Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group — FY2018 Earnings Presentation
42 slides from Foschini's earnings presentation, 2018
Slide 1: Results Presentation for the Year Ended 31 March 2018
RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018
Slide 2: Slide 2
Slide 3: Agenda
RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 AGENDA OPERATING CONTEXT Doug Murray BUSINESS OVERVIEW Doug Murray Doug Murray Anthony Thunström Chief Executive Officer Chief Financial Officer FINANCIAL REVIEW Anthony Thunström TFG FINANCIAL SERVICES Jane Fisher TFG LONDON Ben Barnett Jane Fis
Slide 4: Our Operating Context
OPERATING CONTEXT OUR OPERATING CONTEXT GEOGRAPHIC TURNOVER ONLINE TURNOVER CASH VS CREDIT TURNOVER CONTRIBUTION CONTRIBUTION CONTRIBUTION Online turnover contribution 6,5% TFG Australia 11,0% Credit turnover contribution TFG 34,1% London 18,7% Outlet TFG turnover Africa contribution Cash 70,3% 93,5
Slide 5: Operating Context – South Africa and UK
OPERATING CONTEXT – SOUTH AFRICA Latest Comparative period period CPI % 3,8 6,1 GDP 1,3 0,6 Consumer Confidence Index +26 -5 Business Confidence Index 45 40 − Political uncertainty in South Africa continued to impact the economy for most of the financial year. Outlook has however improved with the i
Slide 6: Operating Context – Australia
OPERATING CONTEXT – AUSTRALIA Latest Comparative period period CPI % 1,9 2,1 GDP 2,1 2,8 Consumer Sentiment 3,2 0,6 Business Confidence 7 6 − Consumer confidence in Australia is slightly more optimistic. − The level of unemployment remains low and unchanged. − Within the retail sector, declining tra
Slide 7: Business Overview: TFG; Significant Changes During the Year
BUSINESS OVERVIEW: TFG − Diverse group with a successful portfolio of 28 leading fashion retail brands − Diversification through: • Cash and credit turnover • Geography – 4 034 outlets in 32 countries on 5 continents • Full OMNI offering – brick and mortar, concessions and online • Broad product off
Slide 8: FY 2018: Salient Features
SIGNIFICANT CHANGES DURING THE YEAR (CONTINUED) CHANGES IN E-COMMERCE − Launched online selling of @homelivingspace, Exact, Foschini and SODA Bloc brands • 20 of our 28 brands now trade online CHANGES IN INTEREST RATE ENVIRONMENT − TFG Africa: • Current financial year: repo rate in South Africa redu
Slide 9: Segmental Performance: TFG Africa
FY 2018: SALIENT FEATURES (CONTINUED) GROUP GROUP March 2018 March 2017 Net bad debt as a % of debtors‘ book (TFG Africa) 10,0 11,3 Free cash flow (Rm) 1 880,6 1 298,8 Debt / equity – recourse (%) 54,6 53,6 Debt / equity – total (%) 61,4 65,3 RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 13
Slide 10: Segmental Performance: TFG London and TFG Australia
SEGMENTAL PERFORMANCE: TFG LONDON TFG TFG TFG LONDON LONDON LONDON March 2018 March 2017 % change Retail turnover (GBPm) 310,9 251,8 23,5 Gross margin (%) 61,9 63,0 EBITDA excl acquisition costs (GBPm) 24,8 28,9 (14,2) Underlying EBITDA (GBPm) 28,0 27,8 0,7 New outlets 91 125 Closed outlets 83 49 To
Slide 11: Turnover: Merchandise Category and Tender Type Contribution
TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION GROUP GROUP TFG AFRICA TFG AFRICA March 2018 March 2017 GROUP % change % same (Rm) (Rm) % change ZAR store growth Clothing 22 642,7 17 578,7 28,8 9,4 4,8 Jewellery 1 499,4 1 490,5 0,6 0,6 (1,7) Cellphones 1 923,8 1 927,7 (0,2) (0,2) (3,2) Homeware & furnit
Slide 12: Financial Review: FY 2018 Financial Highlights
FINANCIAL REVIEW FY 2018: FINANCIAL HIGHLIGHTS Positive Further Like-for-like Strong H2 performance improvement expense performance from in free cash control acquisitions flow • Strong 2nd half performance • Acquisitions are • Free cash flow increased • Like for like expense control across the Group
Slide 13: Income Statement Highlights and Revenue
INCOME STATEMENT HIGHLIGHTS GROUP GROUP GROUP March 2018 March 2017 % change Revenue (Rm) 31 536,5 26 413,6 19,4 Retail turnover (Rm) 28 593,0 23 548,7 21,4 Gross margin (%) 52,5 49,7 Total trading expenses (Rm) 13 779,0 10 757,2 28,1 Net bad debt (Rm) 837,5 896,1 (6,5) Operating margin (%) 14,6 16,
Slide 14: Gross Profit and Trading Expenses
GROSS PROFIT TFG GROUP GROUP AFRICA March 2018 March 2017 GROUP % change (Rm) (Rm) % change ZAR Gross profit (Rm) 15 001,1 11 703,5 28,2 9,5 Gross margin (%) 52,5 49,7 − Improved performance of Group gross margin at 52,5% (March 2017: 49,7%) − TFG Africa • Gross margin increased to 47,8% (March 2017
Slide 15: Working Capital Management and Borrowings
WORKING CAPITAL MANAGEMENT TFG GROUP GROUP AFRICA March 2018 March 2017 GROUP % change (Rm) (Rm) % change ZAR Trade receivables 7 573,8 7 000,7 8,2 8,2 Other receivables 1 118,6 1 017,1 10,0 3,7 Stock 6 773,6 5 511,2 22,9 3,3 15 466,0 13 529,0 14,3 6,1 Trade and other payables (3 608,2) (2 751,3) 31
Slide 16: Free Cash Flow and Capex
FREE CASH FLOW GROUP GROUP March 2018 March 2017 GROUP (Rm) (Rm) % change Operating profit before acquisition costs and finance costs 4 165,6 3 811,2 (EBIT) Add back: depreciation and amortisation 745,5 540,3 EBITDA 4 911,1 4 351,5 12,9 Less: taxation* (1 157,6) (1 012,7) Operating profit before dep
Slide 17: TFG Financial Services: Industry Review
TFG FINANCIAL SERVICES TFG FINANCIAL SERVICES: INDUSTRY REVIEW - The TransUnion SA Consumer Credit Index (CCI) declined marginally in the fourth quarter 2017 to 53,4 from 53,7 in the third quarter 2017 - Credit health has improved since 2016 mainly due to tighter lending standards, relatively soft i
Slide 18: TFG Financial Services: Credit Performance and Credit Book
TFG FINANCIAL SERVICES: CREDIT PERFORMANCE TFG AFRICA TFG AFRICA March 2018 March 2017 TFG AFRICA (Rm) (Rm) % change Income 2 072,0 2 035,3 1,8 Net bad debt (837,5) (896,1) (6,5) Credit costs (578,4) (567,3) 2,0 EBIT 656,1 571,9 14,7 − Income growth of 1,8% (March 2017: +11,7%) • Flat rate environme
Slide 19: TFG Financial Services: Credit Statistics and Value Added Services
TFG FINANCIAL SERVICES: CREDIT STATISTICS TFG AFRICA TFG AFRICA Key debtors statistics March 2018 March 2017 Net debtors‘ book 7 573,8 7 000,7 Overdue values % to debtors‘ book 12,4 13,9 % able to purchase 83,0 81,8 Net bad debt write off as a % of credit transactions 7,9 8,2 Net bad debt write off
Slide 20: TFG Financial Services: Regulation and Strategy
TFG FINANCIAL SERVICES: REGULATION REGULATION UPDATE Affordability Court Case − The favourable court ruling on the 16th of March removed the onerous requirement for credit applicants to provide documented proof of income when applying for credit − The NCR have recently released Affordability Guideli
Slide 21: TFG London Is Building a Portfolio of High Quality Brands
TFG LONDON TFG LONDON IS BUILDING A PORTFOLIO OF HIGH QUALITY BRANDS SALES BY CHANNEL SALES BY REGION Wholesale / Other ROW • Premium British brand with a global following. Stores Europe • Dedicated to dressing women of all ages, for Concessions all occasions, in high quality and versatile clothing.
Slide 22: TFG London Is Focused on Delivering the Online Opportunity
TFG LONDON IS FOCUSED ON DELIVERING THE ONLINE OPPORTUNITY SALES EVOLUTION¹ (GBPm) 103 SPLIT BETWEEN OWN SITE AND OTHER/MARKETPLACE SITES… 73 58 Partner websites 42 44 Own Sites 27 23 16 45 29 19 11 2015 2016 2017 2018 • Collect from store introduced • Single stock pool project completed • Current D
Slide 23: TFG London Is Well Positioned for Sustainable Growth
TFG LONDON IS WELL POSITIONED FOR SUSTAINABLE GROWTH • TFG London operates a retail model focused on sustainable growth where costs are substantially flexed with sales › Retail sales are predominantly generated Online (33%) and through turnover rent based concessions (35%) TRADING MODEL & › Staffing
Slide 24: TFG Australia
TFG AUSTRALIA CONTENT #1 Business Overview #2 Current Performance #3 Strategic Focus & Next Steps RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 44 TFG Results presentation 2018 22 www.tfglimited.co.za
Slide 25: RAG Is Amongst Australia's Best Performing Retailers
RAG IS AMONGST AUSTRALIA‘S BEST PERFORMING RETAILERS Sales +14%(8 mths) +10 years 5 Specialty Brands of continuous growth Stores 431 Omni-Channel Targeted Product strategy RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 45 RAG IS 5 SPECIALTY BRANDS A leading mid-market, A leading mid-market, O
Slide 26: Focused on Fashionable Mid-Market and Value Segments
FOCUSED ON FASHIONABLE ―MID-MARKET‖ & ―VALUE‖ SEGMENTS Fashion Saba H&M Ben Sherman Politix Calibre Topshop Marcs Zara Herringbone MJ Bale Country Trenery Road Factorie Oxford Witchery Uniqlo Sportscraft Jay Jays Cotton Ron Bennett On Price Jeans West GAP Just Jeans Fletcher Jones Department Ed Harr
Slide 27: Typical Customer by Brand
` Typical customer: — He has an urban, fast-paced lifestyle and is usually shopping for a night out or an occasion where he likes to stand out — Fashion conscious 14-27 year old males Product positioning: Fashionable mid-market menswear for going out Stores (Mar-18) 100 Price point Mid-market RESULT
Slide 28: Typical Customer by Brand (continued)
Typical customer: — He is the previously underserved bigger, broader, and taller man who wants to look good when he goes out — He is willing to spend more per unit and buys more units per transaction — 18-45 year old males requiring large sizes Product positioning: One-stop-shop for the big and tall
Slide 29: Physical Store Rollout Strategy
CONTENT #1 Business Overview #2 Current Performance #3 Strategic Focus & Next Steps RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 53 CONTINUED… PHYSICAL STORE ROLLOUT STRATEGY 431 400 2018: Acquired 400 31 Net New stores 362 Created 342 350 325 300 10 expansions Acquired 274 302 250 431 stor
Slide 30: Driven Investment in Digital Channels
DRIVEN INVESTMENT IN… ―DIGITAL‖ CHANNELS E Commerce - Sales as % of Total RAG 16,000,000 3.6% 3.4% 14,000,000 3.2% 12,000,000 3.0% 10,000,000 2.8% 2.6% 8,000,000 2.4% 6,000,000 2.2% 4,000,000 2.0% April May June July August September October November December January February March Sales 8,724,597 9
Slide 31: Strategic Focus and Next Steps
ACQUISITION REVIEW… Information above is based on management accounts. RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 56 CONTENT #1 Business Overview #2 Current Performance #3 Strategic Focus & Next Steps RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 57 TFG Results presentation 2018 2
Slide 32: RAG – Long Term Strategic Goals; Store Footprint
RAG – LONG TERM STRATEGIC GOALS STORES Maximise store portfolio in Australia & New Zealand BRANDS Continue to add Growth Brands to the portfolio GROWTH CUSTOMER Uniqueness of Brands maintained at all times – Target unique markets STORES Increase store sizes as opportunity evolves DIGITAL Double % Gr
Slide 33: Outlook
OUTLOOK OUTLOOK TFG AFRICA − Cautiously positive around SA outlook − Credit – outlook more positive given recent court ruling however uncertainty around future legislation − Gross margin to be maintained • Product price deflation anticipated at similar levels to last year − Ongoing focus on our exis
Slide 34: Outlook (continued); Thank You
OUTLOOK (CONTINUED) TFG AUSTRALIA − Outlook remains stable − Continued strong growth − Test launch TFG Africa brand − Continuing store roll out of existing brands GROUP − Gross margin to be expanded − Retail turnover for first 7 weeks: • TFG Australia and TFG London ahead of management expectation.
Slide 35: Disclaimer; Appendices
DISCLAIMER THIS ANNOUNCEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE FOSCHINI GROUP LIMITED AND ITS SUBSIDIARIES, WHICH BY THEIR NATURE INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO EVENTS AND DEPEND ON CIRCUMSTANCES
Slide 36: Economic Sources; TFG Mission and Values
ECONOMIC SOURCES Latest Comparative Operating context – South Africa period period CPI % y-o-y (March 2018 vs March 2017) 3,8 6,1 GDP (2017 y-o-y growth vs 2016 y-o-y growth) 1,3 0,6 FNB/BER Consumer Confidence Index (Q1 2018 vs Q1 2017) +26 -5 RMB/BER Business Confidence Index (Q1 2018 vs Q1 2017)
Slide 37: Group Footprint; Footprint: TFG Africa
GROUP FOOTPRINT 4 034 OUTLETS IN 32 COUNTRIES: − TFG Africa: 8 countries − TFG International: 24 countries • South Africa: 2 458 outlets • TFG London: 935 outlets • Rest of Africa: 194 outlets in 7 countries • TFG Australia: 447 outlets RESULTS PRESENTATION FOR THE YEAR ENDED 31 MARCH 2018 68 69 FOO
Slide 38: Footprint: TFG London and TFG Australia; Merchandise Category Contribution
FOOTPRINT: TFG LONDON AND TFG AUSTRALIA North America Europe Asia USA 2 35 37 UK & Ireland 206 467 673 Japan - 5 5 Mexico - 13 13 Sweden 1 12 13 Hong Kong 8 2 10 Estonia - 1 1 Macau - 2 2 Middle East Latvia - 2 2 Qatar - 3 3 Malaysia - 1 1 Netherlands - 7 7 United Arab - 8 8 Singapore - 5 5 Emirates
Slide 39: Condensed Consolidated Statement of Financial Position
Condensed consolidated statement of financial position March 2018 March 2017 Reviewed Audited Rm Rm ASSETS Non-current assets Property, plant and equipment 2 861,9 2 469,0 Goodwill and intangible assets 7 667,2 4 675,9 Deferred taxation asset 620,6 483,6 11 149,7 7 628,5 Current assets Inventory 6 7
Slide 40: Condensed Consolidated Income Statement
Condensed consolidated income statement Year ended Year ended 31 March 31 March 2018 2017 Reviewed Audited % Rm Rm change Revenue 31 536,5 26 413,6 Retail turnover 28 593,0 23 548,7 21,4 Cost of turnover (13 591,9) (11 845,2) Gross profit 15 001,1 11 703,5 Interest income 1 755,8 1 736,9 Other incom
Slide 41: TFG Results presentation 2018 www.tfglimited.co.za
TFG Results presentation 2018 39 www.tfglimited.co.za
Slide 42: TFG Brands
re | i) REY @home @bhomelivingspace AmericanSwiss Archive Charles&Keith Colette Connor Donna Duesouth Exact Fabiani TheFix Foschini G-StarRaw hi Hobbs JohnnyBigg Markham Mat & May Phase Eight Rockwear SodaBloc Sportscene Sterns Tarocash Totalsports Whistles yd.