Lovisa Holdings Ltd. · ASX:LOV
Lovisa — FY2019 Earnings Presentation
23 slides from Lovisa's earnings presentation, Aug 22, 2019
Slide 1: Lovisa Holdings Limited 2019 Full Year
Lovisa Holdings Limited 2019 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: Contents
CONTENTS 1. FULL YEAR OVERVIEW 2. FINANCIAL OVERVIEW 3. TRADING PERFORMANCE 4. CASHFLOW AND BALANCE SHEET 5. STORE GROWTH 6. USA UPDATE 7. EUROPE UPDATE 8. OPERATIONAL UPDATE 9. TRADING UPDATE AND OUTLOOK 10. SUMMARY 11. APPENDICES 3
Slide 4: Full Year Overview
FULL YEAR OVERVIEW • EBIT up 2.8% to $52.5m • eCommerce trading in the Australian/New Zealand market since • Total sales up 15.3% and comparable store sales down 0.5% for October 2018 and UK/EU since July 2019, providing enhanced the full year customer interaction capability • Gross margin continued
Slide 5: Financial Overview
FINANCIAL OVERVIEW Continued earnings growth from store rollout and gross margin expansion • Revenue up 15.3% with comparable store sales down 0.5% for the year, an ($000) FY19 FY18 Variance improvement on -1.8% in the first half with most markets showing improved Actual Actual Actual results in 2H1
Slide 6: Trading Performance – Sales
TRADING PERFORMANCE – SALES Total sales up 15.3% from continued global rollout 280 260 • Total Global Sales Revenue up 15.3% to $250.3m from 240 acceleration in store rollout 220 • Return to positive comparable store sales for 2H19, resulting 200 in full year being down 0.5% compared to -1.8% in 1H1
Slide 7: Trading Performance - Sales
TRADING PERFORMANCE - SALES Sales growth driven by new regions Region ($AUD '000) FY19 FY18 Variance • Australian region impacted by softer trading conditions throughout the year and strong prior year performance offset by benefits of new stores opened in both current and Australia / NZ 137,684 132,
Slide 8: Trading Performance - Gross Margin
TRADING PERFORMANCE - GROSS MARGIN Gross margin increased to 80.5% Gross Margin % 90.0% Gross Margin at Constant Currency* 80.0% FY19 FY19 FY18 70.0% 60.0% Currency USD 0.76 0.75 0.75 50.0% Sales 250,282 250,282 217,010 40.0% 77.1% 74.0% 78.8% 80.0% 80.5% 30.0% Cost of Sales (48,873) (49,721) (43,37
Slide 9: Cost of Doing Business
COST OF DOING BUSINESS Continued investment in global rollout 60% CODB % Sales • Investment into the growth of the business continued with the 50% addition of a number of senior leadership roles into the structure during the year to lead both existing and new territories 40% • Acceleration of rollou
Slide 10: Cash Flow
CASH FLOW Continued investment in store rollout (A$000s) FY19 FY18 • Cash flow from operating activities lifted 10.1% to Cash from operating activities 66,727 60,605 $66.7m with operating cash conversion at 107% Net interest income 134 81 • Capital expenditure of $24.1m for the year, including Tax p
Slide 11: Balance Sheet
BALANCE SHEET Strong Balance Sheet with Significant Capacity Available To Fund Growth (A$000s) FY19 HY19 FY18 Net Cash 11,192 32,284 21,057 • Balance sheet continues to be strong, with investment in fitout and inventory for new Receivables 7,413 4,631 4,881 stores and e-commerce implementation funde
Slide 12: Store Growth
STORE GROWTH International Rollout Accelerates with a Net Increase of 64 Stores Store number growth • Number of international stores growing with offshore territories now 61% of the store network Country FY19 FY18 Var • Net increase of 64 stores for the year, with 70 new stores Australia 154 151 3 o
Slide 13: USA Update
USA UPDATE • We were trading from 12 stores in California, 5 in Texas, and 2 in Florida at year end, and have opened a further 9 since the end of the financial year with our first store in Chicago opened in August • Performance to date has been in line with expectations with good customer reaction a
Slide 14: Europe Update
EUROPE UPDATE • At financial year end we were trading from 38 stores in the UK, 8 in France, and 9 in Spain • UK rollout has continued with 2 stores opened in the second half following 12 in the first half, with site availability at appropriate rents slowing progress • Cautious approach to Spain con
Slide 15: 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 • Investment made into a number of senior roles in the first half of the financial year to lead our key markets, as well as leasing team
Slide 16: Trading Update and Outlook
TRADING UPDATE AND OUTLOOK • Trading since the end of the financial year has seen a continuation of the improvement seen in the second half, with positive comparable store sales for the period back within our target comparable store sales range of 3 – 5% • Currency headwinds have begun to have an im
Slide 17: Summary
SUMMARY • EBIT of $52.5m and 80.5% Gross Margin (80.1% on constant currency) • Comparable store sales down 0.5% for the year, with positive comparable store sales for the second half • Lift in margin benefiting from currency tailwinds and tight inventory and promotion management • Continued CODB inv
Slide 18: Appendices
APPENDICES 18
Slide 19: ASIC Regulatory Guide Disclosing non-IFRS financial information
APPENDIX 1 ASIC Regulatory Guide 230 Disclosing non-IFRS financial information In December 2011 ASIC issued Regulatory Guide 230. To comply with this Guide, Lovisa Holdings Limited is required to make a clear statement about the non-IFRS information included in the Profit announcement and Full Year
Slide 20: Appendix – Profit and Loss Statement
APPENDIX 2 – PROFIT AND LOSS STATEMENT ($’000) FY19 FY18 Variance Actual Actual Actual Revenue 250,282 217,010 15.3% Cost of sales (48,873) (43,373) 12.7% Gross profit 201,409 173,637 16.0% Employee expenses (66,352) (55,514) 19.5% Property expenses (42,579) (34,713) 22.7% Distribution expenses (8,7
Slide 21: Appendix – 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 22: Appendix – 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
Slide 23: Appendix – Impact of new lease accounting standard AASB 16
APPENDIX 5 – Impact of implementation of new lease accounting standard AASB 16 The implementation of AASB 16 will significantly change reported results however will have no economic impact on the company, its cash flows, debt covenants or shareholder value. The expected impact on transition and goin