Lpp S.a. · GPW:LPP
Lpp — 3Q20/21 Earnings Presentation
54 slides from Lpp's earnings presentation, Dec 21, 2020
Slide 1: 3Q20/21 Results Presentation
3Q20/21 RESULTS PRESENTATION GDAŃSK DECEMBER 21, 2020
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) was prepared by LPP SA (the “Company”) with a due care. Still, it may contain certain inconsistencies or omissions. The Presentation does not contain a complete or thorough financial analysis of the Company and does not present its standing or prospe
Slide 3: Agenda
1. 3Q20/21 financial results 2. Key corporate events 3. 2020/21+ outlook GLOBAL ASPIRATIONS 3
Slide 4: Towards omnichannel
Towards omnichannel OFF-LINE 1,802 stores 38 +13.2% m2 COUNTRIES -33.3% LFL 29 countries -11.4% 25 countries ON-LINE +110.3% sales GROUP REVENUES GLOBAL ASPIRATIONS 4
Slide 5: Results impacted by COVID-19
Results impacted by COVID-19 Deterioration Shopping malls Return to of situation in closed in majority Opening of operations in Restructuring October, from of countries, in shopping malls on shopping centers, in Germany October 24, all of which LPP has selected markets high on-line Poland in the red
Slide 6: LPP present in 38 countries
LPP present in 38 countries 5 32 19 363 23 1 1 As at No. of Open as at 868 YoY 19 31.10.2020 stores 31.10.2020 85 110 59 11 LPP GROUP 1,802 +39 94% 33 9 30 69 Poland 868 -42 100% 6 25 Europe 441 +32 77% 26 CIS 485 +49 99% ME 8 0 100% 3 on-line + off-line on-line off-line 1 1 2 1 G L O B A L NAES P A
Slide 7: A shifted fiscal year
A shifted fiscal year 2020/21 will include 3Q20/21 is the third 3Q20/21 encompasses 12 months and 3-month-long quarter period from encompass period of the shifted fiscal 1st August 2020 till from 1st February year. 31st October 2020. 2020 until 31st January 2021. YoY dynamics are presented in relati
Slide 8: Lower traffic, higher conversion
Lower traffic, higher conversion LFL DYNAMICS LFL OF OPEN STORES (local currencies) (local currencies) 8.5% 0.9% 5.9% 5.7% 0.7% 1.7% 4.9% -8.3% -7.5% -13.3% -11.9% -11.4% -23.9% -36.5% -57.3% -74.7% II III IV V VI VII VIII IX X 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 (3M) • Single-di
Slide 9: High double-digit e-commerce dynamics
High double-digit e-commerce dynamics ON-LINE SALES ON-LINE BY REGIONS (PLN m) (PLN m) PLN 621.2 445.9m 445.9 PLN 390.7 384.0 239.5m 62.7 276.3 239.5 26.9 +86% 173.6 174.2 89.2 209.7 123.5 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 3Q19/20 3Q20/21 (3M) Poland Europe CIS • Double-digit o
Slide 10: Foreign revenues exceed Polish ones
Foreign revenues exceed Polish ones REVENUES BY REGIONS IN 3Q20/21 3Q20/21 FLOORSPACE (PLN m) (by regions) Poland 1,070 -1% YoY ths m2 3Q19/20 3Q20/21 YoY LPP GROUP 1,194.1 1,351.8 13.2% Europe 736 +14% YoY Poland 534.9 551.5 3.1% Europe 349.2 417.5 19.6% CIS 634 +6% YoY CIS 301.5 374.4 24.1% ME 6 -
Slide 11: Growth on-line, fall off-line
Growth on-line, fall off-line GROUP REVENUES OMNICHANNEL REVENUES (PLN m) PLN m 3Q19/20 3Q20/21 YoY 3000.0 2 724.2 3 000.0 2 445.7 2 344.8 2 332.0 LPP GROUP 2,332.0 2,445.7 4.9% 2500.0 390.7 2 129.3 2 500.0 1 820.7 276.3 239.5 445.9 Reserved 1,076.9 1,069.0 -0.7% 2000.0 2 000.0 174.2 621.2 1 178.6 C
Slide 12: High gross profit margin
High gross profit margin QUARTERLY GROSS PROFIT MARGIN PLN/US$ 58.8% COVID-19 4.0 54.9% 51.9% 56.6% 4.0 3.9 3.9 49.3% 3.8 3.8 3.8 3.8 48.2% 47.6% 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 (3M) 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 4Q20/21 (3M) • Gross profit margin in
Slide 13: Double-digit operating costs reductions
Double-digit operating costs reductions COSTS OF OWN STORES/ M2 SG&A COSTS/ M2 (IAS17) (IFRS16) -20% YoY -12% YoY 201 204 201 195 148 160 59 59 61 56 150 44 51 55 48 297 53 51 53 286 289 285 257 262 38 38 223 40 89 90 89 86 60 69 72 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 1Q19/20 2Q1
Slide 14: Growing net earnings in 3Q20/21
Growing net earnings in 3Q20/21 3Q19/20 3Q20/21 PLN m IFRS16 IFRS16 YoY Single-digit revenue increases due to open shopping centers in majority of countries where the Group's Revenues 2,332.0 2,445.7 4.9% traditional stores are located and continuation of rapid on-line growth. Gross profit margin 58
Slide 15: 9M20/21 EBIT above zero despite COVID-19
9M20/21 EBIT above zero despite COVID-19 9M19/20 9M20/21 PLN m IFRS16 IFRS16 YoY Double-digit revenue drops due to the closing of shopping centers in 1Q20/21 in most countries where Revenues 6,497.5 5,753.7 -11.4% the Group's stores are located. On-line triple digit growth. Gross profit margin 54.3%
Slide 16: Trade liabilities finance inventory
Trade liabilities finance inventory INVENTORY WORKING CAPITAL (PLN m) 2,500 1,743 2,000 1,614 -PLN 1,570 1,572 1,400 1,159m 2,000 1,600 1,266 1,223 183 189 1,500 1,200 1,992 1,642 2,803 1,921 1,643 1,000 800 1,959 1,857 1,857 1,882 1,518 1,643 500 400 0 0 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20
Slide 17: A billion of net cash on the balance sheet
A billion of net cash on the balance sheet (IAS17) NET DEBT/(NET CASH) CAPEX (PLN m, IAS17) (PLN m) 3Q19/20: 3Q20/21: PLN 244m PLN 179m 112.6 - 268.5 33.3 48.8 46.1 33.8 80.7 69.8 - 561.0 - 542.3 199.7 195.6 181.3 - 666.3 145.6 145.4 - 727.3 106.7 91.8 - 780.8 -1 093.2 1Q19/20 2Q19/20 3Q19/20 4Q19/2
Slide 18: 9M20/21 executive summary
9M20/21 executive summary Floorspace development favourably 1 affects revenue dynamics in traditional stores. 2 Triple-digit on-line sales growth. 3 Operating costs under control. 4 Trade liabilities exceed inventory. 5 Growing net cash (IAS17). GLOBAL ASPIRATIONS 18
Slide 19: Agenda: Key corporate events
1. 3Q20/21 financial results 2. Key corporate events 3. 2020/21+ outlook GLOBAL ASPIRATIONS 19
Slide 20: Key corporate events
Key corporate events October 2020 November 2020 RETURN TO BUILDING LPP DC IN BRZEŚĆ A FAMILY COMPANY KUJAWSKI Acquisition of a controlling Decision to return to interest in LPP by Semper STORE IN DUBAI MADE IN POLAND the investment in DC Simul Foundation. Securing ANOTHER CHAPTER the family characte
Slide 21: Omnichannel organisation
Omnichannel organisation CUSTOMER-FOCUSED ORGANIZATIONAL STRUCTURE PRODUCT SALES LOGISTICS • consistent communication • merging of on-line and • inventory available for on the product, regardless off-line sales departments, both on-line and off-line, of the channel, • customer service process • inte
Slide 22: Product – RFID support
Product – RFID support 3% >99% revenue increase product availability 60% 13 pp. goods availability faster receipt of goods improvement for customers 70% >99% faster registration of cash stock accuracy register operations RFID - greater return on electronic tag design than we have assumed. GLOBAL ASP
Slide 23: Revenues – omnichannel model
Revenues –omnichannel model DEFROST PROJECT Broadening Click & Collect Defrosting slower the e-commerce implementation Selected stores can Support for FCs rotating goods from offer with models from goods in function as FCs. during sales peaks. traditional stores. available in stores. stores. Traditi
Slide 24: Logistics – prepared for omnichannel
Logistics – prepared for omnichannel Logistic Courier System Logistics Platform that allows for quick It allows us to flexibly choose a courier integration of LPP logistics systems company depending on the conditions with systems of Polish and foreign of the services provided courier companies Creat
Slide 25: Distribution centre in Brześć Kujawski
Distribution centre in Brześć Kujawski NEW VERSION OF DISTRIBUTION CENTRE PROJECT IN BRZEŚĆ KUJAWSKI: dedicated to traditional stores of younger brands, smaller area (75 ths m2) with possibility of expansion. More cost effective Ultimately, employment Start of construction investment: PLN 200m Commi
Slide 26: New store in Dubai
New store in Dubai A total of 9 stores in the Middle East with 9.9 ths m2 of floorspace. November 2020 Opening of Reserved brand store in Dubai, United Arab Emirates, in the largest shopping center in the world - Dubai Mall. Store’s area: 1,430 m2 GLOBAL ASPIRATIONS 26
Slide 27: LPP as a family company
LPP as a family company Semper Simul Foundation, closely November 17, 2020, Semper Simul related to Marek Piechocki, Chief Foundation received approval from Executive Officer, currently the President of the Office of possesses: Competition and Consumer Protection to acquire 175,000 preferred shares
Slide 28: Agenda: 2020/21+ outlook
1. 3Q20/21 financial results 2. Key corporate events 3. 2020/21+ outlook GLOBAL ASPIRATIONS 28
Slide 29: We design for our clients
We design for our clients We design responsibly Reserved - leader transparently of change 33% of the collection is Eco Aware taking into account the expectations of the Y and Z generations 23% of LPP’s collections are Eco Aware in a sustainable manner We are prepared for future changes in the retail
Slide 30: Growth acceleration in 2020/21
Growth acceleration in 2020/21 I.2021 Floorspace I.2021 I.2020 former YoY (ths m2) target target • Acceleration of floorspace growths in 2020/21: +16% YoY. BY REGIONS • At the end of 2020/21 Reserved traditional stores Poland 530.0 551.8 570.6 8% should be present in 25 countries (return to Belarus
Slide 31: Dynamic on-line sales growth to continue
Dynamic on-line sales growth to continue 2,000+ 1,174.1 712.0 360.8 2020/21 target: 173.1 79.3 64.8 over PLN 2bn e-commerce revenues, 2014 2015 2016 2017 2018 2019/20 2020/21 TARGET doubling of revenues YoY. ON-LINE SALES (PLN m) GLOBAL ASPIRATIONS 31
Slide 32: Investments in future development
Investments in future development PLN m 2020/21 2021/22 2022/23 Stores 580 840 750 Return to floorspace expansion, new Stores domestically and abroad 580 840 750 larger stores, expansion of Cropp, House and Sinsay Offices 60 50 50 New offices Gdańsk Łąkowa – 30 0 0 Building 1 New offices Gdańsk Łąko
Slide 33: Targets for 2020/21
Targets for 2020/21 Challenges Targets for 2020/21 Opportunities A new model of customer Revenue fall not exceeding Successful collections of all behavior after COVID-19. 15% YoY. brands - favorable price-to- Another wave of infections. Gross margin in the range quality ratio. Changes in
Slide 34: Continuation of growths in 2021/22
Continuation of growths in 2021/22 Floorspace I.2021 I.2022 • Continuation of floorspace growths in 2020/21: YoY (ths m2) target target +15% YoY. • End-2021/22 Reserved traditional stores should be in BY REGIONS 26 countries (entry to Northern Macedonia). Poland 570.6 629.8 10% • 2021/22 targets : E
Slide 35: Key trends in 2021/22
Key trends in 2021/22 Inventory ordered based on the assumption that 2021/22 year is going to be similar to 2019/20 i.e. before pandemic. Targets for 2021/22 double-digit dynamic on-line RFID operating margin maintaining a safe floorspace growth sales growth implementation improvement balance sheet
Slide 36: Targets for upcoming years
Targets for upcoming years Directions for further development Further digitization Product development of the business, aimed following customer at supporting expectations omnichannel Strengthening and Stronger development development of of omnichannel value-for-money organization segment OBJECTIVE:
Slide 37: Q&A
Q&A GLOBAL ASPIRATIONS 37
Slide 38: Back-up
B a c k -up GLOBAL ASPIRATIONS 38
Slide 39: Network development
Network development Floorspace (ths m2) 31.01.2019 30.04.2019 31.07.2019 31.10.2019 31.01.2020 30.04.2020 31.07.2020 31.10.2020 Reserved 605.0 616.6 634.3 655.0 664.8 657.1 669.7 667.8 Poland 268.7 263.5 267.6 272.0 270.3 262.9 262.5 264.8 Europe 188.0 204.4 215.1 218.4 225.3 223.7 232.2 233.2 CIS 1
Slide 40: Network development details as at I.2021
Network development details as at I.2021 Floorspace (ths m2) 31.01.2020 31.01.2021 Nom. growth Growth YoY No. of STORES 31.01.2020 31.01.2021 Nom. growth Growth YoY Reserved 664.8 677.5 12.7 2% Reserved 454 441 -13 -3% Poland 270.3 268.5 -1.9 -1% Poland 200 188 -12 -6% Europe 225.3 232.2 6.9 3% Euro
Slide 41: Changes in group 3Q20/21 floorspace
Changes in group 3Q20/21 floorspace CHANGE IN FLOORSPACE BY BRANDS CHANGE IN FLOORSPACE BY REGIONS (ths m2) (ths m2) +42.4 0.0 1,351.8 +13.9 +15.5 +0.0 1,351.8 +2.4 +3.4 +0.5 +17.5 1,304.9 1,304.9 -1.8 +46.9 ths m2 +46.9 ths m2 2Q20/21 Reserved Cropp House Mohito Sinsay Outlets 3Q20/21 2Q20/21 Polan
Slide 42: Geographical revenue split in 3Q20/21
Geographical revenue split in 3Q20/21 TOP 5 COUNTRIES BY REVENUES IN 3Q20/21 PLN m 3Q19/20 3Q20/21 YoY (PLN m) LPP GROUP 2,332.0 2,445.7 4.9% Poland 1,070 Reserved PL 454.8 425.1 -6.5% Reserved EX 622.0 643.9 3.5% Russia 474 Cropp PL 137.2 124.6 -9.2% Ukraine 150 Cropp EX 196.8 196.8 0.0% House PL 1
Slide 43: Geographical revenue split in 9M20/21
Geographical revenue split in 9M20/21 TOP 5 COUNTRIES BY REVENUES IN 9M20/21 PLN m 9M19/20 9M20/21 YoY (PLN m) LPP GROUP 6,497.5 5,753.7 -11.4% Poland 2,568 Reserved PL 1,377.3 1,044.1 -24.2% Reserved EX 1,723.8 1,518.1 -11.9% Russia 979 Cropp PL 396.0 285.5 -27.9% Ukraine 356 Cropp EX 525.2 427.0 -
Slide 44: Revenue and COGS split
Revenue and COGS split 3Q20/21 REVENUES BY REGIONS 9M20/21 REVENUES BY REGIONS (PLN m) (PLN m) ME ME 0% CIS 0% CIS 23% 26% Poland Poland 44% 45% Europe Europe 30% 32% 3Q20/21 PURCHASES BY REGION 9M20/21 PURCHASES BY REGION (PLN m) (PLN m) Poland Poland Other Other Turkey 2% 2% 1% 1% 7% Turkey 7% Chi
Slide 45: Costs of stores and HQs & e-commerce
Costs of stores and HQs & e-commerce SG&A COSTS SG&A COSTS (PLN m, IFRS16) (PLN m, IFRS16) 913 964 1,020 1,040 967 1,036 2,898 2,819 816 324 322 396 279 271 394 874 +22% YoY 1069 279 642 685 695 717 537 573 640 2023 -14 YoY 1749 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 9M19/20 9M20/21
Slide 46: Results under IAS17
Results under IAS17 3Q19/20 3Q20/21 9M19/20 9M20/21 PLN m YoY PLN m YoY IAS17 IAS17 IAS17 IAS17 Revenues 2,332.0 2,445.7 4.9% Revenues 6,497.5 5,753.7 -11.4% Gross profit margin 58.8% 56.6% -2.2pp. Gross profit margin 54.3% 51.5% -2.7pp. SG&A costs 1,011.4 975.8 -3.5% SG&A costs 2,881.8 2,687.7 -6.7
Slide 47: IFRS16 9M20/21 impact summary
IFRS16 9M20/21 impact summary EBITDA EBITDA PLN 173.2m additional amortisation PLN 498.5m additional amortisation of right of use asset. of right of use asset. 3Q20/21 9M20/21 54% rentals under IFRS16 EBIT EBIT 62% rentals under IFRS16 (PLN 113.1m). These are replaced (PLN 389.2m). These are replace
Slide 48: FX and government grant details
FX and government grant details 3Q20/21 9M20/21 PLN 77.4m losses PLN 186.5m losses on FX differences, on FX differences, including including PLN 3.4m losses on rubble and hryvna, PLN 58.2m losses on rubble and hryvna, PLN 15.5m losses on US$, PLN 3.7m losses on US$, PLN 12.6m gains on other currenci
Slide 49: Historical quarterly results
Historical quarterly results 4Q19/20 1Q19/20 2Q19/20 3Q19/20 2019/20 1Q20/21 3Q20/21 IFRS16 2Q20/21 IFRS16 IFRS16 IFRS16 IFRS16 IFRS16 IFRS16 PLN m (November IFRS16 (February-April (May–July (August- (February 2019 (February-April (August- 2019-January (May-July 2020) 2019) 2019) October 2019) -Janu
Slide 50: Cash flows
Cash flows 3Q20/21 CASH GENERATION 3Q20/21 CASH FLOWS (PLN m) (PLN m) +262 +170 685 +241 2,055 1,764 305 228 -69 -179 -84 -48 43 -48 -141 -214 -315 3Q19/20 3Q20/21 Operating CF Investing CF Financing CF Total CF • Operating cash flow growing positive levels due to lengthening of payment terms. • I
Slide 51: A strong balance sheet despite pandemic
A strong balance sheet despite pandemic PLN m 3Q19/20 4Q19/20 3Q20/21 Non-current assets 5,703.2 5,870.7 5,538.7 • IFRS16: right-of-use asset and lease finance liability. fixed assets 2,176.1 2,312.4 2,407.0 • YoY increase in fixed assets due to network intangibles (incl. goodwill) 404.6 413.3 418.8
Slide 52: Brands' summary
Brands’ summary WE FOCUS ON MAINSTREAM PRICE LEVEL A brand that combines An anchor brand with A streetwear brand Clothes for everyday BRAND comfort and elegance for a broad customer base inspired by hip-hop and Optimistic fashion brand inspirations and original DESCRIPTION business and informal offe
Slide 53: Glossary
Glossary Poland Retail sales in Poland and other sales of LPP SA. CEE Region including: Czech Republic, Slovakia, Hungary. Baltic Region including: Lithuania, Latvia, Estonia. CIS Region including: Russia, Ukraine, Belarus and from 2018 also Kazakhstan. SEE Region including: Bulgaria, Romania, Croat
Slide 54: Contact
GDAŃSK HQs LPP SA Łąkowa 39/44 80-769 Gdańsk, Poland Tel. +48 58 76 96 900 Fax.+48 58 76 96 909 Email: lpp@lppsa.com DISTRIBUTION CENTRE LPP SA Tczewska 2 83-000 Pruszcz Gdański, Poland CONTACT FOR INVESTORS Email: LPP.investor.relations@lppsa.com CONTACT FOR MEDIA Email: media@lppsa.com CRACOW BRAN