Woolworths Group Ltd · ASX:WOW
Woolworths — Investor Day (November 2011)
99 slides from Woolworths's investor day presentation, Nov 2, 2011
Slide 1: Investor Strategy Briefing
INVESTOR STRATEGY BRIEFING 2 NOVEMBER 2011 Grant O’Brien, CEO Woolworths Limited For personal use only Good morning ladies and gentleman. My name is Grant O’Brien. Whether you are here in person or via our webcast, thank you for joining us. The purpose of today’s strategy briefing is to share with y
Slide 2: Four strategic priorities
This era is also marked by a changed retail environment, with consumers deleveraging, more competition for share of wallet as well as a broader, more competitive retail sector. These challenges will continue for the next couple of years, particularly as we head into Federal election and global marke
Slide 3: Liquor leadership and portfolio action
Our goals also include extending our leadership in liquor. Liquor has achieved remarkable success. We’ve achieved this by understanding and delivering for all customers’ shopping occasions. For personal use only And doing so in a world‐class fashion. There are many more opportunities still to be rea
Slide 4: Dick Smith review and multichannel growth
This review will thoroughly examine our options for Dick Smith, and I plan to report our decision to the market by the half‐year results in February. My third strategic priority is maintaining our track record of building new growth businesses For personal use only Nothing speaks more clearly about
Slide 5: Enablers for a new era of growth
My fourth priority is to put in place the enablers for a new era of growth The first enabler for any retailer is a world‐class supply chain. For Woolworths, I want to deliver the next step change in productivity through our supply chain. For personal use only Over the last five years, we have invest
Slide 6: Talent as critical enabler
Finally the most critical enabler is our talent. My goal is to combine the best retail talent in Australia, with the best in the world. At the start of the last decade our last wave of growth was delivered by the talent that we unlocked under Project Refresh. As we moved to a national structure we w
Slide 7: Long-term aspiration and summary
Our long‐term aspiration remains high single digit sales growth and 10% EPS growth assisted by bolt‐ ons and capital management, which is consistent with our long term senior management incentive hurdles. In summary, there are two key factors that are reshaping our business – the new customer and th
Slide 8: Investor Briefing
For personal use only Investor Briefing Grant O'Brien Managing Director and Chief Executive Officer 2 November 2011
Slide 9: Agenda
AGENDA TOPIC PRESENTER For personal use only 10:00AM - 10:45AM STRATEGY OVERVIEW GRANT O'BRIEN 10:45AM - 12:15PM SUPERMARKETS & PETROL TJEERD JEGEN 12:15PM - 1:00PM LIQUOR & HOTELS STEVE GREENTREE 1:00PM - 1:30PM LUNCH 1:30PM – 2:30PM BIG W JULIE COATES 2:30PM – 3:00PM HOME IMPROVEMENT & GRANT O'BRI
Slide 10: Strategy Overview
2 For personal use only STRATEGY OVERVIEW
Slide 11: My Strategic Priorities
MY STRATEGIC PRIORITIES • Re-establish marketing supremacy around value and growth 1 • Unlock sales growth for a tougher consumer and competitive environment For personal use only EXTEND AND DEFEND • Accelerate our leadership in Fresh Food LEADERSHIP IN FOOD AND LIQUOR • Extend leadership in liquor
Slide 12: Supermarkets
4 For personal use only SUPERMARKETS
Slide 13: My Observations Since Joining
MY OBSERVATIONS SINCE JOINING For personal use only 1 A STRONG FRESH FOOD BUSINESS AND OPPORTUNITY 2 A GOOD VALUE OFFER WITH AN OPPORTUNITY TO ENHANCE AND 3 AN OPPORTUNITY TO MOVE FROM A GENERIC OFFER TO A ACCELERATE COMPARABLE SALES AND DELIVER TO EXTEND FRESH STRENGTHEN BRAND MORE TAILORED SUSTAIN
Slide 14: Growth in Supermarkets – Our New Vision
GROWTH IN SUPERMARKETS – OUR NEW VISION For personal use only 6
Slide 15: Brand Communication Strategy
BRAND COMMUNICATION STRATEGY WE NEED TO STRENGTHEN THE VALUE CREDENTIALS OF OUR BRAND OUR BRAND STANDS OUT ON For personal use only • The Woolworths brand has great equity and resonates well with customers • We will continue to build our brand on our existing credentials, but we need a greater focus
Slide 16: Brand and Communication Strategy
BRAND AND COMMUNICATION STRATEGY CUSTOMER CENTRIC AND MARKETING LEADERSHIP For personal use only BRAND COMMUNICATION HAS BEEN INCONSISTENT AND REACTIVE THEREFORE… • Review of advertising and research agencies underway • New GM Marketing with extensive UK experience, who led our winning Countdown str
Slide 17: Growth in Supermarkets – Our New Vision
GROWTH IN SUPERMARKETS – OUR NEW VISION For personal use only 9
Slide 18: First Choice for Fresh Food
FIRST CHOICE FOR FRESH FOOD AMBITION TO TAKE FRESH MARKET SHARE LEADERSHIP TOWARDS THE LEVEL OF GROCERY For personal use only grocery POTENTIAL TO GENERATE IN fresh1 EXCESS OF $2.5B 28 % 36 % ADDITIONAL FRESH FOOD SALES MARKET SHARE 1. Excludes perishables and seafood Source: Roy Morgan Single Sourc
Slide 19: Freshest food, fastest supply chain
FIRST CHOICE FOR FRESH FOOD THE FRESHEST FOOD DELIVERED BY THE FASTEST SUPPLY CHAIN For personal use only • Implementing a reduction of 1 day out of 4 in produce end-to-end supply chain time – Faster journey from the farm to the customer means a fresher product for longer in the customer's kitchen •
Slide 20: Growing fresh offer through merchandising
FIRST CHOICE FOR FRESH FOOD GROWING OUR FRESH OFFER THROUGH BETTER MERCHANDISING For personal use only GORDON, NSW • 2015 improved fresh offer – refurbished stores producing double digit sales uplift • Currently 14% of stores converted with over 50% of stores converted by 2016 • Merchandising and pr
Slide 21: Growing fresh offer through range leadership
FIRST CHOICE FOR FRESH FOOD GROWING OUR FRESH OFFER THROUGH RANGE LEADERSHIP For personal use only 13
Slide 22: Opportunity to win share with tailored range
FIRST CHOICE FOR FRESH FOOD OPPORTUNITY TO WIN SHARE WITH A MORE TAILORED RANGE For personal use only WOOLWORTHS OFFER AFFLUENT CATCHMENT BUDGET CATCHMENT • Primarily generic across all • Local specialist • Local specialist stores • Deeper range, broader price • Good range, fewer price points points
Slide 23: Growth in Supermarkets – Our New Vision
GROWTH IN SUPERMARKETS – OUR NEW VISION For personal use only 15
Slide 24: Customer Led – Power of Insight
WE ARE CUSTOMER LED – POWER OF INSIGHT 8.4M PEOPLE ENGAGED IN OUR REWARDS PROGRAMS For personal use only • Follow our customer: segmentation of our customer in 10 groups which we track to get more in depth understanding of their shopping behaviour • Tailor our offer by catchment: provide the custome
Slide 25: Customer Led – Everyday Rewards
WE ARE CUSTOMER LED – EVERYDAY REWARDS EVERYDAY REWARDS DATA ENABLES STRONG CUSTOMER ENGAGEMENT For personal use only CREATING DIRECT MARKETING ENGAGEMENT WITH CREATING INCREMENTAL LEVERAGING DATA PERSONALISED SALES EXCEEDING TO SUPPORT NEW GREAT REWARDS COMMUNICATIONS INDUSTRY BENCHMARKS BUSINESS G
Slide 26: Growth in Supermarkets – Our New Vision
GROWTH IN SUPERMARKETS – OUR NEW VISION For personal use only 18
Slide 27: Unbeatable Value – Category Management
UNBEATABLE VALUE GREATER CUSTOMER VALUE THROUGH ENHANCED CATEGORY MANAGEMENT For personal use only • Category reviews driven by customer ENHANCED Everyday Rewards data CATEGORY • Comprehensive reviews of categories MANAGEMENT underway, majority complete by June 2012 assisted by newly launched catego
Slide 28: Reducing shrinkage to lower prices
UNBEATABLE VALUE DRIVING REDUCTION IN SHRINKAGE TO LOWER PRICES For personal use only QUARTERLY SHRINKAGE PERFORMANCE LAST 4 QUARTERS INDEXED TO Q2 FY11 100 98 93 • Major initiative to remove underlying causes of shrinkage 86 and redesign end-to-end processes • Enhancement to store ordering system –
Slide 29: Doubling own brand penetration
UNBEATABLE VALUE TARGETING DOUBLE THE PENETRATION OF OWN BRAND SALES PROVIDING WIDER VARIETY AND LOWER PRICES For personal use only 5 Kroger Safeway Carrefour Walmart Sainsbury's Tesco 0 (US) (US) (France) (US) (UK) (UK) OWN BRAND PERCENT OF SALES WOOLWORTHS' OWN BRAND SALES REBASED TO 1 21
Slide 30: Double penetration over the next years
UNBEATABLE VALUE DOUBLE THE PENETRATION OVER THE NEXT 5 YEARS… For personal use only OVER 350 PRODUCTS OVER 1,300 PRODUCTS • Growing 8 times faster than the market in • New product launches and rebranding has seen the last year strong sales growth in the last quarter • Great new categories across th
Slide 31: Homebrand – Australia's most established own brand
UNBEATABLE VALUE HOMEBRAND – AUSTRALIA'S MOST ESTABLISHED OWN BRAND DELIVERING UNBEATABLE VALUE TO CUSTOMERS SINCE 1983 For personal use only SALES GROWTH OVER 850 CURRENT SKUs 2011 180 % 2000 23
Slide 32: Growth in Supermarkets – Our New Vision
GROWTH IN SUPERMARKETS – OUR NEW VISION For personal use only 24
Slide 33: Store tailored for my customer – store growth
STORE TAILORED FOR MY CUSTOMER CONTINUED STRONG GROWTH OF AUSTRALIA'S LEADING RETAIL NETWORK For personal use only # STORES ~960 ~8731 840 756 2006 2011 2012(f) 2016(f) …UTILISING BALANCE SHEET STRENGTH AND DEVELOPMENT EXPERTISE 1. Represents 39 new openings and 6 closures 25
Slide 34: Using data to develop tailored formats
STORE TAILORED FOR MY CUSTOMER USING DATA TO DEVELOP TAILORED FORMATS AND RANGES DRIVING SALES AND PROFIT / SQM For personal use only SHOPPING COMPETITION OCCASIONS CUSTOMER • Specialists SEGMENTS • Independents • Top Up • Conventional chains • Regular • Discounters • Stock Up • Warehouse clubs • On
Slide 35: Customer segments and store sales
STORE TAILORED FOR MY CUSTOMER USING DATA TO GAIN DEEP UNDERSTANDING OF CUSTOMER SHOPPING BEHAVIOURS TO DEVELOP TAILORED STORE FORMATS AND RANGES For personal use only PERCENT OF STORE SALES BY WOOLWORTHS' CUSTOMER SEGMENTS: FY10 CUSTOMER SEGMENT TYPE 1 2 3 4 5 6 7 8 AFFLUENT CUSTOMER GROUPS 9 10 MA
Slide 36: New customer led categories
STORE TAILORED FOR MY CUSTOMER USING DATA TO CREATE NEW CUSTOMER LED CATEGORIES THROUGH SHELF AND FLOOR SPACE OPTIMISATION For personal use only LAUNDRY POWDER WILL DRIVE GROWTH IN SALES AND PROFIT / SQM High RANGE EDITING Substitutability High sales Low sales Low High Low Loyalty TARGET CATEGORIES
Slide 37: Multi-channel growth and upside
STORE TAILORED FOR MY CUSTOMER MULTI-CHANNEL - STRONG CURRENT GROWTH AND SIGNIFICANT UPSIDE POTENTIAL For personal use only Great Significant Multi-channel online potential customer growth upside spend 10 4 ~Tesco % ~70 more than %2 times1 in-store only customer Supermarkets growth (Aus Food & Liquo
Slide 38: New Woolworths online platform
STORE TAILORED FOR MY CUSTOMER NEW WOOLWORTHS ONLINE PLATFORM DELIVERS ENHANCED CUSTOMER BENEFITS For personal use only • Favourites list: your in-store and online purchases (Everyday Rewards customers) • "Have You Forgotten": lets you know if you've missed something you regularly buy • Search Field
Slide 39: Smartphone shopping app
STORE TAILORED FOR MY CUSTOMER 1.1M CUSTOMERS HAVE DOWNLOADED WOOLWORTHS SMARTPHONE SHOPPING APP For personal use only CURRENTLY • Smart shopping lists Featured as "App of the • Specials week" in the Apple • Barcode scanner AppStore (12/8/2011) • Store finder • Product finder Rated No. 1 free • Reci
Slide 40: One of Australia's largest fuel retailers
ONE OF AUSTRALIA'S LARGEST FUEL RETAILERS WITH SCOPE FOR FUTURE GROWTH For personal use only • The petrol offer is an essential ingredient in Supermarket loyalty • Targeting a site supporting every Supermarket - 215 Supermarkets not yet adequately supported • Targeting double digit non-fuel sales gr
Slide 41: Australian Supermarkets recap
AUSTRALIAN SUPERMARKETS RECAP TRACKING KPIs TO ENSURE WE ARE DELIVERING ON OUR STRATEGY For personal use only • Value perception • New category growth • Price position • Own brand penetration • Promotional effectiveness • Fresh food perception • Number of stores • Fresh market share • Ranging effect
Slide 42: New Zealand's largest retail brand
NEW ZEALAND'S LARGEST RETAIL BRAND DELIVERED ON 3 YEAR TRANSITION AND INTEGRATION STRATEGY TO CREATE A STRONG BUSINESS For personal use only 2007-2011 NZ$244m NZ$5,362m 8.2 4.3 % pa1 % pa1 NZ$178m NZ$4,527m EBIT GROWTH REVENUE GROWTH 1. 4 year CAGR 34
Slide 43: New Zealand momentum will continue
NEW ZEALAND'S LARGEST RETAIL BRAND STRONG POSITIVE MOMENTUM WILL CONTINUE For personal use only • Finalised rebranding - only 5 stores left • New format rollout - 65% complete • 24 new stores over the next 5 years • Cross-leveraging and scale synergies with Australian Supermarkets – Supply chain int
Slide 44: Q&A - Supermarkets
36 For personal use only Q&A - SUPERMARKETS
Slide 45: Woolworths Liquor Group
WOOLWORTHS LIQUOR GROUP For personal use only 37
Slide 46: Clear leadership – Australia's leading liquor retailer
CLEAR LEADERSHIP AUSTRALIA'S LEADING LIQUOR RETAILER… For personal use only # STORES / HOTELS 1,532 653 457 282 298 140 2000 2011 38
Slide 47: Capability in direct marketing, production, distribution
CLEAR LEADERSHIP …WITH UNRIVALLED CAPABILITY IN DIRECT MARKETING, PRODUCTION AND DISTRIBUTION… For personal use only PRODUCTION DIRECT AND MARKETING DISTRIBUTION BROKERAGE 39
Slide 48: Leadership across all customer segments
CLEAR LEADERSHIP …RESULTING IN LEADERSHIP ACROSS ALL CUSTOMER SEGMENTS For personal use only CONNOISSEUR BROKERAGE CONVENIENCE AND VALUE BARGAIN HUNTER DIRECT BRICKS AND MORTAR 40
Slide 49: Liquor – imperatives to drive growth
LIQUOR – 7 IMPERATIVES TO DRIVE GROWTH 1 GROW • Continue development pipeline, growing Dan Murphy’s to 208 by FY16 • Expand and optimise Hotel, BWS and Supermarket Liquor network For personal use only NETWORK • Grow Hotels as a key enabler to the rollout of Dan Murphy's and BWS 2 IMPROVE • Rollout n
Slide 50: Grow our network
GROW OUR NETWORK STRONG NEW STORE PIPELINE WILL DELIVER 172 NEW STORES IN 5 YEARS For personal use only # STORES ~1,436 ~1,329 1,264 657 ~691 ~716 461 ~480 ~512 146 ~158 ~208 Sep 2011 2012(f) 2016(f) TODAY • Woolworths operates ~10% of Australia's packaged liquor licenses • 165 Australian supermarke
Slide 51: Improve our store formats
IMPROVE OUR STORE FORMATS For personal use only • Dan Murphy’s "Store of the Future" to deliver a world-class liquor retail experience • 12 stores already open in the revised format. 26 by June 2012 • New format extends leadership through improved access to superior range, people and technology • In
Slide 52: Multi-channel
MULTI-CHANNEL AUSTRALIA’S MOST DIVERSE LIQUOR RETAILER For personal use only ONLINE, BRICKS MOBILE CATALOGUE AUCTION AND AND AND AND FUTURE MORTAR SOCIAL WINE PLANS BROKERAGE MEDIA • Big box • Exceptional growth • Customer loyalty • Langton’s • Broaden the range • Supermarkets for Dan Murphy’s • Dir
Slide 53: Grow own brand share – range
GROW OWN BRAND SHARE EXTENSIVE RANGE OF OWN BRAND PRODUCTS DEVELOPED For personal use only • Own and Exclusive Brands are the 2nd largest "supplier" to the Liquor Group with >600 lines • Proven success across all categories – Leading Sauvignon Blanc range (South Island, Amiri, Tangoroa) – No. 2 Whis
Slide 54: New capability in production
GROW OWN BRAND SHARE NEW CAPABILITY IN PRODUCTION For personal use only • Significant capacity for today’s requirements due to Dorrien Estate acquisition with scope to significantly increase capacity for future needs • One of Australia’s largest wine and beer producers • Q2 will witness the first ‘o
Slide 55: Double own brands as percentage of sales
GROW OWN BRAND SHARE DOUBLE OWN BRANDS AS A PERCENTAGE OF TOTAL SALES IN 4 YEARS For personal use only • Build "Brands" with superior products delivering excellent value • Support growth of Brands with above the line spend • Stay ahead of the curve with new product development • Focus on maintaining
Slide 56: Hotels integral to Liquor Group strategy
HOTELS INTEGRAL TO THE LIQUOR GROUP STRATEGY For personal use only • Key enabler to rollout of Dan Murphy's and BWS, currently 35% of Dan Murphy's and 65% of BWS are affiliated with hotels • Growth in hotels will be delivered organically through continued improvements in food and entertainment offer
Slide 57: Q&A - Liquor
49 For personal use only Q&A - LIQUOR
Slide 58: For personal use only
50 For personal use only
Slide 59: BIG W's Environment and Strategic Priorities
BIG W'S ENVIRONMENT AND STRATEGIC PRIORITIES For personal use only TRENDS RESHAPING DDS ENVIRONMENT BIG W's STRATEGIC PRIORITIES • Customers are saving more, deleveraging and tightening spend 1 WIN ON VALUE EVERYDAY • Internet and social media empowering consumers to compare prices and judge where t
Slide 60: Who is the BIG W customer?
WHO IS THE BIG W CUSTOMER? For personal use only CONVENTIONAL FAMILIES OLDER TRADITIONAL FAMILIES VISIBLE ACHIEVERS 52
Slide 61: Winning on value everyday
CUSTOMERS WINNING ON VALUE EVERYDAY THAT'S WHAT'S IMPORTANT For personal use only • Customers' • You can "GET IT FOR perceptions of LESS" at BIG W QUALITY are reinforced by Brands • BRANDS are PRICE BRANDS cheaper than anywhere else • New initiatives to • VALUE = PRICE and evolve categories QUALITY
Slide 62: Price – customer's champion on price
PRICE – CUSTOMER'S CHAMPION ON PRICE CLEAR COMMUNICATION WITH THE CUSTOMER For personal use only GET IT FOR LESS CAMPAIGN TV OUTDOOR IN STORE CATALOGUE LEADING INTO CHRISTMAS VALUE CAMPAIGN 54
Slide 63: Price – clear communication with the customer
PRICE – CUSTOMER'S CHAMPION ON PRICE CLEAR COMMUNICATION WITH THE CUSTOMER For personal use only 1 NEW LOWER PRICE CAMPAIGN 2 REVITALISE PRICE COMPARISON: 3 NEW BIG W APP WILL ENABLE PRICE (REPLACING COMPARE & SAVE SCANNER IN STORE ROLLBACK) IN-STORE • Delivered a significant uplift in units sold; s
Slide 64: Price – BIG W App
PRICE – BIG W APP ENABLING CUSTOMERS TO COMPARE PRICES For personal use only 56
Slide 65: Brands at BIG W are cheaper than anywhere else
BRANDS AT BIG W ARE CHEAPER THAN ANYWHERE ELSE For personal use only NATIONAL BRANDS EXCLUSIVE BRANDS represent ~73 % SALES $ represent ~27 % SALES $ CUSTOMERS' PERCEPTIONS OF QUALITY ARE REINFORCED BY BRANDS 57
Slide 66: Range – making fashion affordable
RANGE – MAKING FASHION AFFORDABLE WOMENSWEAR – NEW RANGES OFFER GREAT VALUE TO OUR CUSTOMERS AND DELIVER IMPROVED SALES AND PROFITABILITY For personal use only • Developed three new exclusive brands that are relevant to our core customer • Initial range rolled out to all stores February - July 2011
Slide 67: Range – exciting new offers: active wear
RANGE – EXCITING NEW OFFERS CONTINUE TO REVITALISE BIG W STORE RANGES For personal use only NEW ACTIVE WEAR RANGE • We know our core customer is interested in their health and wellbeing • This offer is focused on women's light exercise apparel • New layouts will be rolled out in selected stores earl
Slide 68: Range – home entertainment offer
RANGE – EXCITING NEW OFFERS CONTINUING TO EVOLVE HOME ENTERTAINMENT OFFER For personal use only • Australia's leading footprint with Apple iPad. More stores added recently to extend offer to 160 stores by end of November 2011 • Very strong attachment rate on Accessories (key profit area) • Strong ma
Slide 69: Range – delivering market leading value
RANGE – DELIVERING MARKET LEADING VALUE PROVIDING GREAT VALUE AT GREAT PRICES For personal use only $7 ¢ PK 72 EA $9.46 EA $3 EA 61
Slide 70: New store growth
NEW STORE GROWTH STRONG PIPELINE WILL DELIVER UP TO 35 NEW STORES IN NEXT 5 YEARS For personal use only # STORES ~200 ~172 165 129 2006 2011 2012(f) 2016(f) • Customers want greater accessibility to our offer: via stores and multi-channel • New store growth and multi-channel to deliver market share
Slide 71: Multi-channel – customer response
MULTI-CHANNEL CUSTOMER RESPONSE IS VERY POSITIVE For personal use only WINNER BEST ONLINE RETAIL BIG W DEALS BIG W APP – ENABLING MARKETING INITIATIVE CUSTOMER TO COMPARE PRICES 63
Slide 72: Vision to become leading multi-channel retailer
MULTI-CHANNEL CLEAR VISION TO BECOME AUSTRALIA'S LEADING MULTI-CHANNEL RETAILER For personal use only CUSTOMER CUSTOMER RANGE CONVENIENCE PROPOSITION EXPERIENCE NOW • 166 stores • Edited range • 85,000 SKUs in-store • Great locations • Website to • Trading focus • Deals • Web only • 9,500 SKUs Home
Slide 73: Supply chain productivity growth
SUPPLY CHAIN PRODUCTIVITY GROWTH REAPING THE BENEFITS: RIGHT STOCK, RIGHT PLACE, RIGHT TIME For personal use only IMPROVED INVENTORY IMPROVED IN STOCK REDUCTION SPEED TO SUPPLY CHAIN MANAGEMENT AND IN STOCK ON HAND MARKET EFFICIENCY STOCK FLOW. LESS LABOUR SAVING MARKDOWNS PROJECT FOCUS MERCHANDISE
Slide 74: Supply chain efficiency to deliver lowest cost
SUPPLY CHAIN PRODUCTIVITY SUPPLY CHAIN EFFICIENCY TO DELIVER LOWEST COST For personal use only • Third DC in Hoxton Park, Sydney opens March 2012 providing operating efficiencies and supporting new store growth • Reduced outside storage costs, reduced freight costs and improved inventory flow • DC a
Slide 75: Delivering on our strategic priorities
DELIVERING ON OUR STRATEGIC PRIORITIES 1 WIN ON PRICE • Ensure BIG W is the Customers Champion on Price For personal use only VALUE EVERYDAY • We want all BIG W customers to know they can "GET IT FOR LESS" BRANDS • BIG W will continue to offer the widest range of quality and branded merchandise at t
Slide 76: Q&A – BIG W
68 For personal use only Q&A – BIG W
Slide 77: Home Improvement
69 For personal use only HOME IMPROVEMENT
Slide 78: Masters update
MASTERS UPDATE 5 STORES • Braybrook, VIC For personal use only OPENED • Tingalpa, QLD • Nerang, QLD • Springfield, QLD • Morayfield, QLD SALES ABOVE • Early days, however sales EXPECTATIONS well ahead of budget MARKET LEADING • Strong customer reaction PRICING AND to format, range and EXPERIENCE pri
Slide 79: Masters key elements to success
MASTERS KEY ELEMENTS TO SUCCESS • Almost 100 sites in the pipeline For personal use only SITES • Target is 150 sites secured in 5 years • Leveraging Lowes direct global sourcing and Danks relationships BUYING • Developed strong direct global sourcing capability • Strong team assembled with combinati
Slide 80: Intentionally left blank
For personal use only INTENTIONALLY LEFT BLANK 72 7
Slide 81: Danks driving wholesale, trade and convenience offer
DANKS DRIVING WHOLESALE, TRADE AND CONVENIENCE OFFER For personal use only • Strengthening relationships with existing members and attracting new franchise members – Tiered membership offer to attract additional members into Home Hardware group – Delivering additional benefits for members including
Slide 82: For personal use only
74 For personal use only
Slide 83: Dick Smith – business undergoing strategic review
DICK SMITH BUSINESS UNDERGOING STRATEGIC REVIEW For personal use only • The Dick Smith business is in transition to a smaller network of stores and increasing online sales • It is currently tracking well with 51% of the store network now in optimal new concept format with strong sales result • Onlin
Slide 84: Q&A - Home Improvement and Dick Smith
For personal use only Q&A - HOME IMPROVEMENT AND DICK SMITH 76
Slide 85: Productivity
77 For personal use only PRODUCTIVITY
Slide 86: A successful decade has given us a strong foundation
A SUCCESSFUL DECADE HAS GIVEN US A STRONG FOUNDATION FOR FUTURE GROWTH For personal use only GP / CODB / EBIT MARGIN RATE $M BASELINED: FY99 = 100 30% We drove down COGS and 700 made supply chain more efficient, offset by strong 600 25% price re-investment 500 20% We drove down 400 CODB, assisted by
Slide 87: The next phase – cost savings over five years
THE NEXT PHASE TO DELIVER SIGNIFICANT COST SAVINGS OVER THE NEXT 5 YEARS For personal use only LEVERAGING GROUP QUANTUM SCALE AND BEST PRACTICE DIRECT PROCUREMENT SUSTAINABILITY SUPPLY IT GLOBAL NOT FOR COST CHAIN SYSTEMS SOURCING RESALE SAVINGS • FY11 46% growth • Appointment of new • $55.7m invest
Slide 88: Supply chain – world class food and liquor
SUPPLY CHAIN DEVELOPED WORLD CLASS FOOD AND LIQUOR SUPPLY CHAIN DELIVERING A STEP CHANGE IN OUR COSTS AND SERVICE For personal use only LOGISTICS PERFORMANCE BEST PRACTICE - TRANSPORT 2006-2011 • 40% OF INBOUND VOLUME HANDLED BY WOOLWORTHS CARTONS HANDLED + 45% PRIMARY FREIGHT – reducing trucks to D
Slide 89: Supply chain – next step change
SUPPLY CHAIN – NEXT STEP CHANGE WILL DELIVER SIGNIFICANT FURTHER BENEFITS… For personal use only INITIATIVES OUTCOMES Transforming and integrating Logistics for all brands Leveraging Food and Liquor capability to realise group benefits Increasing integration and efficiency of International Logistics
Slide 90: Logistics costs as a percent of sales
… RESULTING IN LOGISTICS COSTS AS A % TO SALES CONTINUING TO REDUCE For personal use only LOGISTICS COST AS A % OF SALES: FY06-FY16 AUSTRALIAN FOOD AND LIQUOR CREATING CAPABILITY LEVERAGING CAPABILITIES 105 95 85 75 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Note: Rebased to 100 in FY06
Slide 91: IT next generation systems – Galaxy project
IT NEXT GENERATION SYSTEMS GALAXY PROJECT - A COMMON PLATFORM FOR FURTHER PRODUCTIVITY, ENABLING SEAMLESS WORKING ACROSS ALL DIVISIONS For personal use only PERFORMANCE REPORTING PRODUCTS • Group merchandising system • Single reporting system across company PROMOTIONS STORE ENHANCED RANGING • Decomm
Slide 92: Balance Sheet and Portfolio Resilience
For personal use only BALANCE SHEET AND PORTFOLIO RESILIENCE 84
Slide 93: Consistent investment and delivery of returns
CONSISTENT INVESTMENT AND DELIVERY OF RETURNS ON INVESTMENT For personal use only GROUP ROIC, BEFORE TAX 1 % ADJUSTED FOR CAPITALISED LEASES Woolworths ramps up Lower consumer property development confidence. Project Mercury to maintain new store Discretionary (logistics) pipeline expenditure reduce
Slide 94: Strong balance sheet enabling growth
STRONG BALANCE SHEET ENABLING GROWTH CREDIT RATINGS MAINTAINED – MANAGE BALANCE SHEET STRUCTURE TO MAINTAIN RATINGS For personal use only FIXED COVER CHARGE1 CASH FLOW $m 2007-2011 CASH FROM OPERATING ACTIVITY 13,296 3.50 3.00 PAYMENTS DIVIDENDS (4,736) 2.50 CAPEX (5,918) 2.00 PROPERTY (1,120) 1,522
Slide 95: Debt profile
DEBT PROFILE DEBT REFINANCING PLAN COMPLETE For personal use only MATURITY PROFILE OF EXISTING "HARD" DEBT FACILITIES POST NOV 2011 – TOTAL A$5.763B • Access to debt market very 2,000 3 & 5yr Syndicated loan successful 5yr MTN (Mar'11) – US144A offers in Sept US144A (Sep'10) 2010, US$1.25b (5 and US
Slide 96: Capex spend over next years
CAPEX SPEND OVER NEXT 5 YEARS EX-PROPERTY DEVELOPMENT For personal use only % OF SALES • New stores continue in line with planned new store growth 2.3 • Refurbs continue but at lower 2.2 dollar levels in supermarkets given 1.9 2010 initiatives, however format 1.7 improvements will continue to 1.5 im
Slide 97: Recap
89 For personal use only RECAP
Slide 98: My Strategic Priorities
MY STRATEGIC PRIORITIES • Re-establish marketing supremacy around value and growth 1 • Unlock sales growth for a tougher consumer and competitive environment For personal use only EXTEND AND DEFEND • Accelerate our leadership in Fresh Food LEADERSHIP IN FOOD AND LIQUOR • Extend leadership in liquor
Slide 99: Q&A
91 For personal use only Q&A