slow start to new stores in FY16. Will continue store rollout as rollout individual ROI justifies
Slide 24: Growth Strategy Update (continued)
5 Growth Strategy Update (continued) For personal use only GROWTH STRATEGY UPDATE • Growth momentum continues. YOY sales growth 33% • Own website now has ratings and reviews, improved checkout and • Grow online sales in AU, enhanced Summit Club join up functionally Online and NZ and international •
Slide 25: Growth Strategy – UK, Europe, International
5 Growth Strategy – UK, Europe, International For personal use only • Initial results from 1H promotional campaign positive; • Sales growth in the period provides confidence to continue marketing investment, especially online sales growth of over 90%; • Second brand campaign to support the more chal
Slide 26: FY15 Outlook and Actions
For personal use only FY15 Outlook and Actions
Slide 27: FY15 Outlook and Actions
6 FY15 Outlook and Actions 2H Trading For personal use only • Current sales promotional challenge: • Over time the total number of days on promotion has increased, driving: • A continued decline in sales early in sale periods, resulting in an over reliance on end of sale further discounting and clea
Slide 28: Questions
For personal use only 28 Questions
Slide 29: Appendix – Reconciliation of EBITDA to Interim Report
Appendix 1 – Reconciliation of EBITDA to Interim Report For personal use only 1H FY15 1H FY14 Consolidated Statement of Comprehensive Income NZD $m NZD $m (Loss)/Profit after income tax (1.8) 11.4 add back Income tax expense 0.1 3.7 (Loss)/Profit before income tax (1.8) 15.0 add back Finance costs -
Slide 30: Appendix – Reconciliation of Country Trading Results
Appendix 2 – Reconciliation of Country Trading Results For personal use only Australia (NZ $m) 1H FY15 1H FY14 New Zealand (NZ $m) 1H FY15 1H FY14 Segment profit/(loss) before income tax (6.9) 2.8 Segment profit/(loss) before income tax 6.3 9.9 Net interest 1.4 1.0 Net interest 0.4 0.6 Facility fees