Mr Price Group Limited · JSE:MRP
Mr Price — FY2013 Earnings Presentation
47 slides from Mr Price's earnings presentation, March 2013
Slide 1: Annual Results Presentation March 2013
Annual Results Presentation March 2013 Mr Price Group Limited
Slide 2: Solid Performance in a Challenging Year
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET SOLID PERFORMANCE IN A CHALLENGING Y EAR 2012 R12.1bn Revenue Revenue 2013 R13.7bn +13.2% R1.7bn OperatingProfit Operating Profit R2.1bn +19.0% 14.8% Operating OperatingMargin Margin 15.6% +80bps HeadlineEarnings Headl
Slide 3: Awards and Accolades
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET AWARDS AND ACCOLADES Included in MSCI Emerging Markets Index Finalist in Emerging Market Retailer of the Year Category Ranked 5th in Sunday Times Top 100 Companies (10 year compound growth rate in share price 44.2%), t
Slide 4: Difficult Trading Environment
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET DIF F ICULT T RADING ENV IRONMENT Inflation (y/y % change) Interest rates Real GDP growth (y/y % change) Business confidence Consumer confidence Household consumption and real disposable income (q/q % change) Source: B
Slide 5: Difficult Trading Environment
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET DIF F ICULT T RADING ENV IRONMENT Mr Price Group Limited
Slide 6: Difficult Trading Environment
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET DIF F ICULT T RADING ENV IRONMENT Mr Price Group Limited
Slide 7: Difficult Trading Environment
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET DIF F ICULT T RADING ENV IRONMENT Mr Price Group Limited
Slide 8: Difficult Trading Environment
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET DIF F ICULT T RADING ENV IRONMENT Mr Price Group Limited
Slide 9: Difficult Trading Environment
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET DIF F ICULT T RADING ENV IRONMENT Mr Price Group Limited
Slide 10: Difficult Trading Environment
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET DIF F ICULT T RADING ENV IRONMENT Mr Price Group Limited
Slide 11: Satisfactory Sales Performance, Recovery from Q3
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET SAT ISFACTORY SALES PERFORMANCE, RECOV ERY F ROM Q3 2013 2012 % change Retail sales R13.3 bn R11.8 bn 12.7 % Comparable sales - full year 7.3 % - 1st half 8.7 % - 2nd half Refer 6.2 % page 9 20% Strong 14.6% 14.5% 15%
Slide 12: Space Delivered, Right Sizing Continues
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET SPACE DELIV ERED, RIGHT SIZING CONT INUES % change Gross space (new stores & expansions) - weighted average 4.9 % - closing 6.2 % Net space - weighted average 3.7 % - closing 3.9 % Continued R24 979m-2 R17 445m-2 tradi
Slide 13: 2013 Group Income Statement
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET 2013 GROUP INCOME STAT EMENT % of % of % R’m 2013 sales 2012 sales change Retail sales Revenue 13 266 11 767 12.7% Cost of sales up 13.2% 7 664 6 843 12.0% Gross profit 5 602 42.2% 4 924 41.8% 13.8% Other income 398 29
Slide 14: Expense Analysis
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET EXPENSE ANALY SIS Selling Admin % Growth 13.2% 12.0% Adjusted for (R’m): Impairments 10.7 1 7.9 2 Costs associated with online business 8.4 11.9 Increase in net bad debt 42.4 Human Capital Management System 1.9 Foreign
Slide 15: Continued Improvement in Operating Margin
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET CONT INUED IMPROV EMENT IN OPERAT ING MARGIN Operating margin 2012 14.8 • Improved buying and supplier collaboration PMO 0.4 • Product mix • Improved in 3 of 5 divisions Markdowns 0.1 • Decrease mainly due to Apparel i
Slide 16: Sales and Operating Profit Growth
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET SALES AND OPERAT ING PROF IT GROW T H 1st half 2nd half Full year 26 weeks 26 weeks 52 weeks Sales Apparel 13.1 % 10.9% 11.9% Home 15.9 % 14.1% 14.9% Total 13.9 % 11.8% 12.7% Operating profit Apparel 16.2 % 12.5% 14.0%
Slide 17: Earnings and Dividends per Share
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET EARNINGS AND DIV IDENDS PER SHARE 2013 2012 % change Earnings per share - Basic 627.6 c 500.9 c 25.3 % - Headline 635.5 c 503.0 c 26.3 % Fully diluted headline 584.8 c 464.5 c 25.9 % I-Net Consensus estimate 582.3 c Di
Slide 18: Consistent Track Record
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET CONSIST ENT T RACK RECORD 700 120 600 HEPS and DPS (cents) 100 Share price (rand) 500 80 400 60 300 40 200 100 20 0 0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Share price DPS HEPS Com
Slide 19: Financial Position
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET F INANCIAL POSIT ION R’m 2013 2012 Non-current assets Property, plant and equipment 660 540 Intangible and other assets 267 204 Current assets Inventories 1 236 1 168 Trade and other receivables 1 513 1 183 Cash and ca
Slide 20: Capital Allocation
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET CAPITAL ALLOCAT ION 1,600 51% 55% 1,400 15% 45% 1,200 36% 23% 1,000 35% ROE % 800 R’m 25% 600 62% 400 33% 15% 200 72% 5% - (5%) (200) -5% 2010 2011 2012 2013 Dividends Capex Capex NetShare repurchases ROE share
Slide 21: Working Capital Well Managed
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET WORKING CAPITAL W ELL MANAGED Intangible and other assets (R’m) 30.9% 2012 204 • Additions to intangibles of R48.4m (e-commerce, HCM, e-learning). Offset by impairment of customer lists of R10.7m 2013 267 and amortis
Slide 22: PPE and Intangibles
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET PPE AND INTANGIBLES Total additions Retail capex splits 400 R338m Divisional Space 350 13 Sheet Street Reductions R301m New stores 300 8% Revamps 7% 83 Mr Price 54 Home 13% 34% 250 28% 21 9% R221m R221m 54 R’m 200 Mila
Slide 23: Trade Receivables – Ageing Profile of Total Credit in RSA
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET T RADE RECEIVABLES – AGEING PROF ILE OF TOTAL CREDIT IN RSA 95 Retailers included At face value: 90 here • Overall no alarm bells 2% • Current ageing better % current by value 85 decline than ‘worst’, but • Unsecured D
Slide 24: Trade Receivables - A More Cautious Approach
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET T RADE RECEIVABLES - A MORE CAUT IOUS APPROACH What we said • Good ageing profiles of credit in RSA at June. Unsecured, dropped 2%, not a problem, unless start of a trend • Warning signs were there: – downside risks -
Slide 25: Trade Receivables
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET T RADE RECEIVABLES 2013 2012 % change Gross trade receivables 1 550 m 1 208 m 28.4 % Active accounts 1 308 k 1 187 k Credit sales contribution 19.6 % 18.6 % Net bad debt as % of debtors 6.5 % 3.9 % excluding festive se
Slide 26: Highly Cash Generative Business Model
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET HIGHLY CASH GENERAT IV E BUSINESS MODEL 3 500 317 3 000 607 2 500 338 2 000 1,741 R’m 888 1 500 213 8 1 000 500 1,201 Free cash flow up 55% 1,221 1,221 0 Mar-12 Cash Interest Taxation Additions to Dividends Treasury Ot
Slide 27: Increasing Foreign Share Ownership
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET INCREASING FOREIGN SHARE OW NERSHIP Geography 12% Composition Investment style 12% 39% Institutional 7% 8% 24% 30% 11% 37% Institutional 11% 74% SA USA UK Other 19% 16% 2013 2012 2011 South Africa 55 % 64 % 71
Slide 28: Divisional Performance > Strategy
DIVISIONAL PERFORMANCE > STRATEGY ~ ee
Slide 29: Segmental Performance
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET SEGMENTAL PERFORMANCE Retail sales and other income 15 000 10 000 +12.5% 9,759 R’m 8,673 5 000 +15.2% 3,379 3,893 0 2012 2013 Operating profit 2 500 2 000 +14.0% 1 500 R’m 1,728 1 000 1,515 500 +31.9% 373 492 0 2012 20
Slide 30: Mr Price Apparel
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET MR PRICE APPAREL 2013 2012 % change Retail sales R7.2 bn R6.5 bn 10.5 % Comparable sales - 1st half 5.0 % Q3: 1% - 2nd half 2.9 % Q4: 6% Unit sales 6.0 % RSP inflation 4.0 % Weighted average space growth 7.5 % Trading
Slide 31: Mr Price Apparel - Our Customers
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET MR PRICE APPAREL - OUR CUSTOMERS LSM 2/3 3% LSM 4 30% 82% 6% 25% 80% 25% 80% LSM 10 20% 10% 20% LSM 5 LSM 6-10 78% LSM 1-5 LSM 9 11% 15% 16% 76% 75% 10% LSM 8 5% 74% 12% LSM 6 27% 0% 72% LSM 7 2009 2010 2011 2012 16%
Slide 32: Mr Price Sport
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET MR PRICE SPORT 2013 2012 Growth Retail sales R843 m R686 m 22.9 % Comparable sales - 1st half 14.5 % - 2nd half 9.9 % Unit sales 14.1 % RSP inflation 7.7 % Weighted average space growth 4.0 % Trading density R17 678 m-
Slide 33: Miladys
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET MILADY S 2013 2012 Growth Retail sales R1.3 bn R1.1 bn 13.0 % Comparable sales - 1st half 18.5 % - 2nd half 8.2 % Unit sales 12.2 % RSP inflation 0.5 % Weighted average space growth (2.5 % ) Trading density R20 794 m-2
Slide 34: Mr Price Home
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET MR PRICE HOME 2013 2012 Growth Retail sales R2.6 bn R2.3 bn 15.6 % Comparable sales - 1st half 11.5 % - 2nd half 13.1 % Unit sales 8.0 % RSP inflation 7.0 % Weighted average space growth 0.9 % Trading density R18 820 m
Slide 35: Sheet Street
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET SHEET ST REET 2013 2012 % change Retail sales R1.2 bn R1.0 bn 13.8 % Comparable sales - 1st half 9.7 % - 2nd half 5.9 % Unit sales 6.8 % RSP inflation 6.6 % Weighted average space growth 3.0 % Trading density R24 469 m
Slide 36: Fix, Invest, Grow
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET F IX, INV EST, GROW Mr Price Group Limited 28
Slide 37: Fix - Improve Trading Densities
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET F IX - IMPROV E T RADING DENSIT IES 35 000 31,466 • Required high proportion of 30 000 executive involvement • Strengthened divisional 25 000 24,469 management teams 24,119 • Well on track to achieve medium 20,794 term
Slide 38: Fix - Increase Operating Margins
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET F IX - INCREASE OPERAT ING MARGINS • Defined the customer and their 20% 18.3% requirements 18% • Improved merchandise assortments 16% and communication of value 14.0% • Closed Home Kids and Miladys René 14% 12.9% Taylo
Slide 39: Invest - Supply Chain
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET INV EST - SUPPLY CHAIN Objectives • Greater transparency of production pipeline to enable increased flexibility • Improve on-time and in-full deliveries • Consolidate inventory at source, deliver straight to end market
Slide 40: Invest - Systems
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET INV EST - SY ST EMS Objectives • New ERP and planning system required to support local and international growth • Improved business processes Progress • Business processes reviewed and refined • Oracle ERP selected and
Slide 41: Grow
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET GROW Vision • To be a top performing international retailer Objectives • Invest in and continue to grow home base – a solid foundation to finance the ‘invest’ and ‘grow’ phases of our strategic plan • Expand internatio
Slide 42: Grow - RSA
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET GROW - RSA • mrp.co.za launched July 2012 – omni Holidays channel, multiple payment mechanisms • Developed online capability locally before expanding internationally • Annualized sales already equivalent to a large App
Slide 43: Grow - RSA
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET GROW - RSA • Following price point and assortment study, PRICE MIX opportunity for increased proportion of merchandise at existing higher price points • Labour scheduling to be rolled out to all stores by festive 2013
Slide 44: Grow - RSA
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET GROW - RSA • Target new space of 5% pa. Open >200 stores (70 000 m2) in the next 3 years SPACE • Planned reductions of oversized stores of 20 000m2 over next 3 years (60% relates to Home) • Target rental negotiations 3
Slide 45: Grow - International
MR PRICE GROUP MR PRICE APPAREL MR PRICE SPORT MILADYS MR PRICE HOME SHEET STREET GROW - INT ERNAT IONAL • 26 stores in 9 countries FRANCHISE • Grew sales by 10%, but positive momentum since December • Plan to acquire key markets, subject to franchise approval and valuation • Ghana (1 store) and Nig
Slide 46: Mr Price Group Limited
Mr Price Group Limited
Slide 47: Mr Price Group Limited
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