Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — H1 FY2016 Earnings Presentation
33 slides from Baby Bunting's earnings presentation, Feb 12, 2016
Slide 1: Half Year Ended 27 December 2015 Results Presentation
Baby Bunting Group Half Year Ended 27 December 2015 Results Presentation 12 February 2016 Matt Spencer Chief Executive Officer & Managing Director Darin Hoekman Chief Financial Officer
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This document is a presentation of general background information about the activities of Baby Bunting Group Limited (Baby Bunting) current at the date of the presentation (12 February 2016). The information contained in this presentation is for general background and
Slide 3: Introduction to Baby Bunting
Introduction to Baby Bunting Baby Bunting is Australia’s largest specialty retailer of baby goods, aiming to provide customers with the widest range of products, high levels of service and low prices every day • Founded in 1979, Baby Bunting is Australia’s largest specialty baby goods retailer PERSO
Slide 4: Agenda
Agenda 1 Results highlights 2 Industry overview 3 Business overview 4 Growth strategy 5 Financial information 6 Outlook 7 Appendix – pro forma reconciliation 4
Slide 5: Results highlights
1. Results highlights
Slide 6: 1H FY2016 Results Highlights
1H FY2016 Results Highlights 1 • Sales of $108.2 million, up 30.3% on the prior corresponding period TRADING • Comparable store sales growth of 9.2% • Gross margin improvement of 48bp 2 • Cost of doing business (pro forma) improved by 50bp EARNINGS(1) • EBITDA (pro forma) of $7.8 million, up 50.6% o
Slide 7: Industry overview
FURNITURE » PARENTS ROOM al Industry overview
Slide 8: Industry Overview
Industry Overview Baby Bunting’s estimated Strict Australian mandatory Changing competitive Large number of small, addressable market is product safety standards landscape specialty players ~$2.3bn pa provide barriers to entry SPECIALTY BABY GOODS RETAILERS IN AUSTRALIA Number of Stores 40 35 30 20
Slide 9: Business overview
3. Business overview
Slide 10: Drivers of Competitive Advantage
Drivers of Competitive Advantage Consistent Retail Format Widest Product Offering, In-Stock Convenient Network and Available of Stores and Online Competitively Cost Effective Priced Marketing Comprehensive Range of Ancillary Scale Platform Services Customer Centric Team Culture 10
Slide 11: Baby Bunting's Store Network
Baby Bunting’s Store Network 35 stores across Australia, with significant roll-out potential Queensland Helensvale Macgregor Kawana Booval (29 Jul) Fortitude Valley North Lakes (18 Sep) Townsville Burleigh Waters (14 Nov) New South Wales and ACT Penrith Moore Park Warners Bay West Gosford 8 stores T
Slide 12: Store Experience
Store Experience Stores are consistent in branding, range, operations and customer service • The widest range of products with over +6,000 products • Price match guarantee and continued investment in value for the customer • Increasing range of Private Label and Exclusive Products • Services in
Slide 13: Online
Online www.babybunting.com.au continues to evolve & grow as the leading specialty baby goods website • 35% increase in website visits (1H FY2016), and a 44% TOTAL WEBSITE SESSIONS BY MONTH (babybunting.com.au) (1) increase for the month of December year-on-year 900 750 • 48% increase in online sales
Slide 14: Sales and Marketing Strategy
Sales and Marketing Strategy Baby Bunting’s sales and marketing strategy delivering value to our customers every day • Integrated promotions across traditional channels (catalogue, regional and pay TV, radio and print media), online (email, search and digital) as well as social media • As at 27 Dece
Slide 15: Logistics & Supply Chain
Logistics & Supply Chain Continuous improvement in the Distribution Centre supporting the growth of the business • Implementation of the “Paperless” Warehouse SUPPLY CHAIN IS CONTROLLED FOR KEY PRODUCTS (1H FY2016) Management System driving efficiency % of products % of sales DC to store 24% • ~1,60
Slide 16: Supplier Relationships
Supplier Relationships Strong growth in Private Label and Exclusive Products(1) • Private Label and Exclusive Product sales have grown from SUPPLIER BREAKDOWN BY SALES (1H FY2016) 7.2% of sales for FY2015 to 9.5% of sales in 1H FY2016 • Network of more than 260 suppliers across third party brands, P
Slide 17: Building the Best Team
Building the Best Team Continued focus on the development of our growing team • Implementation of a Learning Management System BREAKDOWN OF EMPLOYEES (including casuals) underway • Building the talent pipeline FUNCTION Dec 2014 Jun 2015 Dec 2015 • Inductions, training & development Stores 499 550 64
Slide 18: Growth strategy
4. Growth strategy
Slide 19: Growth Priorities
Growth Priorities Multiple drivers of organic growth 1 Growth from existing stores and online • 46% of stores are less than 3 years old (at 27 December 2015) • Multiple new initiatives to improve customer experience • Replicating Victorian and South Australian brand awareness nationally 2 Growth fro
Slide 20: Growth from Existing Stores and Online
Growth from Existing Stores and Online Strong 1H FY2016 comparable store sales growth1 of 9.2% • Comparable store sales growth driven by the STORE MATURITY PROFILE AT 27 DECEMBER 2015 (YEARS OPENED) maturing of “new” stores (at 27 December 2015, 46% of stores were less than 3 years old) >5 years • A
Slide 21: Growth from New Store Roll-Out
Growth from New Store Roll-Out 4 new stores opened in 1H FY2016, 1-2 more planned for 2H FY2016 NUMBER OF STORES 80 70+ 60 40 36-37 31 21 23 19 20 15 12 9 0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016F Network Plan • Expect to open 5-6 new stores in FY2016 (compared to prospectus forecas
Slide 22: Margin Improvement
Margin Improvement Gross margin improvement across all key categories and operating leverage achieved Gross Margin Improvement Leverage Investment in Support Office and Distribution Centre • Gross margin improvement of 48bps in 1H FY2016 to • Cost of doing business (pro forma) improvement of 34.8%,
Slide 23: Financial information
5. Financial information
Slide 24: Strong Financial Track Record
Strong Financial Track Record 1H FY2016 sales growth of +30% and pro forma EBITDA growth of +50% STORES SALES (#) ($ million) 40 300 +15 36 - 37 ~22% Stores CAGR 225.0 – 235.0 31 30 200 180.2 150.2 23 125.5 21 20 100 108.2 83.0 10 0 FY2013 FY2014 FY2015 FY2016F FY2013 FY2014 FY2015 FY2016F GROSS MAR
Slide 25: Summary Pro Forma Income Statement
Summary Pro Forma Income Statement Pro forma statement of profit or loss Financial highlights Pro Forma Pro Forma Change Actual H1 FY16 Actual H1 FY15 $ million • Total sales of $108.2 million, up 30.3% Sales 108.2 83.0 30.3% ̵ Comparable store sales growth of 9.2% Cost of sales (70.6) (54.6) Gross
Slide 26: Balance Sheet
Balance Sheet Statement of financial position Statutory Statutory Capital structure 27-Dec-15 28-Jun-15 $ million • $0.2 million net cash position Cash and cash equivalents 7.2 3.6 • Inventory increase reflects 4 new stores added Inventories 44.3 35.5 ($3.0 million), new store inventory infill ($0.7
Slide 27: Cash Flow Statement
Cash Flow Statement Statement of cash flows Statutory Statutory • Change in working capital reflects new store 1H FY16 1H FY15 openings and investment in inventory to support the January sales event $ million • Tax paid includes settlement of FY2015 tax return EBITDA 1 8.0 5.5 ($2.4m) and FY2016 pro
Slide 28: Outlook
6. Outlook
Slide 29: Outlook
Outlook Updated FY2016 outlook reflecting strong trading performance year-to-date • Strong trading has continued into 2H FY2016 with year-to-date comparable stores sales growth increasing to 11.2% as at 31 January 2016 • Updated FY2016 guidance: • Sales are expected to be in the range of $225 – $235
Slide 30: Appendix
7. Appendix
Slide 31: Statutory - Pro Forma Reconciliation
Statutory - Pro Forma Reconciliation Statutory Pro Forma Pro Forma Prospectus 1H FY16 adjustments 1H FY16 pro forma FY16 $ million Sales 108.2 108.2 218.6 Cost of sales (70.6) (70.6) (141.8) Gross Profit 37.6 37.6 76.8 Cost of doing business: Store expenses (21.6) (21.6) (43.8) Marketing expenses (2
Slide 32: Glossary
Glossary Comparable Store Sales Growth • Calculated as a percentage change of the total sales generated from stores (including the online store) in a relevant period, compared to the total sales from the same set of stores in the prior corresponding period, provided the stores were open at the begin
Slide 33: Thank You!
Thank You! 33