Super Retail Group Limited · ASX:SUL
Super Retail — Investor Day (November 2019)
60 slides from Super Retail's investor day presentation, Nov 8, 2019
Slide 1: Investor Day Presentation
8 November 2019 ASX/Media Announcement Investor Day Presentation Super Retail Group (SUL) is hosting an Investor Day today where Group Managing Director and CEO, Mr Anthony Heraghty, will provide an update on the Group’s corporate strategy. Please find attached a copy of the Investor Day presentatio
Slide 2: Investor Day
INVESTOR DAY Friday, 8 November 2019 Anthony Heraghty Group Managing Director & Chief ExecuMve Officer
Slide 3: Acknowledgement of Country
Acknowledgement OF COUNTRY We would like to begin by acknowledging the Tradi@onal Owners of the land on which we meet today, the Gadigal people of the Eora na@on, and pay respect to their Elders past, present and emerging. SUPER RETAIL GROUP 2
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Slide 5: Agenda
Agenda TOPIC TIME PRESENTER 1 Strategy overview 10.30 – 12.00 Anthony Heraghty Break 12.00 – 12.30 2 Supercheap Auto 12.30 – 12.45 Benjamin Ward 3 Rebel 12.45 – 1.00 Gary Williams 4 Macpac 1.00 – 1.15 Alex Brandon 5 BCF 1.15 – 1.30 Anthony Heraghty 6 Capital management 1.30 – 1.50 David Burns 7 Q&A
Slide 6: Our leadership team
Our leadership team PAUL BRADSAW ALEX BRANDON DAVID BURNS REBECCA FARRELL PAUL HAYES ANTHONY HERAGHTY Managing Director Chief Execu@ve Officer Chief Financial Group General Counsel Chief Informa@on Group Managing Director BCF1 Macpac Officer and Company Secretary2 Officer and Chief Execu@ve Officer JANE KEL
Slide 7: Today's strategy overview
Today’s strategy overview • Strategic context • Our source of advantage • Our strategy • Brand snapshots • Capital management • Q&A SUPER RETAIL GROUP 6
Slide 8: Strategic context
Strategic context ANTHONY HERAGHTY GROUP MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER SUPER RETAIL GROUP 7
Slide 9: Changing profile of retailing
Changing profile of retailing Visceral 1:1 customer relaMonships, built on experience and expert advice, are the new bacleground 1 3 Perfect execuMon Rise of the transcends all marketplace ecosystem; fall of the general merchant 4 Long standing differenMators - range, price and convenience - 2 relegat
Slide 10: An omni-channel world
An omni-channel world SALES, BY CHANNEL1 ONLINE % OF TOTAL BALANCING COST-TO-SERVE WITH SALES ONLINE SALES CUSTOMER PROMISE HOME DELIVERY 57% 4% CLICK & COLLECT 43% SRG SALES ($M) 3% SALES CHANNEL 3.8% 3-year CAGR 2,710 Total 3.8% 93% 2,422 Online 71.2% IN-STORE Offline 1.7% CUSTOMERS, BY CHANNEL1 Sto
Slide 11: High-involvement, growth categories
High-involvement, growth categories SAMPLE COMPETITIVE SET - INDICATIVE GROWTH RATE 1 OTHER RETAIL GROWTH2 3-year CAGR 3-year CAGR 3-year CAGR 3-year CAGR FY16-FY19 FY16-FY19 FY16-FY19 FY16-FY19 All retail 2.8% Clothing, 3.1% footwear and ~4-5% ~5-6% ~9-11% accessories Household 1.5% goods Departmen
Slide 12: Our source of advantage
Our source of advantage ENGAGED TEAM LOYAL CUSTOMERS POWERFUL BRANDS SUPER RETAIL GROUP 11
Slide 13: Engaged team
Engaged team >12,000 TEAM MEMBERS 14.34 38.6% TOTAL RECORDABLE INJURY WOMEN IN SENIOR FREQUENCY RATE MANAGEMENT 10.1% REDUCTION YOY 47.9% 75.9% FEMALE TEAM TEAM MEMBERS RETENTION 13,500 TEAM MEMBER RECOGNITIONS PER MONTH SUPER RETAIL GROUP 12
Slide 14: Loyal customers
Loyal customers 1.65M ac@ve 2.57M ac@ve 1.45M ac@ve 0.41M ac@ve club members1 club members1 club members1 club members1 61 NPS2 57 NPS2 61 NPS2 67 NPS3 39% - sales from 61% - sales from 81% - sales from 65% - sales from ac@ve club ac@ve club ac@ve club ac@ve club members members members members 1 Cl
Slide 15: Powerful brands
Powerful brands +2.3% LFL sales +3.3% LFL sales +3.2% LFL sales +7.3% LFL sales growth1 growth1 growth1 growth1 2 86% brand 94% brand 74% brand 82% brand awareness3 awareness3 awareness3 awareness3 4 44% main 26% main 26% main 5% main store5 store5 store5 store6 1 For year ending June 2019 4 Macpac
Slide 16: Our strategy
Our strategy SUPER RETAIL GROUP 15
Slide 17: Three primary value levers
Three primary value levers Grow annual Be an efficient Focus on organic customer value omni-retailer growth and capital discipline SUPER RETAIL GROUP 16
Slide 18: Five strategic drivers
Five strategic drivers Grow Leverage Connected Simplify Excel in the core 4 closeness to our omni-retail supply the business omni-retail brands customer chain execu@on 1 2 3 4 5 SUPER RETAIL GROUP 17
Slide 19: 1. Grow the core 4 brands
1. Grow the core 4 brands SRG SALES ($M) ‘CORE 4’ SALES ($M) 1 3-year CAGR 3-year CAGR 3.8% Total 3.8% 4.9% Total 4.9% 2,710 2,664 2,422 Online 71.2% Online 67.2% 2,305 Offline 1.7% Offline 2.9% 2016 2019 2016 2019 1 Core 4 brands CAGR calculated based on Supercheap Auto, Rebel (including Amart), BCF an
Slide 20: 1. Grow the core 4 brands
1. Grow the core 4 brands INCREASED FOCUS ON OUR CORE 4 BRANDS CURRENT FUTURE • Complex mulM-brand divisional structure • Focused investment in Supercheap Auto, Rebel, • Risk of under-investment in core brands BCF and Macpac • Private label penetraMon focus • Execute organic growth opportuniMes: - S
Slide 21: 1. Grow the core 4 brands: key initiatives
1. Grow the core 4 brands KEY INITIATIVES 1. Align capital investment to grow core 4 brands 2. Develop organic brand strategies, leveraging consolidated compeMMve advantage 3. Refresh private brand strategy SUPER RETAIL GROUP 20
Slide 22: 2. Leverage closeness to our customer
2. Leverage closeness to our customer STORE NUMBERS AND ACTIVE CLUB MEMBERS 3-year CAGR 6.1M Ac@ve club 10.7% • Loyal, substanMal and acMve 5.5M members 1 5.2M customer base 4.5M 3.9M • Largely under-leveraged growth engine • Building insights off a data-rich foundaMon, to becer serve and Store 2.5%
Slide 23: 2. Leverage closeness to our customer
2. Leverage closeness to our customer UTILISE INSIGHTS ACROSS OUR EXISTING CUSTOMER BASE TO BETTER MEET THEIR NEEDS CURRENT FUTURE • Customers • FanaMcs • Email database • Structured loyalty program driving visitaMon and • FoundaMonal insight and analyMcs capabiliMes transacMon value growth • Transa
Slide 24: 2. Leverage closeness to our customer: key initiatives
2. Leverage closeness to our customer KEY INITIATIVES 1. Deepen understanding of the customer through more sophisMcated analyMcs and insights 2. Develop structured customer relaMonship management (CRM) program to drive visitaMon and transacMon growth 3. Align markeMng, merchandising and pricing stra
Slide 25: 3. Connected omni-retail supply chain
3. Connected omni-retail supply chain OUR CURRENT SUPPLY CHAIN ~85% of directly sourced imports originate from China Shanghai, Ningbo, Guangzhou and Hong Kong are major supplier ports BRENDALE Store and online orders ERSKINE PARK Store and online orders FORRESTFIELD Store orders INGLEBURN (3PL) Spor
Slide 26: 3. Connected omni-retail supply chain
3. Connected omni-retail supply chain LEVERAGE EXISTING INVESTMENT CURRENT FUTURE • Sound plalorm, driven by legacy investment in • Leverage exisMng investment domesMc logisMcs • VerMcally-connected operaMng model across the • Under-leveraged total supply chain network value chain • DuplicaMon in Re
Slide 27: 3. Connected omni-retail supply chain: key initiatives
3. Connected omni-retail supply chain KEY INITIATIVES 1. OpMmise Australia and New Zealand distribuMon centre networks, planning and product flows 2. Orchestrate customer online orders 3. Leverage group sourcing capability SUPER RETAIL GROUP 26
Slide 28: 4. Simplify the business
4. Simplify the business SIGNIFICANT TECHNOLOGY INVESTMENT OVER THE LAST 4 YEARS – WE ARE ABOUT TO EMBARK ON STAGE THREE Historical Stage 1 Stage 2 Stage 3 < 2015 2020 + Unstable and complex systems ü Stabilise our IT foundaMons ü Establish key omni-foundaMons ü Modernise and reduce complexity throu
Slide 29: 4. Simplify the business
4. Simplify the business INCREASE EFFICIENCY, REDUCE COSTS AND OPTIMISE INVESTMENT CURRENT FUTURE • OperaMonal complexity • Centre-leveraged operaMng model • Post acquisiMon (Rebel) technical debt driving • Stage 3 simplificaMon of informaMon technology cost and complexity environment • DuplicaMon of
Slide 30: 4. Simplify the business: key initiatives
4. Simplify the business KEY INITIATIVES 1. Remove duplicaMon and leverage scale 2. Focus on KPI alignment and value mindset 3. Modernise technology infrastructure to be fit for purpose SUPER RETAIL GROUP 29
Slide 31: 5. Excel in omni-retail execution
5. Excel in omni-retail execuion ALIGN EXPERIENCE WITH THE CUSTOMER JOURNEY CURRENT FUTURE • Channel-centric • Customer-centric • ExecuMon primarily focused on product and • Understand the customer journey and lead with transacMon experience • Limited delivery proposiMons • Omni-order capture and fu
Slide 32: 5. Excel in omni-retail execution: key initiatives
5. Excel in omni-retail PIC execuion KEY INITIATIVES 1. ConMnue to build experMse for our customer-facing teams, underpinned by team members as industry experts 2. Deliver a seamless ‘Super Retailer’ experience 3. Evolve the store experience: - Supercheap Auto – extension of the Super store - Rebel
Slide 33: Recap
Recap • TransiMon the business from analogue to digital • Leverage strong market posiMon and legacy investment • Have a focused, low-execuMon-risk and moderate capital plan creaMng future opMonality • Enhance our omni-retail plalorm for future growth • Smart use of customer and business analyMcs SUP
Slide 34: Lunch break
Lunch break WE WILL RESUME AT 12:30PM SUPER RETAIL GROUP 33
Slide 35: Core brands: Supercheap Auto
Core 4 brands: Supercheap Auto SUPER RETAIL GROUP 34
Slide 36: Benjamin Ward
BENJAMIN WARD MANAGING DIRECTOR- SUPERCHEAP AUTO • Benjamin joined Super Retail Group in July 2019 as Managing Director – Supercheap Auto • Benjamin is an experienced retail execuMve with more than 20 years in senior management roles across Australia, UK, US and Europe • Previously, he was Managing
Slide 37: Super Retail Group
UPERCHEA oF f auTo | i SUPER RETAIL GROUP 36
Slide 38: Supercheap Auto Overview Snapshot
OVERVIEW 323 1.65M 3.4% 11.6% STORES ACTIVE CLUB MEMBERS SALES GROWTH YOY EBIT MARGIN SNAPSHOT OUR CUSTOMER MARKET LANDSCAPE INITIAL OBSERVATIONS • Evolving customer moving from ‘Do • Auto asermarket in posiMve growth • Strong culture with a tenured, It Yourself’ (DIY) to ‘Do It For and set to conMn
Slide 39: Core brands: Rebel
Core 4 brands: Rebel SUPER RETAIL GROUP 38
Slide 40: SUPER RETAIL GROUP
SUPER RETAIL GROUP 39
Slide 41: Gary Williams
GARY WILLIAMS MANAGING DIRECTOR - REBEL • Gary joined Super Retail Group in April 2019 as Managing Director – Rebel • Previously Gary served as Chief OperaMng Officer for Alceon Retail Group • His global experience includes roles in USA, UK, Asia Pacific and South Africa • Gary has held execuMve, board
Slide 42: Rebel Overview
OVERVIEW 161 2.57M 3.8% 9.2% STORES ACTIVE CLUB MEMBERS SALES GROWTH YOY EBIT MARGIN SNAPSHOT OUR CUSTOMER MARKET LANDSCAPE INITIAL OBSERVATIONS • ShiH in par@cipa@on driving changes in • Sports market growth is being led by • Strength of the Rebel brand and customer segments lifestyle – apparel and
Slide 43: Core brands: Macpac
Core 4 brands: Macpac SUPER RETAIL GROUP 42
Slide 44: Alex Brandon
ALEX BRANDON CHIEF EXECUTIVE OFFICER- M A C PA C • Alex was appointed as Macpac’s Chief ExecuMve Officer in July 2012 and conMnues to serve in this role aser Super Retail Group acquired the outdoor adventure specialist retailer in April 2018 • His global experience includes roles in UK, USA, Australia
Slide 45: Super Retail Group
JA Macpac’ SUPER RETAIL GROUP 44
Slide 46: Original, technical outdoor brand
SUPER RETAIL GROUP ORIGINAL, TECHNICAL OUTDOOR BRAND E; 7 SINCE 45
Slide 47: Macpac Overview
OVERVIEW 70 0.41M 70.3% 2 9.4% STORES ACTIVE CLUB MEMBERS SALES GROWTH YOY EBIT MARGIN OUR CUSTOMER • 0.41M ac@ve club members 1 • NPS at 67, for 3 months ending Sep 2019 SUPER RETAIL GROUP 1 As at end June 2019 46 2 Macpac was owned for 12 months in FY 2018/19 compared to three months in FY 2017/18
Slide 48: Macpac Overview: core principles
OVERVIEW 70 0.41M 70.3% 1 9.4% STORES ACTIVE CLUB MEMBERS SALES GROWTH YOY EBIT MARGIN 3 CORE PRINCIPLES BUILD QUALITY PRODUCTS OFFER AN EXCEPTIONAL BE A GOOD THAT LAST GUEST EXPERIENCE GLOBAL CITIZEN SUPER RETAIL GROUP 1 Macpac was owned for 12 months in FY 2018/19 compared to three months in FY 20
Slide 49: Original, technical outdoor brand
SUPER RETAIL GROUP ORIGINAL, TECHNICAL OUTDOOR BRAND E; 7 SINCE 48
Slide 50: Core brands: BCF
Core 4 brands: BCF SUPER RETAIL GROUP 49
Slide 51: Paul Bradshaw
PAUL BRADSHAW MANAGING DIRECTOR – BCF • Paul Bradshaw joins Super Retail Group’s ExecuMve Leadership Team on 26th November 2019 • He brings deep retail experMse from more than 30 years in execuMve and management leadership roles at successful retailers in both Australia and internaMonally • Paul’s e
Slide 52: SUPER RETAIL GROUP
SUPER RETAIL GROUP 51
Slide 53: BCF Overview
OVERVIEW 136 1.45M 3.3% 4.0% STORES ACTIVE CLUB MEMBERS SALES GROWTH YOY EBIT MARGIN SNAPSHOT OUR CUSTOMER MARKET LANDSCAPE KEY OPPORTUNITIES • ~50% purchasing primarily in only • Stable growth in overall market with • ConMnued focus on BCFing experts, new one of our key categories: boaMng, higher g
Slide 54: Capital Management
Capital Management DAVID BURNS CHIEF FINANCIAL OFFICER SUPER RETAIL GROUP 53
Slide 55: Capital Management
Capital Management OBJECTIVES PRINCIPLES • Maximise shareholder returns through focusing on • Ensure dividend payouts are maintained within the financial targets policy of 55% to 65% of underlying NPAT, fully franked – Achieve category-leading operaMng margins • Balance sheet sewngs focused on conser
Slide 56: Robust Cash Flows
Robust Cash Flows $m CASH FLOW SOURCES AND USES • Porlolio of highly cash generaMve businesses • Ongoing focus on working capital management underpins cash flow 400 delivery 350 • Earnings growth and strong cash flow generaMon has enabled the 300 Group to: 250 – Invest capital for growth 200 – Maintai
Slide 57: Strong Financial Position
Strong Financial Posiion • Super Retail Group maintains a strong and conservaMve balance sheet. Key metrics have the following targets: – Net debt/EBITDA below 1.5 Mmes – Fixed-Charge Cover RaMo above 2.2 Mmes $m DEBT FACILITY MATURITY PROFILE – Gearing of ~30% 250 • Group Treasury Policy – Liquidit
Slide 58: New Lease Accounting Standards
New Lease Accouning Standards • Super Retail Group will adopt the new lease accounMng standards (AASB 16) from 1 July 2019 • Recognise on balance sheet – Lease asset: right of use underlying leased assets – Lease liability: present value of future lease payments • DepreciaMon of lease assets and int
Slide 59: Q&A
Q&A ANTHONY HERAGHTY GROUP MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER SUPER RETAIL GROUP 58
Slide 60: Disclaimer
Disclaimer This presentaMon contains general background informaMon about Super Retail Group Limited (“Super Retail Group”) and its acMviMes, current as at the date of this presentaMon. It is informaMon given in summary form and does not purport to be complete. It may include "forward-looking stateme