Douglas Ag · XETR:DOU
Douglas — Debt Investor Presentation (August 2020)
39 slides from Douglas's debt investor presentation, Aug 13, 2020
Slide 1: Financial Results
Financial Results Düsseldorf, 13 August 2020
Slide 2: Notice to Recipients
NOTICE TO RECIPIENTS This presentation and any materials distributed in connection herewith (together, the “Presentation”) have been prepared by Douglas GmbH (the “Company”) solely for use at this presentation. By attending the meeting where this Presentation is made, or by reading the presentation
Slide 3: Today's Speakers
TODAY’S SPEAKERS Tina Müller Group CEO Matthias Born Group CFO 3
Slide 4: Douglas safely navigates through the crisis
DOUGLAS SAFELY NAVIGATES THROUGH THE CRISIS LOCKDOWN EASES AND STORE RE-OPENINGS FROM APRIL ONWARD › Successful store ramp-up with nearly 100% stores reopened › Outstanding E-Commerce growth in Q3 › Core countries see market share gains over previous year › Effective countermeasures implemented › Ef
Slide 5: Development of store ramp-up
DEVELOPMENT OF STORE RAMP-UP › After complete shutdown NUMBER OF OPEN STORES (% OF TOTAL STORES) now nearly 100% of stores reopened › Footfall traffic still significantly 100% 99% lower than PY › Partially compensated for with higher conversion rates and average order values vs. PY › Store Net Sales
Slide 6: Net sales impacted by lockdown in Q3
NET SALES IMPACTED BY LOCKDOWN IN Q3 APRIL MAY JUNE 9M (€m) (€m) (€m) (€bn) 268 251 207 243 252 2.7 98 2.5 Apr 2018/19 Apr 2019/20 May 2018/19 May 2019/20 Jun 2018/19 Jun 2019/20 Q3 (€m) 762 LfL 557 Q3 2018/19 Q3 2019/20 9M 2018/19 9M 2019/20 6
Slide 7: All regions affected while e-commerce booms
ALL REGIONS AFFECTED WHILE E-COMMERCE BOOMS Q3 2019/20 GROUP GERMANY FRANCE (ONLINE) (m€) (m€) (m€) LfL Net Sales LfL LfL LfL 225 288 160 132 237 105 s Q3 2018/19 Q3 2019/20 Q3 2018/19 Q3 2019/20 Q3 2018/19 Q3 2019/20 GROUP SOUTH-WESTERN EASTERN EUROPE (STORES) EUROPE (m€) (m€) (m€) LfL LfL LfL 626
Slide 8: Douglas expands its market share
DOUGLAS EXPANDS ITS MARKET SHARE › Douglas outperforms previous DOUGLAS MARKET SHARE ACROSS CORE COUNTRIES (STORES + ONLINE) year’s market shares across core countries in both +3.0%pts channels, i.e. in stores and online › E-Commerce: Key growth +2.4%pts driver in all countries +2.1%pts › Even post
Slide 9: Long-term e-commerce growth
LONG-TERM E-COMMERCE GROWTH E-COMMERCE GROWTH FURTHER ACCELERATES, WITH NET SALES EXCEEDING €760M E-COMMERCE NET SALES (IN M€) 585 Q3 2019/20 vs. Q3 2018/19 CAGR 423 383 324 261 180 145 106 69 39 50 19 23 32 2 4 6 9 13 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/
Slide 10: Outstanding e-commerce net sales in Q3
OUTSTANDING E-COMMERCE NET SALES IN Q3 APRIL MAY JUNE 9M (€m) (€m) (€m) (€m) 640 85 47 77 47 38 63 Apr 2018/19 Apr 2019/20 May 2018/19 May 2019/20 Jun 2018/19 Jun 2019/20 459 Q3 (€m) 225 132 Q3 2018/19 Q3 2019/20 9M 2018/19 9M 2019/20 10
Slide 11: Permanent shift in consumer behavior
PERMANENT SHIFT IN CONSUMER BEHAVIOR NEW RETAIL PARADIGM ARISES FROM COVID-19 › A total of 44% of European PROPORTION OF CONSUMERS BUYING PRODUCTS ONLINE FOR THE FIRST TIME DURING LOCKDOWN consumers bought products online for the first time during lockdown 55% 55% › Spain and Italy (55%) with highes
Slide 12: Positive development of all e-commerce KPIs
POSITIVE DEVELOPMENT OF ALL E-COMMERCE KPIS ONLINE NET SALES ONLINE REVENUE SHARE GROUP 9M2019/20 +39.6% CONVERSION RATE AVERAGE BASKET (INCL. VAT) (0.2)%pts +4.1% GERMANY 9M2019/20 MOBILE REVENUE SHARE APP REVENUE SHARE +1.8%pts +3.7%pts 12
Slide 13: Activities boosting our e-commerce
ACTIVITIES BOOSTING OUR E-COMMERCE › Strong assortment boost in Germany (+24%1) FIRST-TIME ONLINE CUSTOMERS ACQUIRED › Industry leading CRM program supports growth by converting offline customers into first-time online buyers new E-Commerce › Implementation of special services, such as customers2 ph
Slide 14: Adjusted EBITDA impacted by lockdown in Q3
ADJUSTED EBITDA 1 IMPACTED BY LOCKDOWN IN Q3 › €205m decrease in Net Sales Q3 9M translated into a decrease of only €25m Adjusted EBITDA (€m) (€m) › Countermeasures and tight cost discipline successfully mitigated 295 lockdown effect 264 › Germany segment benefitted by one-time effect2 70 45 Q3 2018
Slide 15: Summary
SUMMARY Almost 100% of stores reopened, running at >90% of PY sales level Accelerated shift to online purchases Core countries see market share gains in both channels E-Commerce as strategic growth driver with outstanding performance Net Sales decline well absorbed 15
Slide 16: Closer Look: 2019/20 Financials
Closer Look: 083 2019/20 Financials 16 DOUGLAS
Slide 17: Q3 2019/20 financials at a glance
Q3 2019/20 FINANCIALS AT A GLANCE THIRD QUARTER IMPACTED BY LOCKDOWN NET SALES LFL GROWTH A D J U S T E D 1/ R E P O R T E D E B I T D A (m€) (m€) Total LfL Growth: 70 41 762 45 557 Store LfL Growth: Q3 2018/19 Q3 2019/20 -7 Q3 2018/19 Q3 2019/20 Online LfL Growth: Q3 2018/19 Q3 2019/20 NET INCOME F
Slide 18: EBITDA: loss in gross profit partially mitigated by countermeasures
EBITDA: LOSS IN GROSS PROFIT PARTIALLY MITIGATED BY COUNTERMEASURES Lower gross profit due to store closures, partly compensated by higher E-Commerce gross Waived and profit; impacted by one- reduced rent time effect2 payments EBITDA Q3 2019/20 VS. PY Cost savings from Higher E-Com fulfilment costs
Slide 19: Net sales development by segment
NET SALES DEVELOPMENT BY SEGMENT Q3 2019/20 › Net Sales impacted by COVID-19 NET SALES 1 lockdown in all regions GROUP GERMANY FRANCE › Impact partly compensated for by strong e-commerce business (m€) (m€) (m€) › France and SWE most severely LfL LfL impacted due to long-lasting LfL 288 237 160 105 l
Slide 20: Adjusted EBITDA development by segment
ADJUSTED EBITDA DEVELOPMENT BY SEGMENT Q3 2019/20 › All EBITDA figures stated pre IFRS161 ADJUSTED EBITDA 1 › Countermeasures and tight cost GROUP GERMANY2 FRANCE discipline have mitigating effect › Germany: Impact partly compensated (m€) (m€) (m€) for by strong e-commerce business; central cost bas
Slide 21: Tight cash and payables management compensated for profit drop in Q3
TIGHT CASH AND PAYABLES MANAGEMENT WAS ABLE TO COMPENSATE FOR PROFIT DROP IN Q3 COUNTERMEASURES Reduced and deferred COUNTERMEASURES payments incl. taxes (i.e. Q3 2019/20 • Hiring freeze and short-term labor • Waived/reduced rent payments leading partially to higher payables -> timing effect) (m€) •
Slide 22: Q3 free cash flow positive and above previous year
Q3 FREE CASH FLOW DEVELOPMENT POSITIVE AND ABOVE PREVIOUS YEAR DESPITE COVID-19 LOCKDOWN ADJUSTED FCF DEVELOPMENT (m€) 92 82 FREE CASH FLOW BRIDGE Q3 2019/20 37 (m€) Q3 2017/18 Q3 2018/19 Q3 2019/20 (19) 87 82 (52) 0 45 (30) 29 29 (3) Adj. EBITDA CAPEX1 Working Taxes Others2 Adj. Free EBITDA Free Ca
Slide 23: Liquidity maximized through countermeasures
LIQUIDITY MAXIMIZED THROUGH COUNTERMEASURES CASH BALANCE (m€) › Effect from lower gross profit, overcompensated by › Savings in personnel expenses (incl. government support) and shift of social securities payments/taxes 339 › Waived/reduced rent payments › Capex reduction 165 (RCF) 122 › Longer term
Slide 24: Basically unchanged capital structure
BASICALLY UNCHANGED CAPITAL STRUCTURE CAPITAL STRUCTURE TOTAL NET LEVERAGE 30 June 2020 6.7x 6.3x m€ x Adj. EBITDA Maturity Pricing 5.7x 5.8x Cash and Equivalents 339 E+3.75% RCF (€200m Volume) 165 Feb 22 (0% floor) Jun 2018 Jun 2019 Mar 2020 Jun 2020 E+3.50% Term Loan B (B2/CCC+) 1,370 Aug 22 (0% f
Slide 25: Q3 2019/20 in summary
Q3 2019/20 IN SUMMARY COVID-19 lockdown in April and May with negative impact on Q3 Liquidity and business continuity secured Effective countermeasures implemented Accelerator for E-Commerce shows impressive results Successful ramp-up of stores with dedicated campaign Cost-optimization program conti
Slide 26: Thank you.
Thank you. DOUGLAS
Slide 27: Appendix
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Slide 28: Key 9M 2019/20 financials at a glance
KEY 9M 2019/20 FINANCIALS AT A GLANCE NET SALES LFL-GROWTH A D J U S T E D 1/ R E P O R T E D E B I T D A (m€) (m€) 2,710 2,506 Total LfL Growth: 295 264 247 183 Store LfL Growth: 9M 2018/19 9M 2019/20 Online LfL Growth: 9M 2018/19 9M 2019/20 9M 2018/19 9M 2019/20 NET INCOME FREE CASH CAPEX2 ADJUSTE
Slide 29: Net sales development by segments
NET SALES DEVELOPMENT BY SEGMENTS 9M 2019/20 › Net Sales impacted by COVID-19 NET SALES 1 lockdown in all regions GROUP GERMANY FRANCE › Impact partially compensated by strong e-commerce business (m€) (m€) (m€) › France and SWE most severely LfL LfL impacted due to lockdown, starting LfL 1,006 981 6
Slide 30: Adjusted EBITDA development by segments
ADJUSTED EBITDA DEVELOPMENT BY SEGMENTS 9M FY2019/20 › All EBITDA figures stated pre IFRS161 ADJUSTED EBITDA 2 › Strong pre-lockdown tailwind, GROUP GERMANY3 FRANCE countermeasures, pricing excellence and tight cost discipline with mitigating (m€) (m€) (m€) effect › Germany: Decreasing, while e- 74
Slide 31: Key financials LTM June 2019/20
KEY FINANCIALS LTM JUNE 2019/20 KEY FINANCIALS (m€) LTM LTM Delta Jun 2019 Jun 2020 Net Sales 3,408 3.250 (4.6)% LfL Growth (5.2)% Adjusted EBITDA1 377 320 (15.2)% Margin (%) 11.1% 9.8% (1.2)%pts CAPEX2 144 98 (31.8)% Adjusted EBITDA1 – CAPEX 233 222 (5.0)% Cash Conversion (%) 61.9% 69.3% 7.5%pts 31
Slide 32: Adjustments to EBITDA
ADJUSTMENTS TO EBITDA Q3 & 9M 2019/20 › Consulting fees: Internal strategic EBITDA ADJUSTMENTS projects (e.g. costs to be expected as part of cost-savings and store (m€) Q3 2018/19 Q3 2019/20 9M 2018/19 9M 2019/20 restructuring program going forward) › PPA: Acquisitions in Germany and SWE Reported E
Slide 33: Reported EBITDA
REPORTED EBITDA Q3 & 9M 2019/20 REPORTED EBITDA (m€) Q3 Q3 9M 9M 2018/19 2019/20 2018/19 2019/20 Germany1,2 2 (5) 40 32 France 18 7 96 85 South-Western Europe 13 (12) 71 34 Eastern Europe 8 3 39 32 Group2 41 (7) 247 183 1 Incl. consolidation effects 33 2 One-time accounting effect included; for furt
Slide 34: Deep dive into LfL net sales growth
DEEP DIVE INTO LFL NET SALES GROWTH QUARTERLY DEVELOPMENT LFL NET SALES GROWTH DEVELOPMENT Q3 Q4 Q1 Q2 Q3 LTM Q3 2018/19 2018/19 2019/20 2019/20 2019/20 2019/20 Germany 5.5% 0.6% 6.6% (3.7)% (19.0)% (0.4)% France (1.7)% 4.1% 2.8% (15.8)% (34.9)% (8.6)% South-Western Europe 0.0% (0.2)% 4.7% (15.8)% (
Slide 35: Strong free cash flow generation driven by special effects
STRONG FREE CASH FLOW GENERATION DRIVEN BY SPECIAL EFFECTS RELATING TO COUNTERMEASURES ADJUSTED FCF DEVELOPMENT (m€) 246 FREE CASH FLOW BRIDGE 9M 2019/20 189 134 (m€) 9M 2017/18 9M 2018/19 9M 2019/20 (75) (81) 79 (8) (14) 264 246 165 165 0 Adj. EBITDA CAPEX1 Working Taxes Others2 Adj. Free EBITDA Fr
Slide 36: Cash flow statement
CASH FLOW STATEMENT Q3 & 9M 2018/19 › Strong development of CASH FLOW STATEMENT Cash Flow from Operating (m€) Q3 Q3 9M 9M activities 2018/19 2019/20 2018/19 2019/20 › Cash flow from Investing Net Cash Flow from Operating activities 35 48 185 239 activities at a lower level, since investments were Ne
Slide 37: Net working capital
NET WORKING CAPITAL Q3 2019/20 › Lower trade account receivables NET WORKING CAPITAL due to timing of weekend at the (m€) prior year end › Inventories slightly higher 289 287 284 313 204 compared with PY due to closure of majority of stores › Payables: Lower due to smaller NWC as % of LTM Net Sales
Slide 38: Technical accounting impact in Q3
TECHNICAL ACCOUNTING IMPACT IN Q3 SEGMENT GERMANY ONLY › Germany with additional positive ACCRUAL – P&L EFFECT ON GROSS PROFIT income effect in Q3 from release of accrual within COGS (m€) Q1 Q2 Q3 Q4 FY › No effect on full financial year › Germany historically with FY2019/20 (23) 8 16 0 0 conservati
Slide 39: Premium store network footprint across Europe
PREMIUM STORE NETWORK FOOTPRINT ACROSS EUROPE 2,437 2,387 › Decrease in # of stores 139 139 driven by portfolio realignment in particular in 2,298 2,248 SWE › Size of footprint will be monitored on an ongoing 30 June 30 June basis subject to level of 2018/19 2019/20 performance following Own stores