Slide 1: 2016/17 Full Year Results Analyst & Investor Presentation
2016/17 Full Year Results Analyst & Investor Presentation June 2017
Slide 2: Disclaimer
2016/2017 Full Year Results Disclaimer • This Document comprises the written materials/slides for a presentation concerning Majestic Wine PLC (the “Company”) and its audited Full Year results for the 53 weeks ended 3 April 2017 (the “Full Year Results”). • By reviewing this presentation you agree to
Slide 3: We are past the tipping point
2016/2017 Full Year Results We are past the tipping point 1 2 3 Reiterate £500m Past the tipping Past the tipping sales target – point financially point operationally affirming current profit expectations • H2 EBIT 51% up on prior • Completed the riskiest and • We are in better shape than year most
Slide 4: Where we are in the transformation timetable
2016/2017 Full Year Results Where we are in the transformation timetable – lots to do but costs and risks are coming down 1 2 3 4
Slide 5: The superficial view…
2016/2017 Full Year Results The superficial view… £461.1m £10.8 m Sales up Underlying +11.4% PBT down -29.2% 5
Slide 6: H2 illustrates long term potential
2016/2017 Full Year Results H2 illustrates long term potential +12% +51% 139% H2 Adjusted Naked Wines H2 Sales EBIT H2 ROI The first period where transformation costs are Up from 48% in H1 +5.7% LFL in Retail fully annualised and +26.3% in Naked benefits coming through 6
Slide 7: We are past the tipping point
2016/2017 Full Year Results We are past the tipping point 1 2 3 Reiterate £500m Past the tipping Past the tipping sales target – point financially point operationally affirming current profit expectations 7
Slide 8: Our goal is to achieve sustainable growth by growing our customer base
2016/2017 Full Year Results Reminder: Our goal is to achieve sustainable growth by growing our customer base Growth in Sustained LFL Sustained Customer Base Sales Growth Shareholder value Customer Retention Availability Wine 5* Service Quality 75% Team Retention 8
Slide 9: The plan is working: we are achieving sustainable growth
2016/2017 Full Year Results The plan is working: we are achieving sustainable growth Majestic Active customers vs Sales 400 160 500 270 350 140 300 120 250 400 Angels (‘000) Customers (‘000) Sales (£m) 250 100 Sales (£m) 230 300 200 80 210 150 60 200 0 stores 29 stores opened 190 100 40 opened 100 1
Slide 10: Lay & Wheeler - the plan even works in a 160 year old business
2016/2017 Full Year Results Lay & Wheeler - the plan even works in a 160 year old business model! Sales Trend FY16 – FY17* 16 14 12 Sales (£m) 10 8 6 4 2 0 FY16 FY17 10 * On a management basis, excluding En Primeur
Slide 11: Retail growth underpinned by input KPIs
2016/2017 Full Year Results Retail growth underpinned by input KPIs +7% +5.7% Growth in Sustained Sustained LFL Customer Base Shareholder Sales Growth value 68%* *NOTE: This is a mix variance, dragged down by the growth in customers buying 5 or fewer bottles. Customer Retention for customers buying
Slide 12: Which are in turn underpinned by strategic initiatives…
2016/2017 Full Year Results Which are in turn underpinned by strategic initiatives… Growth in Sustained LFL Sustained Customer Base Sales Growth Shareholder value 76,000 hours of dull task removed Enhanced bonus scheme Customer Retention Enhanced career path Availability Wine 5* Service Qualit
Slide 13: 5* Service
2016/2017 Full Year Results 5* Service Staff measured & rewarded on 5* service = Improvement in multi Growth in Sustained LFL Sustained bottle customer Customer Base retention Sales Growth Shareholder value Improved store environment – estate looks & feels more loved Refits: reducing task hour
Slide 14: Wine Quality
2016/2017 Full Year Results Wine Quality Growth in Sustained LFL Sustained Range Customer Baseto store –Sales tailored engaging Growth Shareholder value staff as well as customers 45 own label products – 4.7% of sales 91% average Buy it Again rating Customer Retention Availability Wine 5* Serv
Slide 15: Availability
2016/2017 Full Year Results Availability Growth in Sustained LFL Sustained Customer Base Sales Growth Shareholder value Availability up from 66% to 82% National fulfilment centre = next day delivery on 1250 SKU’s £0.9m cost saving opportunity Customer Retention Availability Wine 5* Service Qua
Slide 16: Growth in the customer base
2016/2017 Full Year Results Growth in the customer base Personalised CRM +7% Growth Growth in in introduced Sustained LFL Sustained Customer Customer Base Base New high Sales Growth Shareholder value engagement CRM introduced 15% improvement in 68% welcome process Customer Customer Retention R
Slide 17: Overview – the plan is working
2016/2017 Full Year Results Overview – the plan is working 1 2 3 Reiterate £500m Past the tipping Past the tipping sales target – point financially point operationally affirming current profit expectations 17
Slide 18: 'Test and Learn' delivered answers
2016/2017 Full Year Results ‘Test and Learn’ delivered answers £2.5m under Improving Wine Next day delivery Personalised CRM performing Quality = higher = incremental = 15% uplift in spend BIA ratings = sales welcome process redeployed higher LTV Focus on quality 20 stores refitted & Own label works
Slide 19: Heavy Lifting: costs reducing and benefits starting to come through
2016/2017 Full Year Results Heavy Lifting: costs reducing and benefits starting to come through IT infrastructure and platform Systems investment has improved for multichannel growth our efficiency created First heavy lifting More effective projects complete processes & tools Huge impact on store •
Slide 20: Two milestones nobody has noticed…
2016/2017 Interim Results Two milestones nobody has noticed… Total Revenue vs International Sales Multi Channel vs Store sales 500 20% 60% 56% 450 18% 50% 400 16% 44% % of International sales 350 14% 40% % of Total Sales Sales (£m) 300 12% 250 10% 30% 200 8% 20% 150 6% 100 4% 10% 50 2% - 0% 0% FY13
Slide 21: We are past the tipping point
2016/2017 Full Year Results We are past the tipping point 1 2 3 Reiterate £500m Past the tipping Past the tipping sales target – point financially point operationally affirming current profit expectations 21
Slide 22: Costs and risks naturally coming down
2016/2017 Full Year Results Costs and risks naturally coming down – without impacting the transformation - Own label range - New Majestic - Next day delivery website and App - Core business - Supply Chain - Shelving improvements Increased investment in Coming up for Costs coming out the winners deli
Slide 23: For the record…
2016/2017 Full Year Results For the record… Our Investment We will continue to Our priorities for strategy remains test and learn extra cash are... unchanged 2018 guidance of lower ...so expect one step back - Debt reduction sales growth and higher for every three steps targeting Net Debt: profits b
Slide 24: Financial Review
2016/2017 Full Year Results Financial Review Sales growth H2 profit Working capital continues growth driven build. Final by sales Dividend of 3.6p 24
Slide 25: FY16/17 – Double digit revenue growth continues...
2016/2017 Full Year Results FY16/17 – Double digit revenue growth continues... Sales Growth Naked Wines +26.3% Lay & Wheeler +36.2% Commercial +0.8% Notes: Naked Wines shown on basis +5.4% of full year in both current and Retail comparator. Lay & Wheeler shown excluding net en primeur adjustment. Gr
Slide 26: A year of two halves
2016/2017 Interim Results A year of two halves: H2: Transformation costs fully annualised. Focused on Year on year movements: optimising investments and increasing efficiency H1 H2 FY Sales £19.8m £27.4m £47.2m Adj. EBIT £ (8.6)m £3.8m £(4.8)m H1: Second half of the transformation investment. Increa
Slide 27: H2 strongly driven by Retail and Naked Wines
2016/2017 Interim Results H2 strongly driven by Retail and Naked Wines Adjusted EBIT FY17 H2 52 week basis GBP m 13 - Increased customer base - Marketing efficiency 0.7 12 - Sustained sales growth 11 (1.0) - Margin stabilization - Cost control 3.0 10 9 11.4 1.9 (0.7) 8 7 7.5 6 FY16 H2 Retail Commerc
Slide 28: Group H2 profit growth sales led, with cost control
2016/2017 Full Year Results Group H2 profit growth sales led, with cost control Drivers of H2 Adjusted EBIT H2 FY17 vs FY16, 52 week basis GBP m Group sales Group gross Increased fulfilment costs: growth at margin stable - NW volume driven constant margin - Retail NFC 8.0 7.0 ( 0.1 ) H2 cost control
Slide 29: Retail: Sales driven profit growth, margin stabilised
2016/2017 Full Year Results Retail: Sales driven profit growth, margin stabilised Retail Adjusted EBIT Drivers H2 FY17 vs FY16, 52 week basis GBP m 3.0 NFC double running cost …offset by Inflation 2.5 until we optimise supply reduction in mitigated by chain… write offs efficiencies (0.5) 2.0 0.1 (0.
Slide 30: Naked: Sales growth strong in all markets, US back on track
2016/2017 Full Year Results Naked: Sales growth strong in all markets, US back on track Naked Wines Sales FY13 - FY17, 52 week basis GBP m 160 140 120 100 FY 2017 AUS +55.6% 80 USA +28.9% UK +20.7% 60 40 20 0 FY13 FY14 FY15 FY16 FY17 30
Slide 31: Naked: Profit growth coming from customer growth and economics
2016/2017 Full Year Results Naked: Profit growth coming from customer growth, economics and lower investment year on year • H1 weighted spend H2 Adjusted EBIT • Full Year increase of H2 FY17 vs FY16, 52 week basis £3.1m £m • Quality focus 4.0 21% more 3.5 Mature Angels at year end (0.3) 3.0 1.3 2.5
Slide 32: Investment review has yielded winners and losers
2016/2017 Full Year Results Investment review has yielded winners and losers Business Unit / Spend Implications Retail: Refits • • Shelving works Identifying best performing characteristics ✔ Retail: National Fulfilment Centre • • Demand exists Opportunity to optimise between NFC and ✔ stores Retail
Slide 33: Medium term profitability coming into focus
2016/2017 Full Year Results Medium term profitability coming into focus Cost outlook Revenue Net implication implications Planning for lower rate of Targeting a near-flat growth in Retail Current market range for cost base for the group mid-term profitability in FY18 Naked Wines will slow this looks
Slide 34: Cash delivery in FY17 impacted by working capital movements
2016/2017 Full Year Results Cash delivery in FY17 impacted by working capital movements Reduced CapEx again year on FY17 FY16 YoY year £m £m % Adj EBIT 14.1 16.6 -15.1% Significant Working Capital build: Addback D&A 6.7 8.0 -16.3% - Naked and Retail Inventory Adj EBITDA 20.8 24.6 -15.4% - Timing of
Slide 35: Financial Review
2016/2017 Full Year Results Financial Review Sales growth H2 profit Working capital continues growth driven build. Final by sales Dividend of 3.6p 35
Slide 36: Summary and Outlook
2016/2017 Full Year Results Summary and Outlook • Model is working: • Initiatives driving KPIs, driving • Weaker consumer demand customers, driving sales • Higher input prices • Customer base +12% • Higher rates and other input • Test and learn results now in: costs • We can back the winners and cut
Slide 37: Conclusion – we are a better business than two years ago
2016/2017 Interim Results Conclusion – we are a better business than we were two years ago ✔ ✔ ✔ ✔ International Multichannel Sustainable In-house growth model Transformation c.20% of sales Over 50% of sales capability now International now delivered to Growing sales customers without growing branch
Slide 38: Questions?
2016/2017 Interim Results Questions? 38
Slide 39: Appendices
2016/2017 Full Year Results Appendices 39
Slide 40: 2016/17 Results Summary
2016/2017 Full Year Results 2016/17 Results Summary Reported Underlying FY2017 FY2016 FY2017 FY2016 % YoY £m £m £m £m Underlying 53 weeks 52 weeks 52 weeks 52 weeks Revenue 465.4 402.1 461.1 413.9 11.4% Adjusted EBIT 14.1 16.6 12.1 16.9 -28.4% Adjusted PBT 12.9 15.0 10.9 15.3 -29.2% (Loss)/profit be
Slide 41: Group structure
2016/2017 Full Year Results Group structure Market size £2.2bn £17bn £2.0bn £0.7bn (UK) (Global) Reported Sales for the year to £262.2m £144.3m £46.6m £12.3m April 2017 % increase +5.4% +26.3% +0.8% +36.2% % of the Group 56% 31% 10% 3% Reported Adjusted EBIT £13.3m £1.4m £2.5m £1.0m Proposition We h
Slide 42: Business Unit Detail: Majestic Retail
2016/2017 Full Year Results Business Unit Detail: Majestic Retail Underlying Reported FY FY 2016/2017 FY 2015/2016 2016/2017 52 weeks 52 weeks YoY % 53 weeks £’000 £’000 £’000 Revenue 258,451 245,093 5.4% 262,200 Gross Profit 60,762 59,254 2.5% 61,875 Gross Margin 23.5% 24.2% -0.7pps 23.6% Distribut
Slide 43: Business Unit Detail: Naked Wines
2016/2017 Full Year Results Business Unit Detail: Naked Wines Underlying Reported FY FY 2016/2017 FY 2015/2016 2016/2017 52 weeks 52 weeks YoY % 53 weeks £’000 £’000 £’000 Revenue 142,182 112,581 26.3% 144,341 Gross profit 48,182 39,628 21.6% 49,296 Gross Margin 33.9% 35.2% -1.3pps 34.2% Distributio
Slide 44: Business Unit Detail: Majestic Commercial
2016/2017 Full Year Results Business Unit Detail: Majestic Commercial Underlying Reported FY FY 2016/2017 FY 2015/2016 2016/2017 52 weeks 52 weeks YoY % 53 weeks £’000 £’000 £’000 Revenue 45,933 45,557 0.8% 46,628 Gross profit 6,921 7,533 -8.1% 7,071 Gross Margin 15.1% 16.5% -1.4pps 15.2% Distributi
Slide 45: Business Unit Detail: Lay & Wheeler
2016/2017 Full Year Results Business Unit Detail: Lay & Wheeler Underlying Reported FY FY 2016/2017 FY 2015/2016 2016/2017 52 weeks 52 weeks YoY % 53 weeks £’000 £’000 £’000 Revenue 14,521 10,658 36.2% 12,275 Gross Profit 3,848 3,026 27.2% 3,882 Gross Margin 31.8% 28.4% 3.4pps 31.6% Distribution Cos
Slide 46: Central costs & Group
2016/2017 Full Year Results Central costs & Group Underlying Reported FY 2016/2017 FY 2015/2016 FY 2016/2017 52 weeks 52 weeks YoY % 53 weeks £’000 £’000 £’000 Central costs Administrative costs (4,184) (2,324) 80.0% (4,184) Adjusted EBIT (4,184) (2,324) 80.0% (4,184) Group including Naked Wines Rev
Slide 47: Final dividend of 3.6p, in line with dividend policy
2016/2017 Interim Results Final dividend of 3.6p, in line with dividend policy £'000 Adjusted PBT 12,877 Current tax charge (2,562) Adjusted Earnings 10,315 35% Dividend payout 3,610 Number of Shares 71,232,377 Dividend per Share 5.1p Less Interim Dividend (1.5p) Final Dividend 3.6p 47
Slide 48: Glossary
2016/2017 Full Year Results Glossary Group and KPI definitions Customer Retention % of repeat and loyal customers from 12 months ago that are still repeat and loyal customers, as measured from our customer databases Product Availability % of targeted range available in stores/on websites as indicate
Slide 49: Glossary (cont.)
2016/2017 Full Year Results Glossary (cont.) Majestic Retail, Commercial and Lay & Wheeler Nurture Customer A customer who has shopped once Active Customer A customer who has made a purchase in the last year Repeat Customer A customer who has shopped more than once in the last year Loyal Customer A