Lovisa Holdings Ltd. · ASX:LOV
Lovisa — H1 2017 Earnings Presentation
23 slides from Lovisa's earnings presentation, Feb 23, 2017
Slide 1: Lovisa Holdings Limited 2017 Half Year Results Presentation
For personal use only LOVISA HOLDINGS LIMITED (LOV) 2017 HALF year RESULTS PRESENTATION shane fallscheer Managing Director STEVE DOYlE chief executive officer graeme fallet chief financial officer 23rd FEBRUARY 2017 1
Slide 2: Forward-looking statements disclaimer
Some of the information contained in this For personal use only 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 fut
Slide 3: HY2017 snapshot
hy2017 snapshot 268 TOTAL STORE NUMBERS LFL SALES For personal use only +12.6% REVENUE UP GROSS PROFIT UP 20.7% TO 25.2% TO $99.7M $77.6M EBIT GROSS MARGIN INTERIM DIVIDEND OF INCREASE TO 10.0CPS $28.2M 77.8% FULLY FRANKED 3
Slide 4: Contents
CONTENTS For personal use only half year overview Financial overview Trading Performance Cashflow and Balance Sheet strategy recap Store growth UK rollout merchandising Trading Outlook Summary 4
Slide 5: Half year overview
half year overview • Strong Half Year result with EBIT up 57% to $28.2m For personal use only • Strong comparable store growth of 12.6% following price increases and delivery of on trend product in the first half. Full price volumes increased by 16.3%, whilst a reduction in our sale and markdown act
Slide 6: Financial overview
financial overvieW STRONG LIFT IN EARNINGS FOLLOWING increase IN LFL SALES AND MARGIN ($’000) FY17 FY16 Variance For personal use only Actual Actual Actual Revenue 99,740 82,622 20.7% Gross profit 77,592 61,984 25.2% EBITDA 30,841 20,809 48.2% EBIT 28,194 17,946 57.1% NPAT 20,272 13,540 49.7% EPS ce
Slide 7: Trading performance: sales
trading performance sales comparable sales up 12.6% 100 $99.3m For personal use only $82.2m 80 $73.0m 60 $50.3m 40 20 HY14 HY15 HY16 HY17 • Total Global Sales up 20.8% to $99.3m • Comparable sales up 12.6% driven by retail price increases in second half of FY16 and cycling of the closure of Equip st
Slide 8: Trading performance: international sales increase across all regions
trading performance sales international sales increase across all regions For personal use only • Segment note now reflects international Country ($AUD) HY17 HY16 Variance regions with all countries reflecting Australia / NZ 70,755 59,232 19.4% positive comparable store growth other Asia 14,793 12,5
Slide 9: Trading performance: gross margin
trading performance gross margin gross margin increased to 77.8% For personal use only Gross Margin at Constant Currency* • Gross profit increased 25.2% to $77.6m HY17 HY17 HY16 • Gross Margin was 77.8% up from 75% for the Currency USD 0.71 0.78 0.78 first half FY16 Sales 99,740 99,740 82,622 • Gros
Slide 10: Trading performance: cost of doing business
TRADING PERFORMANCE COST OF DOING BUSINESS COST OF DOING BUSINESS (CODB)% REDUCED TO 46.9% For personal use only • CODB reduced to 46.9% from 49.8% in the 60% prior half year 50% • Total operating costs remain well controlled with any CODB increases in line with store 40% network growth and addition
Slide 11: Cash flow
cash flow strong cash conversion and inventory management For personal use only • Cashflow from operations lifted 83% to (A$’000s) HY17 HY16 $29.7m with operating cash conversion at Cash from operating activities 34,942 20,314 Net interest paid (275) (331) 125% Tax paid (4,982) (3,786) • Capital exp
Slide 12: Balance sheet
balance sheet strong balance sheet with finance facilities increased For personal use only • Disciplined inventory management with (A$’000s) HY17 FY16 HY16 inventory levels below prior periods despite Net Cash 28,246 4,729 8,583 Receivables 3,130 2,293 2,181 store growth and currency increases Inven
Slide 13: Strategy recap
strategy recap • Lovisa is a vertical integrated fast fashion jewellery For personal use only retailer with end to end product development capabilities • Global brand with reach across a multitude of countries • We enjoy high gross margins with demonstrated pricing elasticity • Scalable rollout mode
Slide 14: Store growth
STORE GROWTH international rollout continues with a net increase of 18 STORES For personal use only • Number of international stores growing with Store number growth offshore markets now 44% of the network HY17 FY16 VAR • Net increase of 18 stores for the period with increases across all regions Aus
Slide 15: UK property
uk property SCOTLAND EXISTING STORES • Currently trading from seven stores GLASGOW PROSPECTIVE STORES For personal use only 1 - Leeds - Norwich - Manchester - Bromley - Preston - Brighton - White City/London • We aim to open another eight stores in the second half • UK retail environment for our ret
Slide 16: Merchandising
merchandising • Proven success in bringing new products to For personal use only market • Our vertical model allows us to be fast to market and to react to sale patterns quickly, with concept to store in six to eight weeks • We deliver circa 100 new lines each week providing freshness to customer of
Slide 17: Outlook
outlook • We have experienced a strong start to FY17 but expect some softening in comparable sales in For personal use only second half as the 2016 price increases and the departure of the Equip brand anniversarise • The Company’s investment in its global rollout will continue as we invest in our be
Slide 18: Summary
summary • EBIT of 28.2m and 77.8% gross margin For personal use only • Comparable store sales growth of 12.6% • Strong lift in margin following price increases and reduced mark downs • CODB costs well managed as network grows • Tight stock and cost control with cash conversion at 125% • Internationa
Slide 19: Questions
For personal use only questions 19
Slide 20: 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 Holding Limited is required to make a clear statement about the non-IFRS For personal use only information included in the Profit announ
Slide 21: Store network operating snapshot
appendix 2 store network operating snapshot For personal use only Country Stores Labour cost Occupancy cost Australia 149 New Zealand 18 Malaysia 17 Singapore 21 South Africa 38 United Kingdom 7 Middle East 17 N/A - Franchise territory N/A - Franchise territory Vietnam 1 N/A - Franchise territory N/
Slide 22: Profit and loss statement
appendix 3 profit and loss statement ($’000) FY17 FY16 Variance For personal use only Actual Actual Actual Revenue 99,740 82,622 20.7% Cost of sales (22,148) (20,638) 7.3% Gross profit 77,592 61,984 25.2% Employee expenses (23,261) (19,746) 17.8% Property expenses (14,009) (12,536) 11.7% Distributio
Slide 23: Key risks
appendix 4 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 For personal use only • As international growth continues Lovisa will be exposed to movements in the exchange rates of the countries it