Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — H1 FY2017 Earnings Presentation
31 slides from Kmd Brands's earnings presentation, Mar 21, 2017
Slide 1: 1H FY17 Results Presentation
For personal use only 1H FY17 Results Presentation March 2017
Slide 2: Contents
March 2017 For personal use only Contents 1. Result Overview 2. Key Line Items 3. Country Results 4. Cash Flow, Balance Sheet, Dividend 5. Strategy Update 6. FY17 Outlook 7. Questions A. Appendices 2
Slide 3: Strategy Recap
Strategy Recap For personal use only “Design great, innovative, distinctive and sustainable quality products” “Be customer-centric in everything we do” GROWTH STRATEGIES Continuous improvements Growth initiatives » Brand and customer » International » Store optimisation » Marketplaces » Pricing and
Slide 4: 1. Result Overview
For personal use only 1. Result Overview 4
Slide 5: Result Overview: Highlights
1. Result Overview: Highlights For personal use only Key Points » Strong same store sales growth in Australia » Sales and net profit growth » Improved operating leverage » Lower financing costs from working capital efficiency » Interim dividend increased to NZ 4.0cps, from NZ 3.0cps Sales and Margin
Slide 6: Result Overview: Year-on-Year
1. Result Overview: Year-on-Year For personal use only NZD $m*1 1H FY17 1H FY16 Var $ Var % SALES 196.3 196.0 0.3 0.2% GROSS PROFIT 121.0 123.1 (2.1) (1.7%) Gross margin 61.6% 62.8% OPERATING EXPENSES (99.5) (101.3) 1.8 (1.8%) % of Sales 50.7% 51.7% EBITDA 21.5 21.9 (0.4) (1.8%) EBITDA margin % 11.0
Slide 7: 2. Key Line Items
For personal use only 2. Key Line Items 7
Slide 8: Sales
2. Sales For personal use only SALES: +0.2% to $196.3m Group Sales (NZD $m) » Sales growth year on year:*1 AU 6.0%, NZ 0.9%, UK -57.8% $196.0 $196.3 $167.6 $179.4 $165.9 » At constant exchange rates total sales growth $5.9m / 3.0% » Online sales grew by over 18%*1 to represent 7.4% of total sales 1H
Slide 9: Australasian Sales Growth – constant currency
2. Australasian Sales Growth – constant currency For personal use only » Core business (AU/NZ) solid constant currency sales growth +4.2% AU/NZ SALES GROWTH +4.2% 2.4 5.6 5.2 200.4 195.2 192.3 1H FY16 Retail Online 1H FY17 Exchange 1H FY17 AU/NZ Stores AU/NZ Rates AU/NZ Sales Sales Sales (constant c
Slide 10: Same Store Sales Result
2. Same Store Sales Result For personal use only SAME STORE SALES: +3.4% at constant rates Australia New Zealand 9.6% » Same store sales: 6.6% +0.6% actual exchange rates 4.3% 5.0% 4.8% 3.2% 3.1% 0.9% 1.3% 1.2% +3.4% constant exchange rates: » Stores +2.5% » Online +15.7% 1H FY13 1H FY14 1H FY15 1H
Slide 11: Gross Margin %
2. Gross Margin % AU NZ UK GROUP For personal use only 67.4% 66.1% 64.6% 63.9% 63.6% 62.7% 62.8% 61.6% 61.4% 60.2% 59.3% 58.6% 58.2% 57.3% 56.0% 53.1% 53.8% 50.4% 50.7% 50.4% 1H FY13 1H FY14 1H FY15 1H FY16 1H FY17 » Gross margin impact due to favourable hedging rolling off. Largely offset by 1H FY1
Slide 12: Cost of Doing Business
2. Cost of Doing Business For personal use only OPERATING EXPENSES: -1.8% to $99.5m NZD $m 1H FY17 1H FY16 Var $ Var % » Rent increase includes new Australian distribution Rent 30.5 29.0 1.5 5.2% centre and New Zealand support office % of Sales 15.5% 14.8% » Promotional spend more targeted as a % of
Slide 13: Earnings Summary
2. Earnings Summary For personal use only EBITDA $21.5m EBIT $14.8m NPAT $10.0m -1.8% -2.0% +6.4% 20.9 22.6 21.9 21.5 15.8 17.6 15.1 14.8 10.3 11.4 9.4 10.0 6.8 0.6 -1.8 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 12.6% 13.5
Slide 14: 3. Country Results
For personal use only 3. Country Results
Slide 15: Australia
3. Australia For personal use only SALES: +6.0% to $121.1m AUD $m*1 1H FY17 1H FY16 Var % » Gross margin decreased 100bps / 1.0% of sales Sales 121.1 114.2 6.0% » Total operating expenses (incl. depreciation): Same store sales growth 5.0% 4.3% » 1H FY17 60.1% of sales » 1H FY16 60.6% of sales EBIT (
Slide 16: New Zealand
3. New Zealand For personal use only SALES: +0.9% to $68.8m NZD $m*1 1H FY17 1H FY16 Var % » Gross margin decreased 200bps / 2.0% of sales Sales 68.8 68.2 0.9% Same store sales growth 1.2% 3.1% » Total operating expenses (incl. depreciation): » FY17 40.9% of sales » FY16 42.5% of sales EBIT (trading
Slide 17: United Kingdom
3. United Kingdom For personal use only SALES: -57.8% to £0.7m GBP £m*1 1H FY17 1H FY16 Var % Sales 0.7 1.5 (57.8%) » Cycling store closures in FY16 Same store sales growth (26.5%) 0.2% » Gross margin improved 340bps / 3.4% of sales EBIT (trading result)*2 0.0 (0.2) » Total operating expenses (incl.
Slide 18: 4. Cash Flow, Balance Sheet, Dividend
4. Cash Flow, Balance Sheet, Dividend For personal use only 18
Slide 19: Cash Flow
4. Cash Flow For personal use only NZD $m 1H FY17 1H FY16 Capital expenditure $6.8m (LY $12.9m - with significant investment in AU NPAT 10.0 9.4 distribution centre and flagship stores): Change in working capital (8.1) 7.3 » Stores $3.9m (LY $5.7m) Change in non-cash items 8.1 7.5 » 1 new store Oper
Slide 20: Balance Sheet
4. Balance Sheet For personal use only Stock Per Store (NZ $m) NZD $m 1H FY17 1H FY16 $0.732 Inventories 96.4 103.3 $0.640 $0.616 $0.634 $0.595 Property, plant and equipment 61.2 59.5 Intangible assets 231.5 237.3 Other assets 15.4 21.6 Total assets (excl. cash) 404.5 421.7 1H FY13 1H FY14 1H FY15 1
Slide 21: Dividend
4. Dividend For personal use only » NZ 4.0 cents per share interim dividend (1H FY16 NZ 3.0 cps) » Dividend will be fully imputed for New Zealand shareholders » Dividend will be unfranked for Australian shareholders » Supplementary dividend of NZ 0.706 cents is payable to non-NZ shareholders » Recor
Slide 22: Strategy Update
5. Strategy Update For personal use only “Design great, innovative, distinctive and sustainable quality products” “Be customer-centric in everything we do” GROWTH STRATEGIES Continuous improvements Growth initiatives » Brand and customer » International » Store optimisation » Marketplaces » Pricing
Slide 23: Strategy Update – Continuous Improvement
5. Strategy Update – Continuous Improvement Initiatives Progress update For personal use only » Promote brand distinctiveness with products that showcase our » ISPO Gold award 2017 for Terrane Adapt pack expertise in adventure travel » 26% increase in social media reach, 366% increase in » Leverage
Slide 24: Strategy Update – Continuous Improvement
5. Strategy Update – Continuous Improvement Initiatives Progress update For personal use only Provide a channel agnostic offer: one range available to all customers wherever they choose to shop » Invest in our online platform to further improve usability and » Responsive website launched in November
Slide 25: Strategy Update – Growth
5. Strategy Update – Growth Initiatives Progress update For personal use only » Identify and promote brand and product distinctive attributes that make Kathmandu relevant internationally » Leverage our brand equity and online platform to expand » European wholesale partnerships to commence FY18 Inte
Slide 26: Sustainability
5. Sustainability Australasian industry leadership in sustainability For personal use only » Our goal: » Recognition: awarded “Large Business Sustainability Leaders in Australia” by the Banksia Foundation, Australia’s longest running and arguably most prestigious sustainability awards program » Key
Slide 27: 6. FY17 Outlook
For personal use only 6. FY17 Outlook 27
Slide 28: FY17 Outlook
6. FY17 Outlook For personal use only MARKET / ENVIRONMENT » Outdoor category competitor mix constantly changing and remains competitive KATHMANDU » More than a retailer, Kathmandu is a great brand that designs great, innovative, distinctive and sustainable quality products » International wholesale
Slide 29: Questions
For personal use only 7. Questions 29
Slide 30: Appendix – Historical store count
Appendix 1 – Historical store count For personal use only Australia and New Zealand Stores 160 161 161 153 156 145 131 135 123 114 104 108 91 94 84 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H FY10 FY10 FY11 FY11 FY12 FY12 FY13 FY13 FY14 FY14 FY15 FY15 FY16 FY16 FY17 1. Permanent open stores at bala
Slide 31: Appendix – Reconciliation of Country EBIT Trading Results
Appendix 2 – Reconciliation of Country EBIT Trading Results For personal use only 1H FY17 ($’000) Australia New Zealand United Kingdom Other Total EBIT per Interim Report (NZD) 3,841 12,433 71 (1,515) 14,830 Internal charges not trading related*1 (NZD) 561 (561) - - - EBIT (trading result) (NZD) 4,4