Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — FY2019 Earnings Presentation
33 slides from Baby Bunting's earnings presentation, Aug 16, 2019
Slide 1: FY19 Full Year Results Presentation
FY19 FULL YEAR RESULTS PRESENTATION 16 August 2019 Matt Spencer Darin Hoekman CEO & Managing Director Chief Financial Officer
Slide 2: 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 (16 August 2019). The information contained in this presentation is for general background infor
Slide 3: Results Summary
OUR VISION To be the most loved baby retailer for every family, everywhere Results Summary
Slide 4: FY19 Pro Forma Results Summary
FY19 PRO FORMA RESULTS SUMMARY SALES TOTAL SALES GROWTH 19.0% $362.3M COMPARABLE STORE SALES GROWTH 8.7% GROSS PROFIT INCOME $126.7m GROSS PROFIT GROSS PROFIT GROWTH 25.6% 35.0% GROSS PROFIT % up 190 bps EBITDA EBITDA GROWTH 45.9% $27.1M EBITDA MARGIN % 7.5% NPAT GROWTH 58.2% NPAT EPS 12 CENTS , UP
Slide 5: FY19 Plan in a Changing Market
FY19 PLAN IN A CHANGING MARKET grow market share and recover profitability post the competitor disruption experienced in FY18 Capitalising on market share opportunities from competitor closures • Sales growth of 19.0%, comparable store sales growth of 8.7% • Online (inc. Click & Collect) sales growt
Slide 6: Financial & Trading Performance
OUR CORE PURPOSE To support new and expectant parents in the early years of parenthood Financial & Trading Performance
Slide 7: Significant market share growth achieved post competitor closures
Significant market share growth has 19.0% been achieved post competitor closures Pro Forma Sales Growth FY19 pro forma sales growth of 19.0% driven by • Strong comparable store sales growth of 8.7% • Above our long-term average comparable store sales growth of 6.2% • Estimated ~30% capture of market
Slide 8: Gross Margin Expansion Expected to Continue
Gross Margin GROSS MARGIN EXPANSION EXPECTED TO CONTINUE 35.0% up 190 bps 1H FY19 Gross Margin 34.6%, 2H 35.3% • New product range improvements achieved working with our supplier partners to deliver great products at improved margins • Increased direct importation, working with supplier partners to
Slide 9: Private Label and Exclusive Products
private label and 56.5% exclusive products Private Label & Exclusive Sales Growth Private Label Exclusive % of Total Sales – private label 27.6% and exclusive products 20.9% 11.4% 10.0% 7.2% Private Exclusive Label FY15 FY16 FY17 FY18 FY19 56.5% growth in private label and exclusive products, now 27
Slide 10: CODB Investment to Deliver Future Growth
CODB CODB INVESTMENT TO 30bps DELIVER FUTURE GROWTH LEVERAGE IN 2H Store expenses (1) FY19 CODB $99.5m (27.5% OF SALES) 20.1% store expenses 20.0% 20.1% 19.3% 19.2% • Increased by $11.9 million (vs pcp), in line with FY18 as a % to Sales • $9.3 million relates to new and annualising stores FY15 FY16
Slide 11: Baby Goods Market
Baby Goods Market
Slide 12: Structural Landscape Has Changed
STRUCTURAL LANDSCAPE HAS CHANGED BABY BUNTING MARKET OPPORTUNITY REMAINS SIGNIFICANT IN A CHANGING RETAIL LANDSCAPE Baby Bunting $2.4bn estimated addressable market (1) Specialty baby retail chain store closures by state (breakdown by category) (F18/FY19 - key competitors only) Other Bubs ~$17m sale
Slide 13: Invest to Grow
Invest to Grow
Slide 14: Growth Strategy – Grow Market Share
growth strategy – grow market share 1 Invest in digital to deliver the best possible customer experience across channels • Engage and retain the customer through the customer journey and lifecycle • Customer insights and loyalty program • Endless aisle opportunity 2 Investment to grow sales from exi
Slide 15: Investment in Digital Delivering Growth
Investment in digital 42.3 Online sales (pro forma) $m 40.00% % of Total Sales 35.00% delivering growth 35 28.9 30.00% 25.00% 17.8 20.00% 17. 5 15.00% Online sales continue to grow 10.1 10.00% 5.9 11.8% 9.5% 5.00% 3.2% 4.2% 6.4% • Website visits ~20 million, converting into $42.3m of online sales an
Slide 16: Investment to Grow Sales from Existing Stores
INVESTMENT TO GROW SALES FROM EXISTING STORES Store maturity profile at 30 June 2019 (years opened) (stores on average take 4 years to reach sales maturity) Investment in the customer experience • Investing in our people through team leadership and customer service training • NPS score of ~75, up fr
Slide 17: Growth from New Markets
Growth from new markets 80+ 80 60 53 # of stores 47 42 40 36 31 21 23 19 20 15 12 9 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Network Plan 6 new stores opened and 1 relocation in FY19 • Toowoomba (July 2018), Chatswood (Sep), Hobart (Oct), Chadstone (Dec), Bankstown (Dec), Shellharbou
Slide 18: New Store Economics
NEW STORE ECONOMICS New stores deliver positive returns from Year 1 and strong ROIC by Year 4 New Baby Bunting stores Group Average (all stores opened from June 2008) (all stores opened > 4 years) YEAR 1 YEAR 2 FY2019 Revenue per store ($m) 4.8 5.4 7.8 EBITDA per store ($m) 0.3 0.5 1.2 Store EBITDA
Slide 19: New Shopping Centre Format
NEW SHOPPING CENTRE FORMAT SHOPPING CENTRE FORMAT Clear demand for specialty baby goods retailer • Australia’s premier retail destination in shopping centre format • 23m annual footfall • Chadstone is now our number one store in terms of transaction volumes • ~$2bn retail sales (35% higher than the
Slide 20: Growth Strategy – Grow Services
GROWTH STRATEGY – GROW SERVICES Acquisition of car seat installation businesses in Q4 Expand products and services into adjacent channels / customers including child care centres, government agencies, • Baby Bunting acquired the businesses of some of our car insurance, car hire companies, seat insta
Slide 21: Transformation – Investment in Future Growth
TRANSFORMATION – INVESTMENT IN FUTURE GROWTH Significant investment in transformational projects to grow profitability and support future growth FY20-FY21: ~$20m capex, ~$5m project expenses, ~$4m accelerated amortisation Significant business transformation project pipeline over next 2 years Website
Slide 22: Profit Margin Improvement
PROFIT MARGIN IMPROVEMENT Program of business initiatives and managed investment in costs aimed to support scale and deliver further profit margin improvement over time Supply chain evolution to improve gross margin, lower our cost to serve, improve the customer experience through speed to market an
Slide 23: Financial Information
Financial Information
Slide 24: Summary Pro Forma Income Statement
Summary Pro Forma Income Statement Pro forma statement of profit or loss Pro Forma Pro Forma Change • Total sales of $362.3 million, up 19.0% FY2019 FY2018 $ million ̵ Comparable store sales growth 8.7% Sales 362.3 304.5 19.0% • Gross margin of 35.0%, up 190 bps above pcp, the result of: Cost of sal
Slide 25: Balance Sheet
BALANCE SHEET Statutory Statutory 30-Jun-19 24-Jun-18 $ million Cash and cash equivalents 5.8 7.2 Inventories 68.2 63.0 Plant and equipment 24.5 21.0 Goodwill & Intangibles 49.9 46.7 Other Assets 10.6 10.0 Total Assets 158.9 148.0 Payables 46.2 38.1 Borrowings 3.1 10.8 Provisions 8.8 7.2 Income tax
Slide 26: Cash Flow
CASH FLOW Statement of Cash Flows Statutory Statutory • Change in working capital reflects 6 new store openings offset FY19 FY18 by increased payables associated with Week 53 $ million • Capital expenditure included investments in: ̵ New store capex for 6 new stores (including $1.6m investment Pro F
Slide 27: Anticipated impacts of new lease accounting standard
Anticipated impacts of new lease accounting standard (AASB 16) AASB 16 “Leases” comes into effect on 1 July 2019, superseding the existing lease requirements currently recognised under AASB 117. The impact(1) to Baby Bunting will see the majority of our leases being brought onto the Balance Sheet. T
Slide 28: Outlook
Outlook 28
Slide 29: Outlook
OUTLOOK TRADING YEAR TO DATE AS AT 9 AUGUST 2019 After 6 weeks of trade, comparable store sales growth was 5.2% FY20 OUTLOOK • Pro forma NPAT expected to be in the range of $20.0 million to $22.0 million • Pro forma EBITDA (as measured under old lease accounting standards), is expected to be in the
Slide 30: Q&A
Q&A
Slide 31: Appendices
APPENDICES
Slide 32: Statutory - Pro Forma Income Statement Reconciliation
Statutory - Pro Forma Income Statement Reconciliation FY2019 FY2018 Statutory Add Pro Forma Statutory Add Pro Forma FY19 Pro Forma FY19 FY18 Pro Forma FY18 adjustments (a) (restated) adjustments (a) (restated) $ million Sales 368.0 (5.7) 362.3 304.5 304.5 Cost of sales (239.6) 3.9 (235.7) (203.6) (2
Slide 33: 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