Lovisa Holdings Ltd. · ASX:LOV
Lovisa — FY2018 Earnings Presentation
23 slides from Lovisa's earnings presentation, Aug 22, 2018
Slide 1: Lovisa Holdings Limited 2018 Full Year
Lovisa Holdings Limited 2018 FULL YEAR SHANE FALLSCHEER MANAGING DIRECTOR CHRIS LAUDER CHIEF FINANCIAL OFFICER
Slide 2: Forward-looking statements
Some of the information contained in this presentation contains “forward - looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect the current intentions, plans, expectations, assumptions and beliefs about future events of Lovisa
Slide 3: FY18 key results
EBIT up 26% NPAT $36.0M $51.1M up 24% Like for Like Sales Revenue up 21.4% +6.8% $217.0M Total Stores Final Dividend 326 14.0 CPS Net increase of 38 stores Fully Franked 3
Slide 4: Contents
CONTENTS 1. FULL YEAR OVERVIEW 2. FINANCIAL OVERVIEW 3. TRADING PERFORMANCE 4. CASHFLOW AND BALANCE SHEET 5. STORE GROWTH 6. OPERATIONAL UPDATE 7. BOARD RENEWAL 8. STRATEGY RECAP 9. TRADING UPDATE AND OUTLOOK 10. SUMMARY 4 11. APPENDICES
Slide 5: Full Year Overview
FULL YEAR OVERVIEW • EBIT up 26% to $51.1m • We continue to invest in the structure of the business to support global growth, with • Comparable store sales growth of 6.8% investment in rollout of new territories, • Gross margin increased to 80.0% due to global support structures and the expanded con
Slide 6: Financial Overview
FINANCIAL OVERVIEW Continued earnings growth following increase in LFL sales and margin ($000) FY18 FY17 Variance • Revenue up 21.4% with comparable store sales up 6.8% for the year Actual Actual Actual • Gross profit of $174m up 23% reflecting improved margins Revenue 217,010 178,746 21.4% • CODB m
Slide 7: Trading Performance - Sales
TRADING PERFORMANCE - SALES Comparable sales up 6.8% 240 220 200 180 160 Sales ($AUDm) 140 120 100 $217.0 $178.7 80 $153.5 60 $134.3 $105.7 40 20 0 FY14 FY15 FY16 FY17 FY18 • Total Global Sales Revenue up 21.4% to $217m • Comparable store sales up 6.8% driven by strong performance of Christmas and B
Slide 8: Trading Performance - Sales by region
TRADING PERFORMANCE - SALES Sales increase across all regions *Sales revenue Region ($AUD '000) FY18 FY17 Variance excluding franchise income Australia / NZ 132,013 122,577 7.7% Asia 34,558 28,320 22.0% Africa 30,499 21,895 39.3% Europe/Americas 18,393 4,830 280.8% Total 215,463 177,622 21.3% • All
Slide 9: Trading Performance - Gross Margin
TRADING PERFORMANCE - GROSS MARGIN Gross margin increased to 80.0% Gross Margin at Constant Currency* • Gross profit increased 23% to $173.6m FY18 FY18 FY17 • Gross Margin was 80.0% up 120 Currency USD 0.75 0.72 0.72 basis points from 78.8% in the prior Sales 217,010 217,010 178,746 year Cost of Sal
Slide 10: Cost of Doing Business
COST OF DOING BUSINESS Continued investment in global rollout 70% CODB % Sales 60% 50% 40% 30% 61% 54% 54% 53% 53% 20% 10% 0% FY14 FY15 FY16 FY17 FY18 • Continued reinvestment back into the growth of the business resulted in CODB percentage to sales being maintained at 53% • One-off impact of reloca
Slide 11: Cash Flow
CASH FLOW Strong Cash Conversion and Inventory Management (A$000s) FY18 FY17 • Cash flow from operations lifted 20% to $60.6m with operating cash conversion at 104% Cash from operating activities 60,605 50,364 Net interest paid 81 (262) • Capital expenditure of $15.3m for the year, including payment
Slide 12: Balance Sheet
BALANCE SHEET Strong Balance Sheet with Significant Capacity (A$000s) FY18 FY17 Net Cash 21,057 11,039 Available To Fund Growth Receivables 4,881 3,615 Inventories 14,945 13,127 • Disciplined inventory management with growth in inventory Derivatives 1,429 - levels in line with growth in store number
Slide 13: Store Growth
STORE GROWTH International Rollout Continues with a Net Increase of 38 Stores Store number growth Est. Store • Number of international stores growing with offshore Country FY18 FY17 Var territories now 54% of the store network Capacity Australia 151 145 6 150+ • Net increase of 38 stores for the yea
Slide 14: Operational Update
OPERATIONAL UPDATE • We continue to focus on investment in people and processes to ensure we remain efficient as we grow and able to execute on our strategic plans • Key operational and IT changes complete/underway: • Move of our third party logistics hub from Hong Kong to Qingdao China • Change in
Slide 15: Board Renewal
BOARD RENEWAL • The Board is currently well advanced in the appointment of a new independent non-executive Director to replace Paul Cave • The Board would also like to announce that after 2 years in the role, Michael Kay will be stepping down as a Director and Chairman of the Company effective from
Slide 16: Strategy Recap
STRATEGY RECAP • Lovisa is a vertically integrated fast fashion jewellery retailer with end to end product development capabilities supporting high gross margins • Global brand with reach across 15 countries • Scalable rollout model with centralised merchandising, marketing and back office to suppor
Slide 17: Trading Update and Outlook
TRADING UPDATE AND OUTLOOK • We continue to cycle particularly strong comparable store sales delivered over recent years, with growth above our target range delivered in each of the past 4 years, which will make continuation of the comparable store sales momentum delivered in FY18 more challenging.
Slide 18: Summary
SUMMARY • EBIT of $51.1m and 80% gross margin (79% on constant currency) • Comparable store sales growth of 6.8% • Lift in margin following tight inventory management and strong Christmas and Boxing Day sales period • CODB investment well managed to focus on laying the platform for future growth • T
Slide 19: Appendices
Avise APPENDICES
Slide 20: Appendix 1 - Disclosing non-IFRS financial information
APPENDIX 1 ASIC Regulatory Guide 230 Disclosing non-IFRS financial information In December 2011 ASIC issued Regulatory Guide 230. To comply with this Guide, Lovisa Holdings Limited is required to make a clear statement about the non-IFRS information included in the Profit announcement and Full Year
Slide 21: Appendix 2 - Profit and Loss Statement
APPENDIX 2 – PROFIT AND LOSS STATEMENT ($’000) FY18 FY17 Variance Actual Actual Actual Revenue 217,010 178,746 21.4% Cost of sales (43,373) (37,924) 14.4% Gross profit 173,637 140,822 23.3% Employee expenses (55,514) (45,276) 22.6% Property expenses (34,713) (28,683) 21.0% Distribution expenses (7,2
Slide 22: Appendix 3 - Key Risks
APPENDIX 3 – KEY RISKS Foreign Currency • Majority of goods that are imported are priced in USD. Consequently Lovisa is exposed to movements in the USD exchange rate • As international growth continues Lovisa will be exposed to movements in the exchange rates of the countries it operates Store Growt
Slide 23: Appendix 4 - Global Brand Strategy
APPENDIX 4 – GLOBAL BRAND STRATEGY Vision • Internationally recognised brand • Global footprint • Brand of choice for fast fashion jewellery Growth Engine • High Margin business operating in small store footprint • Fit out cost generally low with compelling return and pay back period • Inexpensive e