Frasers Group Plc · LSE:FRAS
Frasers — Sports Direct International — H1 FY2015 Earnings Presentation
32 slides from Frasers's earnings presentation, Dec 11, 2014
Slide 1: Interim Results Presentation
SPORTS DIRECT INTERNATIONAL PLC Interim Results Presentation For the 26 weeks ended 26 October 2014 Thursday 11th December 2014
Slide 2: Dave Forsey, Chief Executive
SPORTS COM Dave Forsey CHIEF EXECUTIVE
Slide 3: FY15 H1: Group Highlights
FY15 H1: Group Highlights Neustadt, Austria • Sports Retail gross margin increased by 130 bps to 44.5% • Group underlying EBITDA increased by 10.8% to £203.1m • Underlying profit before tax up 9.8% to £160.6m • Underlying free cash generation of £161.5m • Oxford Street store re-located in May 2014 N
Slide 4: Financial Review
SPORTS | ECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Slide 5: Group Revenue Bridge
FY15 H1: Group Revenue Bridge 1,500 -2.8% 1,450 +11.1% -3.9% £1,433m +7.9% +£17.6m -£2.9m 1,400 -£4.1m 1,350 £1,345m +£77.2m Revenue (£m) 1,300 1,250 1,200 1,150 1,100 1,050 1,000 FY14 H1 Sports Retail Stores ¹ Sports Retail - online Premium Lifestyle Brands FY15 H1 • Sports Retail revenue growth of
Slide 6: Sports Retail Overview
FY15 H1: Sports Retail Overview Sports Retail Revenue Sports Retail Gross Margin Online Stores and Other* 1,300 £1,231m 45.0 £1,136m Gross Margin % 44.5 1,200 176 44.0 1,100 43.2 159 43.0 1,000 Gross Margin (%) Revenue (£m) 42.9 900 42.0 41.4 40.9 800 41.0 700 977 1,055 40.0 40.3 40.3 600 39.0 H1'12
Slide 7: Sports Retail Operating Costs
FY15 H1: Sports Retail Operating Costs FY15 H1 FY14 H1 Change (£m) (£m) (%) Store Wages 120.4 103.7 16.1 Premises Costs 106.8 92.0 16.1 Other Retail Costs 126.7 114.9 10.3 Sports Retail Operating Costs 353.9 310.6 13.9 Sports Retail Underlying EBITDA pre associates 194.2 180.3 7.7 Associates (Heaton
Slide 8: Premium Lifestyle
FY15 H1: Premium Lifestyle FY14 H1 • May 2013: acquired remaining 20% of Cruise 120 • July 2013: acquired 51% of Pulp, a six store retail fashion chain £102.8m £99.9m FY15 H1 • Continued rationalisation of USC business 100 Van Mildert Van Mildert • Further growth in online sales across the division
Slide 9: Brands Division
FY15 H1: Brands Division 120 £106.2m £102.1m 100 15.4 15.3 80 Revenue (£m) 60 90.8 86.8 Licensing 40 Wholesale 20 0 FY14 H1 FY15 H1 • Revenue: down 3.9% – Licensing: down 0.6% – Wholesale: down 4.4% • Wholesale margin increased to 32.7% – Up 70 bps • Licensing: – FY15 H1: 29 deals completed with con
Slide 10: Brands Operating Costs
FY15 H1: Brands Operating Costs FY15 H1 FY14 H1 Change (£m) (£m) (%) Wages 9.7 12.0 (19.2) Advertising & Promotion 7.6 6.4 +18.8 Other Brands Costs 11.4 11.9 (4.2) Total Brands Operating Costs 28.7 30.3 (5.3) Brands EBITDA 15.1 14.0 +7.9 SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation
Slide 11: Underlying EBITDA Bridge
FY15 H1: Underlying EBITDA Bridge 210 +34.5% +7.9% +10.8% +1.7% +8.1% 200 £4.1m £1.1m (£6.1m) UNDERLYING EBITDA (£M) 190 £14.6m 180 170 £203.1m £197.0m 160 £183.3m 150 140 FY14 H1 pre Share Sports Retail Premium Lifestyle Brands FY15 H1 pre Share Share Schemes' FY15 H1 Scheme charges Schemes' non-ca
Slide 12: PBT / PAT / EPS
FY15 H1: PBT / PAT / EPS FY15 H1 FY14 H1 Change (£m) (£m) (% ) Underlying EBITDA (pre Share Scheme charges) 203.1 183.3 +10.8 Bonus Share Scheme charges (6.1) (6.0) +1.7 Depreciation (33.0) (28.4) +16.2 Interest (4.7) (4.1) +14.6 Investment Income 1.3 1.3 - Underlying PBT 160.6 146.2 +9.8 Underlying
Slide 13: Depreciation & Amortisation
FY15 H1: Depreciation & Amortisation FY15 H1 FY14 H1 Change (£m) (£m) (% ) Sports Retail - Stores, warehouse and amortisation of goodwill 25.1 20.9 +20.1 Sports Retail – Change in estimated useful life – fixtures & fittings 2.5 2.5 - Total Sports Retail 27.6 23.4 +17.9 Premium Lifestyle 1.6 1.8 -11.
Slide 14: Taxation
FY15 H1: Taxation FY15 H1 FY14 H1 (£m) (£m) Reported PBT 149.7 143.1 Standard rate of corporation tax (1) 31.4 32.9 Non-qualifying depreciation 1.9 2.9 Other differences 1.1 - Effective tax 34.4 35.8 Actual effective tax rate 23.0% 25.0% (1) The standard rate of corporation tax was 21% in FY15 H1 (F
Slide 15: Cash Flow
FY15 H1: Cash Flow FY15 H1 FY14 H1 (£m) (£m) EBITDA (pre scheme costs) 203.1 183.3 Realised (loss) / profit on FX contracts (7.7) (0.6) Taxes paid (33.9) (35.8) Underlying free cash flow 161.5 146.9 Working capital Inventory (89.6) (49.3) Debtors / Creditors, Other (2.2) 31.8 Acquisitions (including
Slide 16: Capital Expenditure
FY15 H1: Capital Expenditure FY15 H1 FY14 H1 (£m) (£m) Freehold acquisitions 0.7 9.2 Warehouse and Shirebrook store expansion 3.4 4.4 New stores (leasehold) 9.5 8.0 Maintenance capex 5.2 3.4 Other 4.2 3.1 Sports Retail 23.0 28.1 Premium Lifestyle 1.6 1.9 Brands 2.1 1.8 26.7 31.8 Proceeds on disposal
Slide 17: Net Debt Bridge
FY15 H1: Net Debt Bridge -100 -50 0 NET DEBT (£M) 50 100 186.5 212.0 195.4 (92.8) 150 (33.2) (26.7) 21.1 (4.4) 200 (33.9) 250 Net Debt EBITDA Working Purchase of Capital Sale of Interest Tax Net Debt 27/04/2014 capital & investment Expenditure freehold 26/10/2014 other property • Investment in worki
Slide 18: Operational Review
SPORTS | ECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Slide 19: Sports Retail: UK Property
Sports Retail: UK Property FY15 FY14 H2 FY14 H1 H1 • Square footage has remained at c. 4.5m sq. ft. (1) UK Stores (3) 434 418 409 • Continued enhancement of the store portfolio Openings 22 13 19 Closures 6 4 6 • Leasehold expiry profile is now 5.0 years (2) Freehold properties 60 59 58 • 22 new stor
Slide 20: Sports Retail: UK Property Targets for FY15
Sports Retail: UK Property Targets for FY15 include: • Target c. 300,000 sq. ft. of existing space to be refitted • Target 30 – 40 store openings, 30% of which are expected to be relocations • Focus on further large format stores in key markets • Continued investment in specialist performance areas
Slide 21: Sports Retail: UK Property - Oxford Street and Glasgow
Sports Retail: UK Property Oxford Street relocation • New Oxford Street store opened in May – c. 50,000 sq. ft. • Enhanced in-store concepts • Collaboration with key suppliers e.g. Nike, adidas and Puma Glasgow city centre extension • Existing store trades 22,000 sq. ft. over 2 floors • Extended tot
Slide 22: Sports Retail: Fitness Division Update
Sports Retail: Fitness Division Update • Acquired 18 former LA Fitness sites • Aintree sports retail now open and gym due to open by end of December • 40,000 sq.ft. retail space over 2 floors • A separate 20,000 sq.ft. dry gym • Another two units opening in St Helens and Keighley in early 2015 SPORT
Slide 23: Sports Retail: International Overview
Sports Retail: International Overview Letňany, Czech Republic Existing territories No. of Stores • Active in 19 European countries, including Iceland and Ireland Austria 48 Belgium 44 • Opening of Sports Direct store in Letňany, Czech Republic in co-operation Estonia (1) 37 with Tesco Latvia (1) 24
Slide 24: Sports Stores: Austria Update
Sports Stores: Austria Update • Remaining 49% equity stake in Eybl and Sports Experts acquired in Vienna, North March 2014 • Integration of Eybl stores only commenced in April 2014, following acquisition of remaining equity stake • Integration process includes significant re-configuration of histori
Slide 25: Sports Retail: Marketing Campaigns
Sports Retail: Marketing Campaigns • In October 2014 we helped adidas to launch their NEO range of footwear in a pan - European campaign via windows and in store POS in over 700 doors and via our digital platforms • We revealed the latest ‘through the line’ Firetrap campaign on Halloween. The horror
Slide 26: Sports Retail: Forever Sports Magazine
Sports Retail: Forever Sports Magazine • In April 2014 we re-launched the Sports Direct magazine as a stand alone Mens Sports & Lifestyle title, Forever Sports • The title is stocked in all major retailers including Tesco, Sainsburys, WH Smiths and ASDA as well as Sports Direct channels • In the las
Slide 27: Sports Retail: Online Overview
Sports Retail: Online Overview Overview Online Sports Sales Ecommerce 400 • Click & collect has been trialled across c. 400 UK Sports £335m Direct stores 350 • Responsive design now fully implemented across all platforms, including Sports Retail and Premium Lifestyle 300 • Gift cards launched online
Slide 28: Premium Lifestyle
Premium Lifestyle • Rationalisation of USC business continues, including closure of further 20 loss making stores since the prior year • Further progress made in mitigating operating costs related to former Republic business • Republic brands, including Soulcal, Fabric and Crafted, continue to perfo
Slide 29: Brands: Wholesale
Brands: Wholesale • Reduction in overall wholesale revenue of 4.4% • US trading in line with expectations • US now represents c. 40% of total wholesale revenue • Sales in Europe up 3.5% despite a tough market • Wholesale gross margin up by 70 basis points • Investment in key Group Brands expected to
Slide 30: Brands: Licensing
Brands: Licensing • Sports Direct Retail licensing continues to grow, as stores open in South East Asia and the Middle East • 29 new license agreements signed in H1 with guaranteed minimum royalties of $12m over the contract period • Everlast, Dunlop & Slazenger continue to drive potential growth, r
Slide 31: Outlook Statement
FY15: Outlook Statement • Results for the six months were solid considering the adverse impact of • England’s early departure from the FIFA World Cup in Brazil • Unseasonably mild weather during Autumn reducing footfall • Trading since the period end has been in line with management’s expectations •
Slide 32: Questions?
SPORTS | ECT.com EXCEPTIONAL QUALITY * UNBEATABLE VALUE
Sports Direct International — H1 FY2015 Earnings Presentation on 6ix