Baby Bunting Group Ltd. · ASX:BBN
Baby Bunting — FY2018 Earnings Presentation
32 slides from Baby Bunting's earnings presentation, Aug 10, 2018
Slide 1: Full Year Ended 24 June 2018 Results Presentation
® FULL YEAR ENDED 24 JUNE 2018 RESULTS PRESENTATION 10 AUGUST 2018 Matt Spencer Chief Executive Officer & Managing Director Darin Hoekman 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 (10 August 2018). The information contained in this presentation is for general background infor
Slide 3: Agenda
AGENDA 1 Results summary 2 Financial and trading performance 3 Baby goods market 4 Invest to grow 5 Financial information 6 Outlook 7 Appendices 3
Slide 4: 1. Results Summary
1. RESULTS SUMMARY
Slide 5: FY2018 Results Summary
FY2018 RESULTS SUMMARY 1 • Sales +9.0% to $303.1 million, transaction growth of 12.5% • Comparable store sales flat year on year, comparable store transaction growth of 2.6% Trading • Gross profit income up 5.9%, gross margin of 33.3% (FY17: 34.3%), impacted by price deflation of 3.6% • Cost of doin
Slide 6: 2. Financial and Trading Performance
2. FINANCIAL AND TRADING PERFORMANCE
Slide 7: Sales - Market Share Growth Continues
SALES - MARKET SHARE GROWTH CONTINUES Continued to achieve market share growth 350.0 Total sales $m 35.0% across all regions 300.0 - Comparable store sales growth % 278.0 303.1 30.0% • Total annual year on year sales growth of 9.0% 250.0 236.8 25.0% 20.0% • Total business transaction growth of 12.5%
Slide 8: Gross Margin Outlook Positive
GROSS MARGIN OUTLOOK POSITIVE Gross margin 120.0 40.0% 39.9% 39.8% 39.7% 39.6% 100.9 39.5% 39.4% 39.3% Gross profit $m 95.3 39.2% 39.1% Gross margin % of 33.3% is 100 bps below pcp, the 100.0 39.0% 38.9% - • 38.8% 38.7% 38.6% Gross margin % 38.5% 38.4% 38.3% result of significant price discounting b
Slide 9: CODB Deleverage Driven by Price Deflation
CODB DELEVERAGE DRIVEN BY PRICE DEFLATION Cost of Doing Business metrics (% sales) (1) Cost of Doing Business (pro forma) in FY18 was Store expenses 27.1% of sales 20.3% 20.1% Store expenses increased by $7.7 million or 14.5% (vs pcp) 20.0% • 19.3% 19.2% ($6.6 million of which is from new and annual
Slide 10: 3. Baby Goods Market
3. BABY GOODS MARKET >, — F411)
Slide 11: Large Addressable Baby Goods Market
LARGE ADDRESSABLE BABY GOODS MARKET Baby Bunting’s addressable market is a subset of the larger baby goods market The baby goods market is a $5.1bn market in Baby Bunting $2.4bn estimated Australia(1) addressable market breakdown by Other Cots, mattresses category $0.2 billion and nursery furniture
Slide 12: Competitive Landscape Has Changed
COMPETITIVE LANDSCAPE HAS CHANGED BBN estimated Large number of small, Baby goods is a $5.1bn addressable market is specialty players & Sector consolidation market in Australia $2.4bn department stores +6 -45 48 Specialty baby goods retailers in Australia Department stores in Australia 0 Number of S
Slide 13: Some Key Changes in Markets
SOME KEY CHANGES IN MARKETS Changes in competitors occurred in all markets Specialty baby retailer store closures by state (key competitors only) Estimated Key Competitor Closure dates Stores Sales Bubs ~Sep-17 8 $17m Baby Bounce (WA) ~Nov-17 3 ~$5m 4 Baby Bounce (NSW/Qld) ~Jun-18 10 ~$20m 6 8 Baby
Slide 14: Baby Bunting Competitively Positioned on Range & Price
BABY BUNTING COMPETITIVELY POSITIONED ON RANGE & PRICE Benchmarking analysis: Baby Bunting versus Amazon(1) comparing Baby Bunting’s top 250 SKUs • We compared price and availability against products sold Sold on on Amazon Australia Amazon 7% Amazon Cheaper • ~79% (or 197 products) of Baby Bunting’s
Slide 15: 4. Invest to Grow
4. INVEST TO GROW
Slide 16: Baby Bunting's Strategy
BABY BUNTING’S STRATEGY OUR VISION To be the most loved baby retailer for every family, everywhere OUR CORE PURPOSE To support new and expectant parents in navigating the early years of parenthood OUR VALUES Being Being Being Being Being Being Passionate Considerate Honest Positive Focused Bold OUR
Slide 17: 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 • Aiming for same day fulfillment for 90% of consumers • Customer insights and loyalty • Click and coll
Slide 18: Investment in Digital Delivering Growth
INVESTMENT IN DIGITAL DELIVERING GROWTH Website replatform commenced in Q4 FY18, expected to complete Nov-18 Mobile app pre-launch in June 2018 with 2,000 downloads to date for gift registry Marketing Automation utilised personalised activity to ~586,000 customers Click & Collect sales 27% of online
Slide 19: Investment to Grow Sales from Existing Stores
INVESTMENT TO GROW SALES FROM EXISTING STORES FY2018 comparable store sales growth(1) flat year on year • 34% of our stores are less than 3 years old and in their growth Store maturity profile at 24 June 2018 (years opened) phase (Stores on average take 4 years to mature) • Average comparable store
Slide 20: Growth from New Markets
GROWTH FROM NEW MARKETS 5 new stores opened in FY2018 Number of stores at year end 80+ 80 60 47 42 40 36 31 21 23 19 20 12 15 9 0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Network Plan • 48th store opened in July 2018 (Toowoomba Qld) • Pipeline – 5 stores committed, revie
Slide 21: EBITDA Margin Improvement
EBITDA MARGIN IMPROVEMENT Program of business initiatives and managed investment in costs over time as the business builds to scale to deliver the long term goal of 10% EBITDA margin • Supply chain evolution to lower our current cost model, improve the customer experience through speed to market and
Slide 22: 5. Financial Information
5. FINANCIAL INFORMATION
Slide 23: Summary Pro Forma Income Statement
SUMMARY PRO FORMA INCOME STATEMENT Pro forma statement of profit or loss Summary Pro Forma Pro Forma • Total sales of $303.1 million, up 9.0% Change FY2018 FY2017 ̵ Comparable store sales growth flat year on year $ million Sales 303.1 278.0 9.0% ̵ Price deflation of 3.6%, unit growth up 13.4% Cost o
Slide 24: Balance Sheet
BALANCE SHEET Statement of financial position Capital structure Statutory Statutory 24-Jun-18 25-Jun-17 • $3.6 million net debt position $ million • Inventory increase reflects 6 new stores added (~$5 million) and ~$1.7 million of inventory to Cash and cash equivalents 7.2 6.4 support sales growth (
Slide 25: Cash Flow
CASH FLOW Statement of cash flows Financial highlights Statutory Statutory FY2018 FY2017 • Change in working capital reflects 6 new store $ million openings (including Toowoomba which opened shortly after year end) and investment in inventory Underlying Statutory EBITDA1 18.6 23.0 to support sales g
Slide 26: 6. Outlook
6. OUTLOOK
Slide 27: Outlook
OUTLOOK FY2019 guidance • After 6 weeks of trade (5 August) total sales growth was 16.5%. Comparable store sales growth was 9.8% • EBITDA expected to be in the range of $24.0 million to $27.0 million, representing growth of between ~30% to ~45%. This excludes employee equity incentive expenses • Gui
Slide 28: 7. Appendices
7. APPENDICES
Slide 29: Statutory - Pro Forma Income Statement Reconciliation
STATUTORY - PRO FORMA INCOME STATEMENT RECONCILIATION FY2018 FY2017 Statutory Add Pro Forma Statutory Add Pro Forma FY18 Pro Forma FY18 FY17 Pro Forma FY17 adjustments (a) adjustments (a) $ million Sales 303.1 303.1 278.0 278.0 Cost of sales (202.2) (202.2) (182.7) (182.7) Gross Profit 100.9 100.9 9
Slide 30: Baby Bunting's Store Network Update
BABY BUNTING’S STORE NETWORK UPDATE 48 stores across Australia, with significant roll-out potential to over 80 stores Queensland Aspley (25 Jan) Burleigh Waters Helensvale North Lakes Booval Capalaba Kawana Toowoomba (28 July) Browns Plains Fortitude Valley Macgregor Townsville 12 New South Wales an
Slide 31: 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
Slide 32: Thank You!
Thank You! 32