Kmd Brands Limited · NZX:KMD
Kmd Brands — Kathmandu Holdings — Investor Day (February 2020)
57 slides from Kmd Brands's investor day presentation, Feb 7, 2020
Slide 1: Trading Update and Profit Guidance for the Half Year ended 31 January 2020
Trading Update and Profit Guidance for the Half Year ended 31 January 2020 KATHMANDU HOLDINGS LIMITED For personal use only ASX / NZX / MEDIA ANNOUNCEMENT 7 February 2020 Kathmandu Holdings Limited (ASX/NZX code: KMD) is pleased to provide this update on its sales and earnings for the half year ende
Slide 2: Coronavirus Update
CORONAVIRUS UPDATE The Group sources product from a diverse range of markets throughout Asia, and is actively monitoring any developments on its supply chain as a result of the Coronavirus outbreak in China. For personal use only There is not expected to be a material supply impact in the short term
Slide 3: Investor Day 2020
For personal use only INVESTOR DAY 2020
Slide 4: David Kirk, Chairman
For personal use only David Kirk Chairman
Slide 5: Iconic Brands
Iconic Brands For personal use only • A global outdoor and action sports company, consisting of three iconic brands: • Kathmandu specialises in quality clothing and equipment for travel and adventure. • Oboz designs ‘True to the Trail®’ outdoor footwear to help people explore the wilderness. • Rip C
Slide 6: Evolution of Kathmandu Holdings' growth
Evolution of Kathmandu Holdings’ growth For personal use only Phase 1: Implemented a new management team ~5 years ago - Focus was on optimising the performance of Kathmandu’s assets, improving Australasian sales and market penetration, optimising profitability and elevating the Kathmandu brand. Phas
Slide 7: Evolution of Kathmandu Holdings' growth
Evolution of Kathmandu Holdings’ growth For personal use only 23.1% CAGR since 29 June 2015, 29.5% CAGR with dividends re-invested 2015-2019 performance evolution prior to Rip Curl acquisition Volume Price ('000) - 7.4% sales CAGR over the last 4 years $3.50 10000 - EBIT has increased by $51m to $84
Slide 8: Agenda
Agenda For personal use only 11:00am: Welcome 12:20pm - Brand marketing David Kirk, (Chairman) Michael Daly (Rip Curl CEO) 11:10am: Group strategy update Xavier Simonet (Group CEO) 12:45pm - Finance and integration Chris Kinraid (Group CFO) 11:25am - Rip Curl brand, business and strategy Michael Dal
Slide 9: Group Chief Executive Officer Xavier Simonet
For personal use only Group Chief Executive Officer Xavier Simonet
Slide 10: Vision for the Group
Vision for the Group For personal use only Maintain brand affinity and cultural alignment while leveraging capabilities and delivering synergies. Kathmandu, Oboz and Kathmandu, Oboz and Kathmandu, Oboz and Rip Curl to leverage Rip Curl to retain Rip Curl to retain their respective strengths operatio
Slide 11: Benefit – Diversification of Kathmandu
Benefit 1 – Diversification of Kathmandu For personal use only Product and geographic diversification reduces seasonality of earnings and reliance on Australasia INVESTOR DAY 2020
Slide 12: Benefit – Growth enabler by leveraging capabilities
Benefit 2 – Growth enabler by leveraging capabilities For personal use only INVESTOR DAY 2020
Slide 13: Benefit – Synergies expected over the medium term
Benefit 3 – Synergies expected over the medium term For personal use only • Sourcing: capitalising on the combined scale of Kathmandu and Rip Curl to improve gross margin, quality, costs and diversification • Systems and IT: - benefit over time from system integration between our three brands. - ben
Slide 14: Why Rip Curl?
Why Rip Curl? For personal use only Creating a global outdoor and action sports company • Rip Curl is an iconic global brand with a strong loyal customer base focused on designing and bringing to market technical products • Combined group meets the year round needs of customers globally • Rip Curl c
Slide 15: For personal use only
For personal use only
Slide 16: Chief Executive Officer - Rip Curl Michael Daly
For personal use only Chief Executive Officer - Rip Curl Michael Daly
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For personal use only
Slide 18: Principles & Values
4) SOR DERSOMEAUSS ON 7 ‘ 0 ORAS RNS *« Customers * Creativity and Innovation * Committed Crew * Community and Environment * Honesty and integrity ASS AS A THE PRINCIPLES & VALUES HOW WE ACT % 2 ¥
Slide 19: Our Mission
To continue developing a brand image that truly reflects our brand values and the attitudes and aspirations of those people on The Search... OUR MISSION
Slide 20: For personal use only
to market leadership in core products. j true and authentic to our surfing roots. g our customers properly as input into designing and only the very best quality products and delivering time. uting our products in the best shops alongside other and mountain brands.
Slide 21: The Rip Curl Brand Values
The Search Leadership Technology Tradition Crew Fun Irreverence Respect Durability @- Reliability THE RIP CURL BRAND VALUES THE DNA OF THE BRAND Aclear filter which captures our spirit and which we put all product ideas and marketing messages through to decide if they are on brand for Rip Curl.
Slide 22: Rip Curl: Business Overview
For personal use only RIP CURL: BUSINES OVERVIEW
Slide 23: Rip Curl at a Glance
RIP CURL AT A GLANCE For personal use only » Rip Curl is a leading global action sports brand with a long-standing history in marketing, designing, manufacturing, wholesaling and retailing surfing apparel and equipment Overview Geographic mix(1) Distribution mix(1) Product mix(1,3) (Total revenue by
Slide 24: Global footprint with strong representation in major surf destinations
GLOBAL FOOTPRINT WITH STRONG REPRESENTATION IN MAJOR SURF DESTINATIONS For personal use only » Rip Curl has a direct presence across 6 key regions through stores, design and manufacturing facilities Rip Curl Group » Direct presence in 6 key regions » c.6,000 wholesale doorways » 173 owned retail sto
Slide 25: Well established and diversified commercial channels
WELL ESTABLISHED AND DIVERSIFIED COMMERCIAL CHANNELS For personal use only » Rip Curl's controlled distribution has traditionally focused on the wholesale channel and has progressively evolved towards direct to customer retail Wholesale Retail Online » Wholesale distribution to external retail custo
Slide 26: Experienced Leadership
For personal use only EXPERIENCED Michael Daly CEO Rip Curl since 2002 LEADERSHIP Senior Management Rip Curl’s management team is a strong combination of long term internally Lori Showell Lachlan Farran Tony Roberts Neil Ridgway Brooke Farris Bec Christian Nichol Wylie Michael Ray developed talent a
Slide 27: What's Happening in Surfing
Since a private buy out of the old Association of WORLD SURF LEAGUE Surfing Professionals in 2015 the World Surf WHAT’S League have increased broadcast quality and For personal use only tripled the audience in online and offline channels HAPPENING globally, driving increased awareness of the sport a
Slide 28: Large global industry with growth underpinned by technical products
LARGE GLOBAL INDUSTRY WITH GROWTH UNDERPINNED BY TECHNICAL PRODUCTS For personal use only » Rip Curl operates in the c.A$11.3bn global surf apparel and equipment industry Global surf apparel and equipment market (A$bn) 2014-18 CAGR » Rip Curl’s products are focused on core technical surf category, p
Slide 29: Complementary core capabilities under a combined business
COMPLEMENTARY CORE CAPABILITIES THAT BENEFIT THE CONSUMER UNDER A COMBINED BUSINESS For personal use only Kathmandu Shared Rip Curl Technical products » Experienced retail operations » Global presence with established capabilities Seasonal specialists distribution network in the US and Europe »
Slide 30: For personal use only
For personal use only
Slide 31: Nichol Wylie, General Manager of Product
For personal use only NICHOL WYLIE General Manager of Product
Slide 32: Our Core Purpose
For personal use only To create innovative, functional and OUR CORE PURPOSE durable products for.. “The Search”
Slide 33: Core Technical Products
For personal use only • Technical product sales represent 40% of FY19 revenue • Critical to retaining support from our core consumer and retailer CORE base TECHNICAL • Supports the premium nature of Rip Curl’s brand and drives sales across broader offering. PRODUCTS • Rip Curl recently won 10 awards
Slide 34: Wetsuit Market Leader
For personal use only Leader in Innovation and Technology WETSUIT MARKET Leader in Function LEADER FOR OVER 30 Leader in Quality and Service YEARS
Slide 35: Men's Surfwear
For personal use only • Fanatical dedication to Boardshorts • Fabric Technology(stretch, quick dry, durability, hand feel, waterproof) MEN’S • Sustainability – Saltwater Culture SURFWEAR • Continuous feedback and testing from Rip Curl’s Pro Men's Surf Team. • Immense focus on the beach culture – Sum
Slide 36: Women's Surfwear
For personal use only • Fanatical dedication to Swim • Designed with Style and Performance in mind. • Fabric Technology (Comfort, durability, fabric interest) WOMEN’S SURFWEAR • Sustainability – Saltwater Culture, Eco Swim Essentials • Continuous feedback and testing from Rip Curls Pro Women’s Surf
Slide 37: Technical Equipment
For personal use only • Fanatical dedication to Travel on “The Search” TECHNICAL • Fabric Construction and Technology (light weight, functional and durable) EQUIPMENT (Men’s & Women’s) • Sustainability – Saltwater Culture • Athlete Integration – Backpacks, Wheelie Bags, Surf Access
Slide 38: Watch Technology
For personal use only • Fanatical dedication to Surf Watches. • Tide watches let the surfer know what the tide is doing at a glance. WATCH • GPS Technology lets the surfer track every surf and every TECHNOLOGY length of ride • Service – warranty and repairs. • Athlete Integration
Slide 39: Key Areas of Focus
For personal use only • To continue to be regarded in all that we do as the Ultimate Surfing Company • To continue to develop market leading innovative products (tech and apparel) KEY • To leverage the strengths of Kathmandu into Rip Curls offering AREAS OF whilst keeping Rip Curls DNA. FOCUS • To p
Slide 40: For personal use only
For personal use only
Slide 41: For personal use only
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Slide 42: The Rip Curl Brand Values
For personal use only The Search Leadership Technology Tradition THE Crew Fun RIP CURL BRAND Irreverence Respect VALUES Durability THE DNA OF THE BRAND Reliability A clear filter which captures our spirit and which we put all product ideas and marketing messages through to decide Belief if they are
Slide 43: For personal use only
For personal use only
Slide 44: The Ultimate Surfing Company
THE ULTIMATE SURFING COMPANY For personal use only Born in Bells Beach, Australia, in 1969, Rip Curl has always been a brand on The Search “The Search was the driving force that led to the creation of Rip Curl... We loved charging into the unknown and the journey that waited. It was about the great
Slide 45: Highly recognisable, global brand
HIGHLY RECOGNISABLE, GLOBAL BRAND For personal use only » Rip Curl’s brand is highly recognisable across surfwear, wetsuit and equipment categories in Australia, the US and France » Demonstrable brand affinity with core surf customers who value product functionality and performance showcased by worl
Slide 46: Part of the fabric of authentic global surf culture
PART OF THE FABRIC OF AUTHENTIC GLOBAL SURF CULTURE For personal use only World Class Athletes The Ultimate Sports Event Platform Social Media(1) Content Creation Advertising 2.0m+ fans 2.0m+ 119k Distribution globally Followers(2) subscribers 200k+ customers reached daily
Slide 47: Events
For personal use only • World Surf League Rip Curl Pro Bells (April); Rip Curl Pro Portugal (October) are six month anchors. • Rip Curl Gromsearch Our global junior event series runs across the planet and recruits the next Events generation. • Padang Cup premier tube riding event for non – WSL “outl
Slide 48: For personal use only
oS be ae > BSRIPCURLPRO seach SY > ASE
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For personal use only
Slide 50: Content Creation
For personal use only • Integrated Merchandise and Marketing Campaigns for all core products across all online and offline channels, in both media and sales … Content • Centralised content creation to avoid waste. Creation • Brand first content that reflects our Vision of being the ultimate surfing
Slide 51: Key Areas of Focus
For personal use only • Continued centralisation of content and campaigns. Key Areas of • Marketing driving footfall to retail and traffic online, better use of CRM to understand Focus customer and begin RC Loyalty Club. • Staying on brand and authentic to the Vision of being “Regarded as the Ultima
Slide 52: Group Chief Financial Officer Chris Kinraid
For personal use only Group Chief Financial Officer Chris Kinraid
Slide 53: Creating a NZ$1.0bn company
Creating a NZ$1.0bn company For personal use only Rip Curl transaction expected to deliver meaningful EPS accretion – in excess of 10% pre-synergies INVESTOR DAY 2020
Slide 54: Financial strategy: balance sheet
Financial strategy: balance sheet For personal use only KMD to maintain a conservative capital structure • Kathmandu intends to maintain a conservative capital structure, however maintain investment levels where appropriate to enable growth • We are comfortable with the pro-forma debt levels of 1.5x
Slide 55: Financial strategy: strong cash flow
Financial strategy: strong cash flow For personal use only Brands have a history of strong cash flow generation • 3 strong cash generating brands • Focus on inventory management, targeting improved Kathmandu Cash Flow Sources and Uses stock turns for each brand 140 120 • Global sourcing strategy imp
Slide 56: Synergies expected over the medium term
Synergies expected over the medium term For personal use only Key work streams have been identified and progressed Supply Chain and Sourcing • Focus areas on common fabrics and supplier consolidation • Alignment of terms, standards, compliance and quality • Combined brand sourcing workshops have bee
Slide 57: Investor Day 2020
For personal use only INVESTOR DAY 2020