Fairway — Investor Presentation (June 2013)
24 slides from Fairway's investor presentation, Jun 11, 2013
Slide 1: Fairway Market
TAIKWAY LIKE NO OTHER MARKET ® Fairway Market June 2013
Slide 2: Forward Looking Statements/ Safe Harbor
Forward Looking Statements/ Safe Harbor Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown
Slide 3: Differentiated Food Shopping Experience
Differentiated Food Shopping Experience Specialty / fresh / convenience Conventional grocery Natural / organic grocery
Slide 4: Unique Customer Value Proposition
Perishable mix ~ 65% ~ 65% ~ 65% ~ 20% ~45% ~ 35% Shopping selection Broad 70,000 SKUs Narrow 21,000 SKUs Narrow 9,500 SKUs Narrow 18,000 SKUs Narrow 3,500 SKUs Moderate 50,000 SKUs Demographic Broad Narrow Narrow Narrow Broad Broad Competitive pricing x x Quality x Experiential x Customer draw Dest
Slide 5: Company Overview
Company Overview Premier high growth destination food retailer emphasizing quality, selection and value since 1933 12 high volume locations with 3 wine and spirit stores Plan to open 2 new locations and a central production center in FY 2014 Differentiated in-store customer experience Highly scalabl
Slide 6: Capturing Market Share
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Capturing Market Share (1) Reflects $25.0 million pro forma net sales adjustment for the temporary closure of the Red Hook, Brooklyn store 18 week period in the prior fiscal year during which the store was open. Sales for FY 2013 excluding
Slide 7: Highly Attractive Market Opportunity
Highly Attractive Market Opportunity Northeast region represents ~90+ store opportunity in a ~$70 billion food retail market Greater NYC Metropolitan Area #1 food retail market ~$30 billion of annual sales ~90+ store opportunity Fairway current location
Slide 8: Fairway is in the Early Innings of Growth
Fairway is in the Early Innings of Growth 4% 30% 100% 4 stores ~90 locations Super-regional footprint Highly portable concept Clustering strategy to drive efficient operations 12 Destination locations (with 2 sites underway) Best-in- Deep pipeline of attractive store sites Infrastructure investments
Slide 9: Competitive Strengths
TAIKWAY LIKE NO OTHER MARKET ® Competitive Strengths
Slide 10: Easy to Shop Store Layout
Market style with strong “specialty shop” orientation Easy to Shop Store Layout
Slide 11: Highly Engaging Customer Experience
Highly Engaging Customer Experience
Slide 12: Fairway Branded Products and Prepared Foods
Represents ~8% of net sales Capitalizes on our authentic brand Typically one of the top sellers in category Highly selective product introductions Significant private label growth opportunity Original recipes Everyday value Convenience Fairway Branded Products and Prepared Foods Prepared Foods Priva
Slide 13: Fairway's Mission
Fairway’s Mission “Passionate, committed people providing good food at great prices that people can trust”
Slide 14: Quality and Value Drive Industry Leading Margins
Authentic food destination with outstanding customer service Highest quality, fresh perishables 3 Everyday customer value proposition 7 6 Industry-leading volumes 2 Strong brand recognition with broad consumer appeal 5 Broad merchandise selection (70,000 SKUs) 4 Direct product sourcing & flexible ve
Slide 15: Financial Review
FAIRWAY LIKE NO OTHER MARKET ® Financial Review er
Slide 16: High Volume, High Return Store Model
Urban Suburban Net sales after two years $60-85MM $45-55MM Contribution margin at maturity 17%+ 10%+ Sales per sq. ft. (selling sq footage)(1) ROIC(2) $1,900+ 40%+ (1) Represents Fiscal 2013 net sales per selling sq. ft. for stores open greater than 13 months. Excludes Red Hook. (2) Represents the a
Slide 17: Outstanding Track Record of Growth
$24 $29 $36 $47 6.0% 6.0% 6.4% 6.9% FY 2010 FY 2011 FY 2012 FY 2013 Adjusted EBITDA Adjusted EBITDA margin Outstanding Track Record of Growth $401 $486 $555 $686 FY 2010 FY 2011 FY 2012 FY 2013 Notes: Our Red Hook, Brooklyn location was temporarily closed beginning October 29, 2012 due to damage sus
Slide 18: Gross Margin Expansion Opportunities
Fairway branded products Vendor initiatives Increased buying power Greater scale increasing opportunities for key suppliers ~8% of net sales with the ability to double penetration Central production facility Significant upside as store count grows Labor Optimization Capital Efficiencies Scalability
Slide 19: Leveraging Infrastructure to Drive Profit Growth
Leveraging Infrastructure to Drive Profit Growth 7.2% 6.7% 6.3% 6.1% 5.3% FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Investment in infrastructure to support new store growth New store growth Leveraging central services investment Note: Central services expenses represents G&A expenses less depreciation
Slide 20: Long-Term Financial Targets
Unit growth driving 20%+ topline growth 3 store builds planned for FY15 4 store builds planned for FY16 Confidence in real estate pipeline development Margin expansion of nearly 200 bps by fiscal 2016 Gross margin initiatives (production center, private label and vendor) Leverage of central services
Slide 21: Key Investment Highlights
Iconic brand expected to serve approximately 20MM customer this year Distinctive merchandising concept with large perishable mix, attractive pricing and unique product assortment Powerful store format with industry leading productivity 10+ year runway of store growth in existing and new markets Pass
Slide 22: Appendix
rFAIKWAY LIKE NO OTHER MARKET ® Appendix c7 Y
Slide 23: Non-GAAP Reconciliation
FYE March FY 2010 FY 2011 FY 2012 FY 2013 Net income ($7.1) ($18.6) ($11.9) ($62.9) Loss on early extinguishment of debt $2.8 $13.9 Net income before loss on early extinguishment of debt ($4.3) ($4.7) ($11.9) ($62.9) Interest expense (net) 13.8 19.1 16.9 24.0 Depreciation and amortization 10.2 14.6
Slide 24: Non-GAAP Reconciliation: Central Services
FYE March FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 General & administrative $29.0 $34.7 $40.0 $44.3 $60.2 Depreciation and amortization (2.6) (3.2) (4.3) (5.7) (4.5) Management Fees (0.5) (1.2) (1.6) (2.6) (3.5) Expense geography 2.7 Pre-opening advertising (3.2) Non-recurring items (1.3) (3.4) (3.5)
Fairway Group Holdings — Investor Presentation (June 2013) on 6ix