Adairs Ltd. · ASX:ADH
Adairs — H1 2016 Earnings Presentation
21 slides from Adairs's earnings presentation, Feb 26, 2016
Slide 1: 1H FY16 results presentation
1H FY16 results presentation For personal use only 26 February 2016
Slide 2: 1H FY16 results highlights
1H FY16 results highlights For personal use only LFL sales Sales growth $117.82m up 21.5% 15.4% Gross profit margin CODB 43.8% of sales 62.9% down from 45.2% MAIDEN EBIT $19.9m NPAT INTERIM DIV 5.0cps Up 34.9% $13.3m fully franked Variances refer to 1H FY16 highlights compared to pro-forma 1H FY15 h
Slide 3: Agenda
Agenda 1. Operational highlights – Doing what we said we would do For personal use only 2. Financial performance – Continued strong growth 3. Outlook – Well positioned for continued growth and expect to outperform FY16 Prospectus forecast
Slide 4: 1H FY16 operational highlights
1H FY16 operational highlights Continued to focus on product and range differentiation • Strong performance from fashion and decorator product For personal use only categories • Strengthening sales in Adairs Kids product ranges Omni channel strategy delivering growth • LFL sales growth: 15.4% •
Slide 5: Strong LFL sales momentum +15.4%
Strong LFL sales momentum +15.4% All store formats continue to deliver above market Total sales growth cycling strong prior periods For personal use only LFL sales growth while cycling strong 1H15 comps 12 consecutive quarters of LFL sales growth, the key driver to strong earnings growth Drive
Slide 6: Agenda
Agenda 1. Operational highlights – Doing what we said we would do For personal use only 2. Financial performance – Continued strong growth 3. Outlook – Well positioned for continued growth and expect to outperform FY16 Prospectus forecast
Slide 7: Strong growth across all key financial metrics
Strong growth across all key financial metrics $ million 1H FY16 1H FY15 Change Sales revenue growth +21.5% Like for like sales growth +15.4% For personal use only Sales 117.8 97.0 21.5% Gross Profit Margin of 62.9% Range of product cost reductions Gross Profit 74.2 60.8 22.0% Select retai
Slide 8: Continued management of FX headwinds
Continued management of FX headwinds Ongoing FX depreciation headwinds For personal use only c88% of COGS are settled in USD c80% hedged for remainder of 2H16 Impact of average AUD/USD exchange rates through the P&L 1H15 c0.91 cents, decreased to c0.79 cents in 1H16 2H16 rates expected t
Slide 9: Strong balance sheet to support growth
Strong balance sheet to support growth For personal use only Working Capital Increase over the half $ million 27 Dec 2015 28 Jun 2015 Change due to inventory investment required to Trade and Other support January sales and store 6.2 4.8 29.2% growth. Receivables January closing stock levels and
Slide 10: Cash flow from operations
Cash flow from operations For personal use only $ million 1H16 1H15 • Operating cash flow impacted by increased inventory to support peak sales EBITDA 22.5 17.0 period and store growth Change in Working Capital / (3.6) 1.4 • Significant non-recurring cash payments Other made during the half in relat
Slide 11: Investing for growth
Investing for growth For personal use only Capital expenditure ($m) Securing attractive new store locations as they arise 5 new stores opened Continuing to see pleasing results from store refurbishments Remain committed to ongoing investment in existing stores Continue to seek opportunitie
Slide 12: Agenda
Agenda 1. Operational highlights – Doing what we said we would do For personal use only 2. Financial performance – Continued strong growth 3. Outlook – Well positioned for continued growth and expect to outperform FY16 Prospectus forecast
Slide 13: Core and Emerging formats underpin growth
Core and Emerging formats underpin growth Core For personal use only Continued roll out of ‘core’ store formats is a significant driver our growth 7 – 10 of the new stores to be opened annually for the next 5 years expected to be Adairs and Adairs Homemaker; with majority of new locations expect
Slide 14: International expansion
International expansion New Zealand selected as the preferred first market for international expansion For personal use only New Zealand represents a lower risk opportunity for first international market Working on finalising appropriate locations within our target centres for initial 3 - 4 stor
Slide 15: Key growth strategies
Key growth strategies A consistent strategic direction For personal use only Product and range differentiation with a focus on growing our high margin Fashion & Decorator range Product team and merchandise planning processes enable on trend fashion with speed to market Continuing nationwide st
Slide 16: Adairs FY16 Outlook
Adairs FY16 Outlook Revised FY16 Guidance For personal use only Prospectus Guidance • FY16 sales and earnings guidance revised upwards Sales $231m $245 - $255m • 2H LFL sales to date (8 weeks) has GP% 61.50% 60 - 61% seen low double digit growth EBIT $36.7m $37-39m • Cycling higher LFL sales in 2H (
Slide 17: Questions?
For personal use only 16 Questions?
Slide 18: Appendix
For personal use only Appendix 17
Slide 19: Leading Australian home furnishings retailer
Leading Australian home furnishings retailer Adairs has a long history in Australia and now supplies home furnishings across five For personal use only different formats nationwide, plus an online store Strong sales and profitability growth across all formats “Core” formats key to growth over ne
Slide 20: Store footprint
Store footprint For personal use only 85 - Adairs Stores (incl. Outlet) 40 - Homemaker Stores 10 - Adairs Kids Stores 5 - UHR Stores (inc. Myer concessions) DC and HQ 1H16 stores refurbished 1H16 new stores Adairs Kids - Rhodes Adairs Kids – Belrose, Bondi, Werribee Adairs Homemaker – Mile End, Nuna
Slide 21: Disclaimer
Disclaimer Some of the information contained in this presentation contains “forward-looking statements” which may not directly or For personal use only exclusively relate to historical facts. These forward-looking statements reflect Adairs Limited current intentions, plans, expectations, assumptions