Slide 1: FY17 Results Presentation
FY17FY17 Results Presentation Results Presentation August 2017 28 August 2017
Slide 2: Results Overview
1. RESULTS OVERVIEW
Slide 3: FY17 Results Overview
FY17 Results Overview Sales growth • Sales increased by $17.5m (7.1% on FY16) • LFL Sales for the full year down -1.4% • LFL strengthened over 2H with Q4 LFL sales +3.8% Growth from Online channel • Online sales growth +26% LFL • Online sales growth of > 40% in 2H • Equates to 9% of total sales
Slide 4: FY17 Operational Achievements
FY17 Operational Achievements Growing footprint in Australia • 9 new stores opened taking total stores to 156 • 5 stores refurbished with 4 of these upsized Successfully rolled out new POS system across all stores International expansion commenced with New Zealand • ERP system enhanced to suppor
Slide 5: Financial Results
2. FINANCIAL RESULTS
Slide 6: Year on Year Result
Year on Year Result $ Million FY17 FY16 ^ $ Change EBIT $m 39.2 33.1 Sales 265.0 247.4 17.5 2H 30.8 Gross Profit 156.8 151.0 5.8 21.8 19.3 2H Gross Profit % 59.2% 61.0% 18.8 12.3 CODB 120.1 106.6 (13.5) 1H 19.9 1H CODB % 45.3% 43.1% 12.0 EBITDA 36.7 44.4 (7.7) FY13 FY14 FY15 FY16 FY17 EBITDA % 13.8%
Slide 7: Sales
Sales Sales momentum turns in Q4 265.0 Sales $m 247.4 • Sales growth achieved from new stores opened and the annualised sales of stores 2H 2H opened during FY16 140.4 129.6 • Negative LFL sales in the 2nd and 3rd quarters due to some poor product ranging in key 210.9 categories and disappointing in-
Slide 8: Gross Profit
Gross Profit Gross Margin stabilising Gross Profit $m 156.8 151.0 • Gross Profit increased $5.8m (3.8% on FY16) 131.4 • Gross Margin down 180 basis points over the 2H 2H 104.6 year due to: 76.8 82.9 89.1 ➢ Impact of additional markdowns and promotional activity undertaken to clear inventory 1H 1H 74
Slide 9: CODB
CODB CODB % of Sales FY17 FY16 ^ Operating Leverage Impacting CODB Salaries & Employee Expenses 23.4% 23.3% • Despite negative LFL sales, salaries as a percentage of sales largely remains in line with Occupancy Expenses 13.9% 12.9% FY16. Achieved through controlling rosters and lower performance inc
Slide 10: Balance Sheet
Balance Sheet $ Million FY17 FY16 Well positioned to support growth Cash and Cash Equivalents 14.3 14.7 • Closing inventory is $6.7m higher than FY16. This reflects 13 new stores, additional inventory to Inventories 33.0 26.3 support the NZ operations, and inventory purchased to support July and Aug
Slide 11: Capital Investment
Capital Investment Capital Investment $m Investing for growth New Store 11.3 10.3 Refurbs • $11.3m invested in FY17 in line with 0.8 2.1 company guidance ERP 1.1 Other 1.1 • 13 new stores opened across Australia 6.9 and New Zealand to support growth 6.3 strategy with sales meeting company 1.0 3.9 3.
Slide 12: Cash Flow
Cash Flow Strong Cash Management $ Million FY17 FY16 ^ • Operating cash flow strong EBITDA 36.7 44.4 • Net working capital well managed with Net Working Capital 7.8 (4.4) increased inventory funded by continuation of improved supplier terms Tax Paid (15.2) (8.7) • Tax paid represents $8m FY16 tax an
Slide 13: Key Growth Drivers
3. KEY GROWTH DRIVERS 3. FY17 Results Presentation August 2017
Slide 14: Key Growth Drivers
Key Growth Drivers Execution key to delivering sustainable growth FY17 was a disappointing year where delivering on strategic initiatives contributed to some poor execution of the retail basics. Over 1H17 we completed key projects, opened 8 Australian stores, refurbished 4 stores and commenced tradi
Slide 15: Product, Product & Product
Product, Product & Product Must deliver great product for our customers • Maintain our focus on delivering great product ➢ Key categories of fashion linen, bathroom, cushions and throws are most important as this is what we are famous for ➢ Deliver quality product at a compelling value for money pro
Slide 16: Passionate High Performing Team Members
Passionate High Performing Team Members In store service delivers a more engaging experience Our team remains a key point of difference in retail execution – consistency of service, product and in store experience. In a survey of general category shoppers(1) Adairs ranked number one for helpful team
Slide 17: More Inspiring Larger Stores
More Inspiring Larger Stores Inspiring more engaging experiences in larger stores Further opportunity exists to improve profitability Store Upsizing Strategy and drive differentiation by rolling out stores and Adairs ‘Regular’ selectively ‘upsizing’ existing Adairs stores. • 5 stores upsized. Positi
Slide 18: Best In Class Omni Retail Capabilities
Best In Class Omni Retail Capabilities Growing & investing in Online & Linen Lovers loyalty program Continuing to evolve omni retail capabilities is a key growth driver Adairs online channel is both integral to our store Online Sales $m 23.7 operations and customer experience, and a 25 material cont
Slide 19: International Expansion
International Expansion Growing & investing in Online & Linen Lovers loyalty program A positive start to our international expansion opportunities • Opened 4 stores in New Zealand in FY17 – 3 Homemakers and 1 Regular store • EBIT loss of $0.8m ahead of $1m forecast loss and includes start up and lau
Slide 20: Company Outlook
4. COMPANY OUTLOOK <8 ™ rf
Slide 21: FY18 Outlook
FY18 Outlook Strong retail execution to deliver growth in FY18 Outlook includes: FY18 FORECAST • Growth in store network with 6 – 8 stores to open in FY18 including up to 2 in NZ Year End Stores 166 – 168 • Growth in online sales through execution of Sales ($m) 285 – 300 omni growth strategies and f
Slide 22: Questions?
Questions? 21
Slide 23: Appendix
Appendix Appendix 1. Profit & Loss by half 2. Fashion continues to grow 3. Store footprint 4. Statutory profit to EBIT reconciliation 5. FY13-17 Profit & Loss 22
Slide 24: Profit & Loss by Half
Appendix 1 Profit & Loss by Half $ Change to $ Change to $ Million FY17 1H FY16 1H FY17 2H FY16 2H ^ FY16 1H FY16 2H Sales 124.5 117.8 6.7 140.4 129.6 10.8 Gross Profit 73.9 74.2 (0.3) 82.9 76.9 6.1 Gross Profit % 59.3% 62.9% 59.1% 59.3% CODB 59.1 51.6 (7.4) 61.0 55.0 (6.1) CODB % 47.4% 43.8% 43.5%
Slide 25: Fashion Continues to Grow as % of Sales
Appendix 2 Fashion continues to grow as % of sales Expansion vs Traditional Sales Mix% Fashion & Decorator vs Staples Sales Mix% 24
Slide 26: Store Footprint
Appendix 3 Store Footprint 1 Total Stores: 160 (FY16: 147) 1 97 - Adairs Stores (incl. Outlet) 20 7 2 44 - Homemaker Stores 11 - Adairs Kids Stores 10 6 8 - UHR Stores (inc. 3 Myer concessions) 5 2 DC and HQ 1 12 3 30 1 1 3 27 6 14 6 2 FY17 New Stores FY17 Store Refurbished Adairs – Launceston, Port
Slide 27: Statutory Profit to EBIT Reconciliation
Appendix 4 Statutory Profit to EBIT reconciliation FY17 FY16 Statutory Profit after income tax 21,017 27,172 Add back: Finance Expenses 1,946 2,006 Interest Income (55) (81) Income tax expense 7,904 11,651 EBIT 30,812 40,478 26
Slide 28: Profit & Loss FY13 - 17
Appendix 5 Profit & Loss FY13 - 17 $ Million FY13 FY14 FY15 FY16 ^ FY17 Stores 126 128 132 147 160 Sales 143.9 167.9 210.9 247.4 265.0 Store Sales 137.2 159.2 199.3 228.6 241.3 Online Sales 6.7 8.7 11.6 18.8 23.7 Gross Profit 89.1 104.6 131.4 151.0 156.8 Gross Profit % 61.9% 62.3% 62.3% 61.0% 59.2%
Slide 29: Disclaimer
Disclaimer 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 Adairs Limited current intentions, plans, expectations, assumptions and beliefs about fut