Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — Investor Presentation (August 2020)
40 slides from Baby Bunting's investor presentation, Aug 14, 2020
Slide 1: FY20 Full Year Results Presentation
FY20 Full Year Results Presentation Matt Spencer CEO & Managing Director Darin Hoekman CFO 14 August 2020
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 (14 August 2020). The information contained in this presentation is for general background infor
Slide 3: Our core purpose and vision
Our core purpose is to support new and expectant Our vision is to be the parents in the early years most loved baby retailer of parenthood for every family, everywhere
Slide 4: FY20 pro forma results summary
FY20 pro forma(1) results summary Total sales growth up 11.8% vs pcp (2) SALES SALES Comparable store sales(3) growth of 4.9% (1H 1.0%, 2H 10.5%) $405.2M $186.4M Online (including click & collect) growth of 39.1% (1H 10.5%, 2H 66.1%) GROSS Gross Profit income $146.9m, up 15.9% GROSS PROFIT Gross Pro
Slide 5: FY20 operational objectives
FY20 operational objectives Progress our transformation program & 1 strategic investments to plan Grow gross margin without compromising 2 value to the consumer Accelerate our Private Label & Exclusive 3 Product strategy to exceed 35% of sales 4 Capitalise on shopping centre opportunities that prese
Slide 6: Caring and supporting others is at the heart of our culture
Caring and supporting others is at the heart of our culture Baby Bunting is a values driven organisation that seeks to be a good and responsible corporate citizen. As we grow, we continue to consider the ways in which we operate and the impact we have 1 Keeping our Team Safe 2 Promoting a Diverse an
Slide 7: Response to COVID-19
Response to COVID-19 Our response to COVID-19 centered around supporting the health and wellbeing of our Team and our Customers. Our approach focused on business continuity and maintaining jobs, forward planning & recovery and strategic opportunities Supporting our Team • Paid COVID-19 leave policy:
Slide 8: Responding to consumer needs in COVID-19
Responding to consumer Channel mix (% of total sales) needs in COVID-19 Introduction of contactless click & collect and Helping Hand telephone shopping service allowed our 78% customers to continue to shop safely with us 84% 7% 88% • Click & collect sales grew 91% in 2H and 137% in Q4, a run- 7% 4%
Slide 9: Financial & Trading Performance
1. Financial & Trading Performance
Slide 10: Market share growth continues
Market share growth Sales ($m) continues 400.00 380.00 $362.3 $405.2 360.00 340.00 320.00 $304.5 11.8% 4.9% 300.00 $278.0 280.00 $236.8 260.00 240.00 total comparable 220.00 200.00 sales growth sales growth 180.00 160.00 140.00 120.00 100.00 FY16 FY17 FY18 FY19 FY20 FY20 total sales growth of 11.8%
Slide 11: Investment in Digital to grow Sales & Market Share
$58.9 Online Sales ($m) Investment in Digital to Sales $m % of total sales grow Sales & Market Share $42.3 $28.9 Our multi-channel retail experience delivers sales 14.5% $17.8 growth, online sales are now 14.5% of total sales 9.5% 11.8% $10.1 6.4% • Website visits continue to grow, unique visits exc
Slide 12: Great Range at Low Prices Everyday
Great Range at Low Prices Everyday Our Price Promise underpins our value statement • Competitive pricing with the widest range to: % of Total Sales – Best Buys (EDLP) • Deliver great value to our customers 24.9% • Build trust with our customers through Our Price Promise 21.0% 19.6% - find a lower pr
Slide 13: Gross margin improvement of 120 bps to 36.2%
Gross margin improvement of 120 bps to 36.2% 1H FY20 Gross Margin 36.9%, 2H 35.6% • 2H Gross Margin performance reflects COVID-19 impacts: • Consumer shift to online delivery which attracts a higher freight cost per transaction Gross Profit • Significant sales growth of lower margin baby essentials
Slide 14: Private Label & Exclusive Products
Private Label & 47.9% PRIVATE LABEL & Exclusive Products EXCLUSIVE SALES GROWTH % of Total Sales – Private 55.0%Label & Exclusive Products 50.0% 50.0% 45.0% 40.0% 36.5% 35.0% 30.0% 27.6% 25.0% 20.9% 20.0% 15.0% 10.0% 11.4% 10.0% 5.0% 0.0% FY16 FY17 FY18 FY19 FY20 Long-term Target Private Label & Exc
Slide 15: Continued investment supports growth
Continued investment supports growth Cost of Doing Business metrics (% sales) (1) CODB (pro forma) in FY20 was 27.9% of sales Store expenses Store expenses of 20.1% 20.1% 20.1% 20.1% • 1H store efficiency initiatives delivered increased customer 19.3% 19.2% service levels and improving cost to sales
Slide 16: Maternity & Baby Goods Market
2. Maternity & Baby Goods Market
Slide 17: Competitive landscape - our market expansion continues
Competitive landscape - our market expansion continues Baby Bunting leads the industry in a fragmented market Baby Bunting $2.4bn estimated addressable market (1) Baby Bunting store numbers by state (breakdown by category) Other $0.2 billion Cots, mattresses Food, Nappies, and nursery furniture Clot
Slide 18: Strategy
3. Strategy
Slide 19: Growth strategy - grow market share
Growth strategy - grow market share Focused investment in capability, IT systems and supply chain to support growth 1 Investment in digital to deliver the best possible customer experience across channels and enable new business models 2 Investment to grow market share from our core business 3 Growt
Slide 20: Investment to Grow Sales from Existing Stores
Investment to Grow Sales Store maturity profile as at 28 June 2020 (years opened) (stores on average take 4 years to reach sales maturity) from Existing Stores • Improving the customer experience in-store, NPS score of 81 <3 years • Our Baby on Board car seat installation and services business 25% c
Slide 21: Growth from New Markets: Network Plan upgraded to 100+
Growth from New Markets Network Plan 100+ upgraded to STORE Store roll-out NETWORK PLAN 100+ 100+ stores # of stores On the back of significant market share growth and the changes in competitive landscape, Baby Bunting has capacity to grow its network of stores to 100+ • Expanding our store network
Slide 22: New Store Economics
New Baby Bunting stores (all stores opened from Group Average (all stores opened New Store Economics June 2008) > 4 years) New Store performance exceeding expectations YEAR 1 YEAR 2 FY2020 Revenue per store ($m) 4.9 5.4 7.8 • Mature store average EBITDA margin 17%, +200 bps from FY19 driven by gross
Slide 23: New Zealand
New Zealand $450m+ addressable market Following on from our launch of shipping online orders to New Zealand, a review of the New Zealand market is currently being undertaken: $450m addressable market • Fragmented retail market with similar attributes • Common language and regulatory system • Product
Slide 24: Profit Margin Improvement
Profit Margin Improvement Program of business initiatives and managed investment in costs over time as the business builds to scale to deliver the long term goal of 10% EBITDA(1) margin Gross Margin Improvement • Growing the Private Label program and introduce new Private Label brands • Expansion of
Slide 25: Transformation Update
4 Transformation { eS } J | * , 7 . A — _
Slide 26: Transformation – investing to grow
Transformation – investing to grow FY20: $4m capex and $4m project expenses $2.6m write down of old brand assets FY21: ~$10m capex and ~$4m project expenses ~$1m write down of PPE (old support office) Significant business transformation project pipeline continues Brand Modernisation Core Systems Sup
Slide 27: Our Brand
Our Brand New parents’ expectations of brands and shopping experiences changes over generations. However, their need for support and advice remains constant Our new brand represents our core values of support and advice with a warm and friendly tone 27
Slide 28: Supply Chain Strategy
Supply Chain Strategy Supply chain evolution to improve gross margin. Lower our cost to serve. Improve the customer experience through speed to market and increased on-shelf stock availability New Distribution Centre & Support Office • We are moving to a new larger Distribution Centre in Melbourne,
Slide 29: Financial Information
5. Financial Information
Slide 30: Summary Pro Forma Income Statement
Summary Pro Forma Income Statement Summary Pro Forma Income Statement • Total pro forma sales of $405.2 million, up 11.8% vs pcp Pro Forma Pro Forma Change FY2020 FY2019 ̵ Comparable store sales growth of 4.9% $ million Sales 405.2 362.3 11.8% • Gross margin of 36.2%, up 120 bps above pcp, the resul
Slide 31: Statement of Financial Position
Statement of Financial Position Statutory Statutory 28-Jun-20 30-Jun-19 $ million Strong balance sheet with no debt Cash and cash equivalents 13.3 5.8 Inventories 65.1 68.2 • Net cash position of $13.3m Plant and equipment 22.5 24.5 • Inventory decrease of $3.1m compared to 30 June 2019 Goodwill & I
Slide 32: Cash Flow
Cash Flow Statutory Statutory 28-Jun-20 30-Jun-19 $ million • Improvement in working capital reflects significant Q4 sales growth accelerating stock EBITDA(1) 58.6 48.9 turns through 2H Movement in working capital 8.1 3.7 Tax Paid (7.2) (4.1) • Capital expenditure of $8.3m includes Finance costs – b
Slide 33: Outlook
6. Outlook
Slide 34: Exciting times ahead
Exciting times ahead We remain focused on executing our growth strategy: • Expansion of our store network plan to 100+ stores and alternative store formats • Expansion of our Private Label products • Expansion of our services business, car seat hire and other product categories • Undertake assessmen
Slide 35: FY21 outlook
FY21 outlook Strong start to FY21 We have seen positive trading momentum continue. Sales reflect the less discretionary nature of the maternity and baby goods category. As at 9 August 2020, comparable store sales growth of 20.0% for the first 6 weeks of FY21. All Victorian stores remain open. Sales
Slide 36: Questions
QUESTIONS 36
Slide 37: Appendices
6. Appendices
Slide 38: Appendix 1: Statutory - Pro Forma Income Statement Reconciliation
Appendix 1: Statutory - Pro Forma Income Statement Reconciliation FY2020 FY2019 Add Add Statutory Pro Forma Pro Forma Statutory Pro Forma Pro Forma FY20 Adj (a) FY20 FY19 Adj (a) FY19 $ million Sales 405.2 405.2 368.0 (5.7) 362.3 Cost of sales (258.3) (258.3) (239.6) 3.9 (235.7) Gross Profit 146.9 1
Slide 39: Appendix 2: AASB 16 Transition Impact - Pro Forma Income Statement
Appendix 2: AASB 16 Transition Impact - Pro Forma Income Statement FY2020 FY2019 Remove AASB 16 Recognise Remove AASB 16 Recognise Pro Forma Pre-AASB 16 Pro Forma Pre-AASB 16 Depreciation and Operating Lease Depreciation Operating Lease FY20 FY20 FY19 FY19 Interest Expenses and Interest Expenses $ m
Slide 40: 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 financial year, provided the stores were open at the beginning o
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