Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — H1 FY2020 Earnings Presentation
36 slides from Baby Bunting's earnings presentation, Feb 14, 2020
Slide 1: FY20 half year results presentation
14 February 2020 Baby Bunting Group Limited (ASX: BBN) FY20 half year results presentation Baby Bunting Group Limited provides the attached FY20 half year results presentation for the half year ended 29 December 2019. The release of this announcement was authorised by the Board. For further informat
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Slide 3: Half year ended 29 December 2019 Results Presentation
Half year ended 29 December 2019 Results Presentation Matt Spencer CEO & Managing Director Darin Hoekman CFO 14 February 2020
Slide 4: 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 (14 February 2020). The information contained in this presentation is for general background inf
Slide 5: Our core purpose
OUR CORE PURPOSE To support new and expectant parents in the early years of parenthood
Slide 6: 1H FY20 proforma result reflects strong profit growth
1H FY20 proforma result reflects strong profit growth Total sales growth up 8.1% vs pcp (1) SALES SALES Comparable store sales growth of 1.0% $186.4M $186.4M Underlying comparable store sales growth of 4.1% (2) GROSS GROSS PROFIT Gross Profit income $68.9m PROFIT 36.9% Gross Profit % up 223 bps to 3
Slide 7: Our vision
OUR VISION To be the most loved baby retailer for every family, everywhere
Slide 8: FY20 operational objectives
FY20 operational objectives Accelerate market share growth & profitability and invest in business transformation Progress our transformation program & 1 strategic investments to plan • Solid progress toward delivering the changes to support long-term growth objectives Grow gross margin without compr
Slide 9: Financial & Trading Performance
1. Financial & Trading Performance
Slide 10: Positive market share growth continuing
Pro forma sales Positive market 200.00 Pro forma sales $m Comparable sales growth % $172.5 $186.4 share growth continuing 180.00 160.00 $151.7 $135.1 140.00 120.00 $108.2 100.00 1H FY20 total sales growth of 8.1% driven by: 80.00 9.2% 9.5% • Comparable sales growth of 1.0% - underlying 4.1%, 60.00 8
Slide 11: Gross margin improvement of 223 bps to 36.9%
Gross margin improvement Pro Forma Gross Profit of 223 bps to 36.9% Pro forma gross profit $m Gross margin % $59.9 $68.9 38.0% 60.00 37.0% Gross margin on track to reach 37% in FY20 $50.0 $46.5 36.9% 36.0% • Range improvements with supplier partners delivering great $37.6 40.00 35.0% products at sus
Slide 12: Great value, every day
Great value, every day Value is the number one driver to purchase in our category • 48% sales growth in Best Buys (EDLP) now making up 26.9% of total sales in 1H FY20, compared to 19.7% vs pcp • Strategy continues to invest in our Best Buy range across a number of categories including prams, carrier
Slide 13: Continued investment to support growth
Continued investment to support growth Cost of Doing Business metrics (% sales) (1) CODB (pro forma) in 1H FY20 was 29.3% of sales Store expenses 21.0% Store expenses of 21.0% increased by 50 bps (vs pcp) 20.5% 19.9% • Added 6 premium location sites including shopping centre 19.7% 19.8% format store
Slide 14: Baby Goods Market
2. Baby Goods Market
Slide 15: Competitive landscape - our market expansion continues
Competitive landscape - our market expansion continues Baby Bunting continues to be the industry leader in a fragmented market Baby Bunting $2.4bn estimated addressable market (1) Baby Bunting store numbers by state (breakdown by category) Other $0.2 billion Cots, mattresses Food, Nappies, and nurse
Slide 16: Strategy
3. Strategy
Slide 17: Growth strategy - grow market share
Growth strategy - grow market share Focused investment in Team, IT systems and supply chain to support growth, our strategy to grow market share remains unchanged 1 Investment in digital to deliver the best possible customer experience across channels • Engage and retain the customer through the cus
Slide 18: Investment in Digital
Investment in Digital Online sales continue to complement store sales growth • Website visits continue to grow, unique visits exceeded Website Sessions (4 week rolling) 10 million for the half, up 13% vs pcp • Online sales (inc. Click & Collect) grew 10.5%, making up 11.7% of total sales • Click & C
Slide 19: Investment to Grow Sales from Existing Stores
Investment to Grow Sales Store maturity profile as at 29 December 2019 (years opened) from Existing Stores (stores on average take 4 years to reach sales maturity) • Improving the customer experience in-store, in-store NPS score of 80 <3 years • Our Baby on Board car seat installation and services 2
Slide 20: Growth from New Markets
Growth from New Markets Store roll-out 80+ # of stores • Network plan – we are in the final stages of completing our latest network plan review, incorporating: • the addition of shopping centre format stores • store trading performance • updated market share performance post competitor landscape cha
Slide 21: New Store Economics
New Baby Bunting stores Group Average (all stores opened from June 2008) (all stores opened > 4 years) New Store Economics YEAR 1 YEAR 2 FY2019 Revenue per store ($m) 4.8 5.4 7.8 New Store performance exceeding expectations EBITDA per store ($m) 0.3 0.5 1.2 • 4 new stores opened in 1H FY19, delivere
Slide 22: Profit Margin Improvement
Profit Margin Improvement Supply chain evolution to improve gross margin. Lower our cost to serve. Improve the customer experience through speed to market and increased on-shelf stock availability • Relocation of our Melbourne Distribution Centre to a larger site (anticipated 2H FY21), reducing 3PL
Slide 23: Transformation Update
4 Transformation { eS } J | * , 7 . A — _
Slide 24: Transformation - Investing to grow
Transformation - Investing to grow Investment in transformational projects to support future growth FY20-FY21: ~$25m capex and project expenses, ~$4m accelerated amortisation Significant business transformation project pipeline over FY20-21 Brand Modernisation Core Systems Supply Chain Strategy Intr
Slide 25: Transformation - progress update
Transformation - progress update Estimated Completion Strategic Focus Project Progress Update FY20 FY21 • New website launched in July 2019 had issues which impacted Customer Website re- Experience Invest in Digital platform • Successful roll-back to old platform in November 2019 • New website vendo
Slide 26: Financial Information
5. Financial Information
Slide 27: Summary Pro Forma Income Statement
Summary Pro Forma Income Statement Summary Pro Forma Income Statement • Total pro forma sales of $186.4 million, up 8.1% vs pcp Pro Forma Pro Forma Change 1H FY2020 1H FY2019 ̵ Comparable store sales growth of 1.0% $ million Sales 186.4 172.5 8.1% ̵ Underlying comparable store sales growth of 4.1% C
Slide 28: Statement of Financial Position
Statement of Financial Position Statutory Statutory Balance Sheet 29-Dec-19 30-Jun-19 $ million • Inventory increase of $12.6m compared to 30 June 2019 reflects: Cash and cash equivalents 10.4 5.8 Inventories 80.8 68.2 • additional three new stores; Plant and equipment 26.3 24.5 • inventory purchase
Slide 29: Cash Flow
CASH FLOW Statutory Statutory 29-Dec-19 30-Dec-18 • Change in working capital reflects build up of inventory $ million balance ahead of Chinese New Year and our biggest trading period Pro Forma EBITDA(1) 25.8 22.1 Movement in working capital (11.4) (0.7) • Capital expenditure of $3.9m includes inves
Slide 30: Outlook
6. Outlook
Slide 31: FY20 outlook remains unchanged
FY20 outlook remains unchanged Positive momentum in 2H FY20 As at 9 February 2020, comparable store sales growth: • 2.0% year-to-date • 5.7% for the first 6 weeks of 2H • 22% Online sales growth for the first 6 weeks of 2H FY20 guidance Pro forma NPAT remains unchanged and expected to be in the rang
Slide 32: Questions
QUESTIONS 30
Slide 33: Appendices
6. Appendices
Slide 34: Appendix 1: Statutory - Pro Forma Income Statement Reconciliation
Appendix 1: Statutory - Pro Forma Income Statement Reconciliation 1H FY2020 1H FY2019 Add Add Statutory Pro Forma Pro Forma Statutory Pro Forma Pro Forma 1H FY20 Adj (a) 1H FY20 1H FY19 Adj (a) 1H FY19 $ million Sales 186.4 186.4 177.7 (5.2) 172.5 Cost of sales (117.5) (117.5) (116.2) 3.6 (112.6) Gr
Slide 35: Appendix 2: AASB 16 Transition Impact - Pro Forma Income Statement
Appendix 2: AASB 16 Transition Impact - Pro Forma Income Statement 1H FY2020 1H FY2019 Remove AASB 16 Recognise Remove AASB 16 Recognise Pro Forma Pre-AASB 16 Pro Forma Pre-AASB 16 Depreciation and Operating Lease Depreciation Operating Lease 1H FY20 1H FY20 1H FY19 1H FY19 Interest Expenses and Int
Slide 36: 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 financial year, provided the stores were open at the beginning o