Shaver Shop Group Limited · ASX:SSG
Shaver Shop — H1 2017 Earnings Presentation
33 slides from Shaver Shop's earnings presentation, Feb 24, 2017
Slide 1: FY 2017 Half Year Results
Shaver Shop Group Limited FY 2017 HALF YEAR RESULTS Management Presentation 24 FEBRUARY 2016
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER This management presentation (“Presentation”) has been prepared by Shaver Shop Group Limited ACN 150 747 649 (“Shaver Shop”) and contains general background information about Shaver Shop, its subsidiaries and their activities which is current at the date of this Prese
Slide 3: 1H FY17 Key Highlights
1H FY17 KEY HIGHLIGHTS • Total Sales of $78.5m up 26.2% on prior corresponding period (pcp) • 1H FY17 LFL Network Sales growth -0.2% (pcp +14.0%) Store sales • LFL Corporate Store Sales growth -0.6% (pcp +12.9%) • Weakness in Hair Styling category in Dec ‘16 was the key driver in LFL sales decline v
Slide 4: Company Background & Competitive Advantage
COMPANY BACKGROUND & COMPETITIVE ADVANTAGE 4
Slide 5: Introduction to Shaver Shop
INTRODUCTION TO SHAVER SHOP Shaver Shop aspires to be the leader in ‘all things related to hair removal’ Company snapshot > Trusted and respected retail brand founded in 1986 > Quality brands at competitive prices, supported by excellent product knowledge > Exclusive product range and outstanding se
Slide 6: History & Competitive Advantage
HISTORY & COMPETITIVE ADVANTAGE A wide range of quality brands, at competitive prices, supported by excellent staff product knowledge 2017 Store network – 108. New e-commerce platform launched Feb ‘17 Store network reaches 100 (6 NZ stores) at 30 June 16. 2016 Shaver Shop IPO – 1 July Store network
Slide 7: Growth Driver Progress
SHOVER SHOP GROWTH DRIVER PROGRESS
Slide 8: Business Growth Drivers
BUSINESS GROWTH DRIVERS Ongoing product innovation & exclusivity Store maturity profile 1 > Continually evolving range to cater to changes in 5 > Shaver Shop stores typically take 24 months to reach personal grooming styles, new fashion trends, and maturity product innovations > Currently 24 stores
Slide 9: Growth Driver 1: Product Innovation & Exclusivity
Growth Driver 1 PRODUCT INNOVATION & EXCLUSIVITY 37 of Shaver Shop’s top 50 products are exclusive and generated 37.9% of total revenue in 1H FY17 (1H FY16 – 39.8%) > Access to innovative & exclusive products Number of exclusive products in top remains a key driver of Shaver Shop’s revenue and gross
Slide 10: Growth Drivers 2 & 3: Greenfields & Buybacks in 1H FY17
Growth Driver 2 & 3 8 GREENFIELDS & 5 BUYBACKS IN 1H FY17 At 31 December 2016, 108 stores across Australia (102) and New Zealand (6) with further rollout potential 10
Slide 11: DFO Success
Growth Driver 2 DFO SUCCESS New larger format stores have increased store flow and significantly increased linear wall space (especially important for wet shave merchandising) > DFO performances have exceeded initial business sales expectations > Gross margins are not materially different to traditi
Slide 12: Wet Shaving Category Opportunity
Growth Driver 4 WET SHAVING CATEGORY OPPORTUNITY Despite reduced share of overall business in 1H FY17, wet shave remains critical component of medium to long term growth Wet Shaving Homesite DFO Store > While Dec QTR 16 wet shaving results were somewhat soft relative to prior year results, Gillette
Slide 13: Growth Driver 5: Store Maturity Profile
Growth Driver 5 STORE MATURITY PROFILE On target to roll out 10+ sites in FY17 > New store rollout continuing with 8 new sites secured in 1H FY17 > Brings total to 32 new stores launched since 1 July 2015 with 18 launched in the last 12 months > Generally it takes a new store 24 months to reach its
Slide 14: Growth Driver 6: Online Sales Growth
Growth Driver 6 ONLINE SALES GROWTH Websales were $6.6m in 1H FY17 or c.7% of total network sales > New omni-channel focused e-commerce platform launched on 9 February 2017 > Decided to wait until after XMAS to launch new site in order to mitigate operational risk > New platform offers: > Improved u
Slide 15: Growth Driver 7: Targeted Marketing Activity
Growth Driver 7 TARGETED MARKETING ACTIVITY Significant investment in TV advertising in Q2 FY17 focussed on innovative and exclusive products to Shaver Shop Remington Nano VS Crew Cut Wahl Stainless Steel Braun Series 9 Dafni Trimmer Smooth Skin Bare Remington Quick VS Beard Designer Remington Man T
Slide 16: 1H FY2017 Business Performance
1H FY2017 BUSINESS PERFORMANCE 16
Slide 17: LFL Network Sales -0.2% in 1H FY17
LFL NETWORK SALES1 -0.2% IN 1H FY17 LFL Sales heavily impacted by lower Hair Styling category sales in December 2016 ($2.8m decline across network despite increase in store numbers over prior year) Total Network Sales – LFL Growth > 1H Total Network LFL sales growth -0.2% (pcp +14.0%) > Corporate St
Slide 18: Category Analysis
CATEGORY ANALYSIS Hair removal categories performed in line (overall) with expectation, but weakness in complementary categories (Hair Styling and Massage) > Hair removal like for like sales up 2.7%. > Mens Electric Shavers growth > Female Hair Removal growth (Long Term Hair Removal and Temporary El
Slide 19: Hair Styling Category Performance
HAIR STYLING CATEGORY PERFORMANCE While category performance versus expectation was disappointing, Dafni remains a core component in Shaver Shop’s female product offering > Total network sales of Hair Styling products decreased 47.4% (or $2.8m) during the month of December compared to prior year pre
Slide 20: Average Inventory Per Store
AVERAGE INVENTORY PER STORE To capitalise on Xmas and Boxing Day trading season, deliberate investments were made driving Q2 FY17 stock levels above average > Q2 FY17 average monthly closing inventory per corporate store $348k (Q2 FY16 - $312k) > Increase in average stock levels in Q2, due to: > Bet
Slide 21: 1H FY17 Financial Highlights
1H FY17 FINANCIAL HIGHLIGHTS 21
Slide 22: 1H FY17 vs 1H FY16 Performance
1H FY17 VS 1H FY16 PERFORMANCE 26.2% top line growth and steady gross margin. NPAT up 6.3% > NB. Actual cash tax paid in FY17 will be significantly lower than accounting income tax expense due to ATO Private Ruling allowing franchise termination right value coming from Franchise Buybacks to be deduc
Slide 23: Summary of Pro Forma Revenue and EBITDA
SUMMARY OF PRO FORMA REVENUE AND EBITDA EBITDA growth impacted significantly by lower Christmas sales and incremental marketing spend Revenue - $78.5m up 26.2% A$m Growth in sales versus 1H FY16 primarily driven by increase in Corporate Stores: > 18 new greenfield stores since 1 January 2016 (8 in 1
Slide 24: Costs of Doing Business & EBITDA Margins
COSTS OF DOING BUSINESS & EBITDA MARGINS EBITDA margins have been naturally impacted by continuation of franchise buyback program (160bps impact) and greenfield rollout strategy > EBITDA margins lower due to four key factors: > Franchise Buyback activity (lower royalties off a higher Corp Store sale
Slide 25: EBITDA Bridge – 1H FY16 to 1H FY17
EBITDA BRIDGE – 1H FY16 TO 1H FY17 EBITDA increased $0.5m vs LYA driven primary by investments in Greenfield and Buyback stores in the last 18 months 14,000 1,534 12,000 1,566 1,399 10,000 589 351 262 10,023 8,000 9,524 6,000 4,000 2,000 - Pro Forma 1H Like for Like Buybacks Greenfields Marketing &
Slide 26: Consolidated Statutory Balance Sheet
CONSOLIDATED STATUTORY BALANCE SHEET Strong financial position with flexibility to undertake additional buybacks if they meet our investment criteria > Balance sheet remains strong > Net cash $7.5m (increase in gross debt associated with repurchase of franchises in 1H FY17) > Inventory position up 7
Slide 27: Consolidated Cash Flow
CONSOLIDATED CASH FLOW Net cash flow $10.5m in 1H FY17 (Pro-Forma - $12.3m – excluding IPO costs). Timing of supplier payments compared to 1HFY16 lowered operating cash flow v 1H FY16. No full year impact. > Operating cash flow was $16.3m in 1H FY17 (1H FY16 – > Net tax payments were $1.15m in 1H FY
Slide 28: Summary & FY2017 Outlook
SHOVER SHOP SUMMARY & FY2017 OUTLOOK
Slide 29: FY 2017 Outlook
FY 2017 OUTLOOK Shaver Shop is executing its growth plans and is in a strong position despite choppy retail environment in January and February > Shaver Shop is in a strong position to increase shareholder value: > Unique business model with access to exclusive products > 8 new greenfield sites in 1
Slide 30: Appendices
SHOVER SHOP APPENDICES
Slide 31: Key Operating Metrics
KEY OPERATING METRICS LFL sales growth is calculated as the percentage change in total sales (including applicable online sales) in a relevant period, compared to the total sales in the prior corresponding period, excluding stores that did not 31 trade for both the whole of the period and / or the p
Slide 32: Cash Tax Payments vs Tax Expense
CASH TAX PAYMENTS VS TAX EXPENSE ATO private ruling relating to franchise buyback licence termination significantly reduces Shaver Shop’s cash tax payments over the next 5 years > Cash tax payments expected to be closer to 20% of earnings before tax in FY17 after accounting for tax deduction from fr
Slide 33: Shaver Shop
SHAVER SHOP | TRANSFORM YOURSELF”