Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — FY2017 Earnings Presentation
32 slides from Kmd Brands's earnings presentation, Sep 26, 2017
Slide 1: FY17 Results Presentation
For personal use only FY17 Results Presentation September 2017
Slide 2: Financial highlights
Financial highlights For personal use only Sales Same Store Sales AU 6.9% $445.3m 4.6% +5.5% NZ 3.6% EBIT Net Profit After Tax $57.0m 12.0% $38.0m 13.5% Dividend Net Debt 13cps 18.2% $6.9m $29.9m 2
Slide 3: Contents
For personal use only Contents 1. Strategy update 2. Result overview 3. Key line items 4. Segment results 5. Cash Flow, Balance Sheet, Dividend 6. Summary 7. Questions A. Appendices 3
Slide 4: 1. Strategy update
For personal use only 1. Strategy update 4
Slide 5: 1. Strategy update
1. Strategy update For personal use only “Design great, innovative, distinctive and sustainable quality products” “Be customer-centric in everything we do” GROWTH STRATEGIES Continuous improvement Growth initiatives » Brand and customer » International » Store optimisation » Marketplaces » Pricing a
Slide 6: Strategy update – continuous improvement
1. Strategy update – continuous improvement Initiatives Progress update For personal use only » Elevate brand distinctiveness through product design and » Our innovative travel design focus is highlighted innovation by products such as the Benmore 5-in-1 travel » Focus on our expertise in adventure
Slide 7: Strategy update – continuous improvement
1. Strategy update – continuous improvement Initiatives Progress update For personal use only » Provide a channel agnostic offer: one range available to » Responsive website launched in November 2016 all customers wherever they choose to shop » Online sales are 7.5% of total sales » Invest in our on
Slide 8: Strategy update – growth
1. Strategy update – growth Initiatives Progress update For personal use only » Kathmandu products now selling through » Identify and promote brand and product distinctive SportScheck and Go Outdoors. Opportunity to attributes that make Kathmandu relevant internationally expand our range for future
Slide 9: Sustainability
1. Sustainability For personal use only Our goal: Australasian industry leadership in sustainability For more information: Kathmandu’s 2017 Sustainability Report released mid-October 9
Slide 10: 2. Result overview
For personal use only 2. Result overview 10
Slide 11: Result overview: Year-on-Year
2. Result overview: Year-on-Year For personal use only NZD $m*1 FY17 FY16 Var $ Var % SALES 445.3 425.6 19.7 4.6% GROSS PROFIT 276.2 266.4 9.8 3.7% Gross margin 62.0% 62.6% OPERATING EXPENSES (205.4) (201.6) 3.8 1.9% % of Sales 46.1% 47.4% EBITDA 70.8 64.8 6.0 9.3% EBITDA margin % 15.9% 15.2% EBIT*2
Slide 12: 3. Key line items
For personal use only 3. Key line items 12
Slide 13: Sales
3. Sales For personal use only SALES: +4.6% to $445.3m Group Sales (NZD $m) » Sales growth year on year:*1 $445.3 AU 7.9%, NZ 3.3% $384.0 $392.9 $409.4 $425.6 » At constant exchange rates sales growth $24.5m / 5.8% » Online sales are 7.5% of total sales FY13 FY14 FY15 FY16 FY17 Australia (AUD $m) Ne
Slide 14: Australasian sales growth – constant currency
3. Australasian sales growth – constant currency For personal use only » Core business (AU/NZ) constant currency sales growth +6.4% Australia and New Zealand Sales (NZD $m) $5.3 $21.5 $4.1 $446.9 $442.8 $420.1 FY16 Retail Online FY17 Exchange FY17 AU/NZ Stores AU/NZ Rate AU/NZ Sales Sales NZD:AUD Sa
Slide 15: Same Store Sales result
3. Same Store Sales result For personal use only Australia New Zealand SAME STORE SALES: +5.5% at constant rates Australia New Zealand 6.7% 6.9% 6.9% » Same store sales: 4.4% 3.6% +4.4% actual exchange rates 2.6% +5.5% constant exchange rates: » Stores +4.7% -0.1% -0.1% » Online +15.9% -1.1% -2.7% F
Slide 16: Gross Margin
3. Gross Margin For personal use only AU NZ GROUP AU NZ GROUP 66.3% 66.3% 63.4% 64.1% 64.1% 63.0% 63.1% 62.6% 61.5% 62.0% 60.1% 57.7% 58.2% 58.5% 57.9% FY13 FY14 FY15 FY16 FY17 SHARE OF BUSINESS (GROSS PROFIT $) » Gross margin long-term target range 61% to 63% INTERNATIONAL 0.5% » Sourcing negotiati
Slide 17: Cost of doing business
3. Cost of doing business For personal use only OPERATING EXPENSES: +1.9% to $205.4m NZD $m FY17 FY16 Var $ Var % » Rent increase includes transition to new Rent 62.2 58.3 3.9 6.7% Australian distribution centre and full year % of Sales 14.0% 13.7% impact of New Zealand support office Other operatin
Slide 18: Earnings summary
3. Earnings summary For personal use only EBITDA $70.8m EBIT*1 $57.0m NPAT $38.0m +9.3% +12.0% +13.5% 74.0 74.5 70.8 64.8 63.4 64.3 57.0 47.1 50.9 44.2 42.2 38.0 33.2 33.5 20.4 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 EBITDA % EBIT % NPAT % 19.3% 19.0% 11.5% 15.2% 1
Slide 19: 4. Segment results
For personal use only 4. Segment results 19
Slide 20: Australia
4. Australia For personal use only SALES: +7.9% to $280.7m AUD $m FY17 FY16 Var % » Gross margin level year-on-year Sales 280.7 260.1 7.9% » Total operating expenses (incl. depreciation): Same store sales growth 6.9% 2.6% » FY17 53.1% of sales » FY16 54.4% of sales EBIT (trading result)*2 30.8 25.1
Slide 21: New Zealand
4. New Zealand For personal use only SALES: +3.3% to $146.4m NZD $m FY17 FY16 Var % Sales 146.4 141.7 3.3% » Gross margin decreased 220bps / 2.2% of sales Same store sales growth 3.6% (0.1%) » Total operating expenses (incl. depreciation): EBIT (trading result)*2 28.9 27.4 5.5% » FY17 38.2% of sales
Slide 22: International
4. International For personal use only SALES: -53.6% to NZD $2.5m NZD $m FY17 FY16 Var % » Cycling the closure of three UK stores during Sales 2.5 5.5 (53.6%) FY16, one UK store still to be closed Same store sales growth (32.7%) 3.7% » Gross margin improved 650bps / 6.5% of EBIT (trading result)*2 (
Slide 23: 5. Cash Flow, Balance Sheet, Dividend
5. Cash Flow, Balance Sheet, Dividend For personal use only 23
Slide 24: Cash Flow
5. Cash Flow For personal use only Operating cash flow: Cash Flow (NZD $m) FY17 FY16 » Strong operating cash flow generated through improved profitability and NPAT 38.0 33.5 continued inventory reduction Change in working capital 12.9 20.5 Capital expenditure $13.3m (LY $23.2m): Change in non-cash i
Slide 25: Balance Sheet
5. Balance Sheet For personal use only Stock Per Store (NZD $m)*1 Balance Sheet (NZD $m) FY17 FY16 Inventories 89.2 95.4 $0.692 $0.708 $0.584 $0.589 Property, plant and equipment 61.0 61.6 $0.544 Intangible assets 279.0 280.1 Other assets 6.3 5.1 Total assets (excl. cash) 435.5 442.2 FY13 FY14 FY15
Slide 26: Dividend
5. Dividend For personal use only » NZ 9.0 cents per share final dividend; Dividends (NZ cents per share) » Record high full year payout NZ 13.0 cps (FY16 NZ 11.0 cps) 13 12 12 » Dividend will be fully imputed for New Zealand 11 shareholders 8 9 » Dividend will be fully franked for Australian shareh
Slide 27: Foreign currency
5. Foreign currency For personal use only FORWARD HEDGING POSITION FY16 FY17 FY18 AUD/USD Effective Rate 0.796 0.728 0.756 NZD/USD Effective Rate 0.732 0.659 0.707 » FY17 USD hedging rates c.9% below FY16 » FY18 USD hedging rates c.5% above FY17 » Forward hedging position: » Longest dated hedges Sep
Slide 28: 6. Summary
For personal use only 6. Summary 28
Slide 29: Summary
6. Summary For personal use only » Outdoor category competitor mix constantly changing and remains competitive » Sustainability and commitment to ethical business an emerging competitive advantage » Kathmandu is a strong brand that designs great, innovative, distinctive and sustainable quality produ
Slide 30: Questions
For personal use only 7. Questions 30
Slide 31: Appendix – Historical store count
Appendix 1 – Historical store count For personal use only Australia and New Zealand Stores 161 163 156 145 131 114 104 91 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1. Four new stores opened during FY17, and three stores closed. One temporary store still open at balance date and closed in August. Exclu
Slide 32: Appendix – Reconciliation of segment EBIT trading results
Appendix 2 – Reconciliation of segment EBIT trading results For personal use only FY17 ($’000) Australia New Zealand International Other Total EBIT per financial statements (NZD) 31,534 29,962 (716) (3,776) 57,004 Internal charges not trading related*1 (NZD) 1,040 (1,040) - - - EBIT (trading result)