Mr Price Group Limited · JSE:MRP
Mr Price — FY2012 Earnings Presentation
40 slides from Mr Price's earnings presentation, March 2012
Slide 1: Annual results March 2012
Mr Price Group Annual results MarCH 2012 JSE share code: MPC
Slide 2: 2012 group highlights
2012 group highlights Retail sales Operating Profit Operating margin R11.8bn R1.7bn 14.8% 10.2% 21.8% 1.4% 12.9% 26.5% Headline earnings per share Dividends per share Return on equity 503.0c 314.0c 47.2% 20.1% 24.6% 1.2% 24.7% Note : Growth on the reported 2011 53 trading week base : Growth
Slide 3: It's not all about the numbers
It's not all about the numbers • Successful international roadshow Nov 2011. Offshore shareholding now at 36% • Included in MSCI emerging markets index from May 2012 • Independent internal audit quality review - MPC maintained highest rating possible, only company in RSA. Part of elite group globall
Slide 4: Overview of the retail environment
OVERVIEW OF THE RETAIL ENVIRONMENT • Consumer confidence levels still net positive at +5 index points – Financial position of households over next 12 months high at +16 – Expect improvement in economy over next 12 months, however – Not appropriate time to buy durable goods • Business confidence jump
Slide 5: Retail sales growth
RETAIL SALES GROWTH • Growth in total retail sales in RSA for 6 months to 31 Mar has been favourably impacted by the performance of general dealers and retailers of food and beverages (double digit growth) • Retailers of textiles, clothing, footwear and leather goods had a positive quarter to 31 Dec
Slide 6: Group performance
Group performance 2012 2011* Growth Retail sales R11.7 bn R10.3 bn 12.9 % Comparable sales - * 10.3 % year - 1st * 9.5 % half - 2nd 11.0 % half Unit sales 193 m 179 m 7.6 % RSP inflation 5.0 % Weighted average space 0.0 % growth Stores Space Trading Openingsdensity R22 46 979 R20 350 m-2 m-2 687 23
Slide 7: Sales analysis 2012
Sales analysis 2012 20% • Market share gains 18% in 2nd half in 3 of 4 Total 16% sales chains included in growth RLC, maintained in 14% 5.0% 12.6% other 12% 11.5% • Higher credit demand Growth 10% 5.0% 3.0% • 69m sales 8% 5.6% transactions and 193m units sold 6% 11.8% • Increased basket 4% 7.6% 7.6%
Slide 8: 2012 group income statement
2012 group income statement % to % to sale Growt R’m 2012 sales 2011 s h 11 10 Retail sales 10.2 % 767 673 Cost of sales 6 843 6 202 10.3 % 41.8 41.9 Gross profit 4 924 4 471 10.1 % % % Other income 296 240 23.3 % 22.5 23.5 Selling expenses 2 645 2 505 5.6 % % % 7.3 Administrative expenses 833 7.1%
Slide 9: Sales and operating profit growth
Sales and operating profit growth Full 1st half 2nd half year 26 26 52 weeks weeks weeks Sales Apparel 11.1% 15.4% 13.4% Home 9.7% 11.2% 10.5% Total 10.7% 14.2% 12.6% Operating profit Apparel 21.1% 22.1% 21.7% Home 57.3% 40.0% 45.6% Total 27.4% 25.9% 26.5% Mr Price Group Limited ANNUAL RESULTS MARCH
Slide 10: Operating margin improvement
Operating MARGIN IMPROVEMENT Gross profit Store expenses 0.3% 0.2% 15% 0.5% 0.2% 0.3% 14% 0.2% 13% (0.2%) (0.1%) 14.8% 12% 13.4% 11% 10% Operatin PMO Markdo Other Other Payroll Occupa Other Admin Operatin g wns income ncy and g margin central margin 2011 costs 2012 % of sales 2012 2011 Depreciation
Slide 11: Earnings per share
Earnings per share 2012 2011 Growth 53 weeks Basic earnings per share 500.9 c 412.3 c 21.5 % Headline earnings per share 503.0 c 418.9 c 20.1 % 52 weeks Basic earnings per share 500.9 c 396.7 26.3 % Headline earnings per share 503.0 c 403.3 24.7 % • Fully diluted HEPS 464.5c • Voluntary trading upda
Slide 12: Dividends per share
Dividends per share Final dividend220.4c +26% Annual dividend 314.0c +25% • Dividend cover retained at 1.6 times (payout ratio 62.5%) • In the past 26 years dividends per share have never decreased • Secondary tax on companies replaced by dividends tax, there will no longer be an income statement ch
Slide 13: Performance record
PERFORMANCE RECORD 550 500 450 400 Cents per share 350 300 250 200 150 100 50 -0 1993 1996 1986 1987 1988 1989 1990 1991 1992 1994 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 HEPS DPS CAGR 5 year10 year26 year HEPS 21.3% 23.8% 23.4% DPS 25.5% 33.1% 25.3%
Slide 14: Drivers of MPC earnings growth
Increase in returns 10 years DRIVERS OF MPC EARNINGS GROWTH Change in Rand % of sales growth Retail sales R9 041 m Cost and expenses R7 502 m 7.6 % Cost of sales R4 944 m 6.1 % Operating Selling expenses R1 919 m 2.1 %) margin has Administrative expenses R639 m (0.6 % increased Profit from operating
Slide 15: Financial position
Financial position R’m 2012 2011 Non-current assets Property, plant and equipment 539 460 Intangible and other assets 204 148 Current assets Inventories 1 168 954 Trade and other receivables 1 183 931 Cash and cash equivalents 1 201 1 368 4 295 3 861 Equity attributable to shareholders 2 780 2 394 N
Slide 16: Financial position
Financial position Intangible assets (R’m) 37.8% • E-commerce system 2011 148 • E-learning training modules 2012 204 • IT software licenses Inventories 22.5% • Inventory growth in Home chains lower than 2011 954 1 sales growth 2012 • Growth mainly off a low base in Mr Price 168 Apparel • Stockin
Slide 17: Trade receivables
Trade receivables Split of credit types in RSA • Retailers only constitute 3.3% of total consumer credit in Unsecured RSA 9% credit Mortgages Credit facilities • Gross debtors book up 9% y/y 11% - mortgages 4.0%, secured 12.8%, unsecured 53.1% Secured 19% Source: National Credit Regulator 61% Credit
Slide 18: Trade receivables
Trade receivables 2012 2011 Growth Gross trade receivables R1 208 m R820 m 47.3 % Number of active accounts 1 187 k 1 034 k 14.7 % Credit sales R2.2bn R1.7bn 26.2 % Credit sales contribution 18.6 % 16.2 % 3,000 73% of book 2,500 2,000 2 353 Rand 1,500 2 603 29% 2 594 2 401 1 824 2 222 1,000 500 88
Slide 19: Trade receivables
Trade receivables • 3rd Q credit growth higher than expected at 41.4% - scorecard subsequently tightened • Long-term target is a cash sale ratio of at least 75% 600,000 Credit 15.9% Growth in sales (R’m) sales 500,000 Total growt sales h 400,000 growth 10.1% 11.9% 12.6% 300,000 200,000 100,000 17.5%
Slide 20: Capital expenditure
Capital expenditure Total Retail Divisional Split Other Reductions Sheet Street DC New stores 5% 5% 5% Retail 8% Revamps 23% Mr Price Mr Price Property Home20% 13% 27% R301 R168 R168 56% m m Miladys5% m 56% 18% Mr Price 13% IT 45% Sport Expansions and Relocations • Capital expenditure for FY 2013 is
Slide 21: Divisional performance
DIVISIONAL PERFORMANCE
Slide 22: Segmental performance Apparel
Segmental performance Apparel All segmental and divisional information is based on 52 weeks for both periods, or 26 weeks for the 2 nd half 2012 2011 Growth Retail sales R8.4 bn R7.4 bn 13.9 % Comparable sales - 10.6 % year - 1st 8.6 % half - 2nd 12.4 % half Unit sales 137m 126 m 8.9 % RSP inflation
Slide 23: Mr Price
Mr price 2012 2011 Growth Retail sales R6.5 bn R5.8 bn 13.2 % Comparable sales - 9.8 % year - 1st 8.9 % half - 2nd 10.6 % half Unit sales 8.3 % RSP inflation 4.5 % Weighted average space 3.8 % growth Trading density R30 614m-2 R28 094m-2 9.0 % Stock turn (times) 7.0 7.3 Number of stores 353 340 Mr P
Slide 24: Mr Price highlights
Mr price highlights RLC market share (%) Contribution to Footwear Footwear sales 8.5% 15% 9.0% Clothing R6.5bn 13.4% 13.7% 85% Clothing • 2011 • 2012 • Nielson’s brand health study: – remains the most loved brand in the category – enjoys the highest store usage amongst its competitor set • Growth in
Slide 25: Mr Price Sport
Mr price sport 2012 2011 Growth Retail sales R686 m R542 m 26.5 % Comparable sales - 11.7 % year - 1st 7.3 % half - 2nd 15.5 % half Unit sales 20.3 % RSP inflation 5.0 % Weighted average space 3.5 % growth m- m- Trading density R14 963 2 R12 241 2 22.2 % Stock turn (times) 4.8 5.2 Number of stores 4
Slide 26: Mr Price Sport highlights
Mr price sport highlights • Market research shows established Contribution to sales acceptance of homegrown brands Equipment and (Maxed, Trail and Promaster) accessories • Successful introduction of high-end Apparel 34% technical products while still offering great value (Maxed Elite, R686m 50% Trai
Slide 27: Miladys
Miladys 2012 2011 Growth Retail sales R1.1 bn R1.0 bn 11.2 % Comparable sales - 14.0 % year - 1st 8.1 % half - 2nd 19.2 % half ) Unit sales 5.9 % RSP inflation 6.2 % Weighted average space (8.1 % growth20% 15% Unit growth and m- m- Trading density R17 950 2 R14 834 2 21.0 % 10% Space growth 10% infl
Slide 28: Miladys highlights
Miladys highlights RLC market share (%) Contribution to Accessories sales Accessories 8.7% 8.2% Footwear Footwear 8% 3.2% 12% 2.8% Intimatewear Intimatewear R1.1bn 2.9% 10% 2.9% Outerwear 68% 4.8% 4.9% Outerwear • 2011 • 2012 • Landscape research - increase in usage of 16% (19% increase in black cus
Slide 29: Segmental performance Home
Segmental performance home 2012 2011 Growth Retail sales R3.3 bn R3.0 bn 10.6 % Comparable sales - 9.5 % year - 1st 11.5 % half - 2nd 8.0 % half ) Unit sales 4.6 % RSP inflation 5.9 % Weighted average space (2.0 % growth 20000 2.4% 12% • Strong correlation Trading density m- m- Operating margin Tra
Slide 30: Mr Price Home
Mr price home 2012 2011 Growth Retail sales R2.3 bn R2.1 bn 9.9 % Comparable sales - 8.4 % year - 1st 9.8 % half - 2nd 7.2 % half ) Unit sales 4.6 % RSP inflation 5.2 % Weighted average space (1.5 % growth m- m- Trading density R16 426 2 R14 729 2 11.5 % Stock turn (times) 6.1 5.9 Number of stores 1
Slide 31: Mr Price Home highlights
Mr price home highlights RLC market share (%) Contribution to Accessories and decor sales 12.6% Accessories 12.3% and decor Household utensils 32% 20.2% R2.3bn 19.6% 55% Domestic textiles 27.3% 13% Domestic 27.3% Household textiles utensils • 2011 • 2012 • Per AMPS grew customer base by 16%, against
Slide 32: Sheet Street
Sheet street 2012 2011 Growth Retail sales R1.0 bn R0.9 bn 12.4 % Comparable sales - 12.0 % year - 1st 14.9 % half - 2nd 9.8 % half ) Unit sales 4.6 % RSP inflation 7.5 % Weighted average space (3.4 % growth m- m- Trading density R22 149 2 R19 040 2 16.3 % Stock turn (times) 6.5 6.1 Number of stores
Slide 33: Sheet Street highlights
Sheet street highlights RLC market share (%) Contribution to Accessories and decor sales Accessories 3.3% and decor 3.5% 17% Domestic textiles R1.0bn 21.0% 21.4% 83% Domestic textiles • 2011 • 2012 • Per Landscape survey 2nd most loved and 2nd most shopped home textile retailer (behind Mr Price Home
Slide 34: Mr Price International
Mr price international • Africa has more cities with a population over 1 million than N. America • Emergence of sizeable middle class will provide fuel for consumer booms in many African countries • Population expected to grow from 1 billion to 3 billion by 2050, outstripping India and China • Worki
Slide 35: Mr Price International
Mr price international FRANCHISED Botswana OWNED Mr Price 12 Mr Price Lesotho Apparel 19 2 Apparel 23 Mr Price Home 9 6 Swaziland Mr Price Sport 1 Total 28 Rest of Africa 28 1 Nigeria Miladys 7 Mr Price Home 5 Sheet Street 9 Total 45 24 Namibia • Nigeria – 1 200m2 in Ikeja Mall, Lagos opened 29 Mar
Slide 36: Supply chain and systems
Supply chain and systems Objectives: To improve visibility, ensure sustainable supply, enhance product flexibility and reduce lead times and cost SUPPLY CHAIN • Long-term project to reduce the number of ‘touchpoints’ between point of manufacture and store • As a consequence of previous initiatives,
Slide 37: Sourcing
SOURCING Long- term project to reduce country risk • Reduce dependence on China in favour of Bangladesh, Cambodia, Vietnam, Mauritius and RSA • Increased factory direct imports by 72% in last year • Pre-season briefing and collaboration with certain key suppliers reduced their lead times from 4 to 3
Slide 38: Migration through the LSMs
Migration through the lsm'S 3,500,000.0 LSM’s targeted by MPC MPC customers per LSM 3,000,000.0 (AMPS – Jul 2011) 2,500,000.0 10 4 14% 8% 5 Number of households (m) 2,000,000.0 11% 9 1,500,000.0 17% LSM 6 1,000,000.0 22% 8 13% 7 500,000.0 15% - LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 L
Slide 39: Driving profitable growth
Driving profitable growth • In FY 2013 35 33 – Targeting space growth of 5% 30 – 73 new stores planned 25 18 (1st half 37 – confirmed 31) 20 20 – Space expansion of high performing stores 5 – 4 000m2 15 10 • Continued right sizing of stores 10 7 15 5 15 • Expect RSP inflation of ±6% in 1st half FY20
Slide 40: Passion, Value, Partnership
Passion VALUE PARTNERSHIP who we are WHAT WE DO How we do it