Lpp S.a. · GPW:LPP
Lpp — Q1 2017 Earnings Presentation
46 slides from Lpp's earnings presentation, May 17, 2017
Slide 1: 1Q17 Financial Results Presentation
1Q17 FINANCIAL RESULTS PRESENTATION W A R S A W , 1 7 TH M A Y 2 0 1 7
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) was prepared by LPP SA (the “Company”) with a due care. Still, it may contain certain inconsistencies or omissions. The Presentation does not contain a complete or thorough financial analysis of the Company and does not present its standing or prospe
Slide 3: Agenda
1 1 Q 1 7 f i n a n cia l r e s u lts 2 K e y c o r po ra te e v e n t s 3 2 0 1 7 o u t lo o k GLOBAL ASPIRATIONS 3
Slide 4: Almost PLN 1.4bn revenues in 1Q17
Almost PLN 1.4bn revenues in 1Q17 1,671 STORES +4.6% LFLs 18 +16% COUNTRIES REVENUES +100% +6.9% E-COMMERCE m2 GLOBAL ASPIRATIONS 4
Slide 5: Sales network optimisation
Sales network optimisation 26 298 31.03.2017 No. stores YoY 19 LPP GROUP 1,671 +30 28 Reserved 455 +7 Cropp 376 +1 House 321 -1 987 @ 18 @ 72 Mohito 285 +4 Sinsay 198 +26 80 @ 58 @ Tallinder 0 -6 16 @ Outlety 36 -1 34 @ 17 12 1 xx Number of traditional stores 1 2 @ Internet store 1 1 GLOBAL ASPIRATI
Slide 6: LFL and e-commerce growth
LFL and e-commerce growth LFL DYNAMICS ON-LINE SALES (local currencies) (PLN m) +100% 9.2% 54.9 YoY 6.6% +53% 2.8% 4.2% 5.1% 4.6% YoY 1.5% +45% 27.4 YoY +636% 18.0 YoY 12.4 -0.8% -1.5% 1.7 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 1Q13 1Q14 1Q15 1Q16 1Q17 • LFLs were positive in each month in 1Q1
Slide 7: Growths in all brands
Growths in all brands REVENUES BY BRANDS 1Q17 FLOORSPACE (PLN m) (by brands) Reserved 614 ths m2 1Q16 1Q17 YoY + 14% YoY Cropp 189 + 13%YoY LPP GROUP 855.0 913.9 6.9% Reserved 467.1 510.7 9.3% Mohito 184 + 23% YoY Cropp 115.4 120.1 4.1% House 159 + 10% YoY House 100.5 102.9 2.4% Sinsay 112 + 27% YoY
Slide 8: Growths in key regions
Growths in key regions REVENUES BY REGIONS 1Q17 FLOORSPACE (PLN m) (by regions) Poland 749 ths m2 1Q16 1Q17 YoY + 6% YoY LPP GROUP 855.0 913.9 6.9% CIS 324 + 39% YoY Poland 468.3 485.3 3.6% Europe 184.4 212.8 15.4% Europe 282 + 24% YoY CIS 194.7 208.2 6.9% ME 8 - 19% YoY ME 7.6 7.6 0.0% • Dynamic fl
Slide 9: Acceleration of sales/m2 growth
Acceleration of sales/ m2 growth GROUP REVENUES REVENUES/ M2 (PLN m) 6.1% 9.0% 2.2% 12.1% 17.2% 16.4% 18.0% 17.8% 16.0% PLN (monthly) 1Q16 1Q17 YoY 2,000 20% LPP GROUP (retail) 449 492 9.5% 1,500 15% 1,000 10% Poland 491 500 2.0% 500 5% Europe 418 451 8.0% 0 0% CIS 390 514 31.8% 1Q15 2Q15 3Q15 4Q15
Slide 10: Gross profit margin stabilisation
Gross profit margin stabilisation QUARTERLY GROSS PROFIT MARGIN MONTHLY GROSS PROFIT ON SALES (PLN m) 60% NEW INVENTORY + 28% + 30% YoY 54.2% 54.8% MANAGEMENT 55% YoY 52.6% POLICY + 2% + 5% 52.1% 49.9% 50.8% YoY YoY 309 50% 280 46.1% 47.1% 45% 178 168 45.6% 40% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q1
Slide 11: Higher costs/m2
Higher costs/ m2 COSTS OF OWN STORES/ M2 SG&A COSTS/ M2 +12% YoY +12% YoY 205 201 214 254 254 258 266 187 191 202 236 232 244 237 189 186 195 230 48 49 53 46 47 48 55 46 53 50 52 56 57 59 63 48 47 52 93 93 90 89 93 98 99 89 98 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 1Q15 2Q15 3Q15 4Q15 1Q16 2Q1
Slide 12: Seasonally weaker 1Q17
Seasonally weaker 1Q17 PLN m 1Q16 1Q17 YoY • Dynamic group revenue growth: Revenues 1,174.8 1,362.3 16.0% • positive LFLs and floorspace growth, • on-line sales increase. Gross profit margin 46.1% 45.6% -0.5 p.p. • Gross profit margin stabilisation, due to introduction of new inventory management po
Slide 13: Freeing up working capital
Freeing up working capital INVENTORY WORKING CAPITAL (PLN m) 2,000 1,575 1,669 1,634 1,381 1,600 110 1,600 1,684 1,621 1,275 1,507 155 1,516 PLN 370m 1,200 1,200 1,374 1,444 1,438 1,336 1,251 PLN 770m 1,320 1,164 800 1,167 800 1,374 1,131 1,251 400 400 882 604 0 0 1Q16 1Q16 1Q17 1Q17 Inventory Recei
Slide 14: Lower indebtedness
Lower indebtedness NET DEBT VS NET DEBT/EBITDA CAPEX (PLN m) (PLN m) 1,200 0.9x 0.8x 1.1x 0.9x 1.3x 1.0x 1.2x 0.3x 0.8x 1.5 PLN 36m PLN 112m 900 636 561 600 712 689 1.0 586 619 556 446 300 315 201 183 320 284 268 240 224 195 182 0 0.5 99 -122 -156 -120 -224 -145 -219 -266 78 74 -280 -300 51 -366 27
Slide 15: 1Q17 executive summary
1Q17 executive summary 1 On-line sales acceleration. 2 Sales network optimisation. 3 Gross profit margin stable YoY. 4 Net working capital improvement. 5 Fall in net debt. GLOBAL ASPIRATIONS 15
Slide 16: Agenda
1 1 Q 1 7 f i n a n cia l r e s u lts 2 K e y c o r po ra te e v e n t s 3 2 0 1 7 o u t lo o k GLOBAL ASPIRATIONS 16
Slide 17: Key corporate events
Key corporate events REFRESHED RESERVED IN FIRST STORES IN ANOTHER CSR SHOWROOM HAMBURG AND BELARUS STEP COLOGNE 17th and 18th store in Reserved, Cropp and House Co-operation with SGS, an Upgraded Showroom in Germany, high-street franchise stores in Minsk international auditor, in Warsaw for all LPP
Slide 18: Strengthening the designing teams
Strengthening the designing teams DESIGN CENTRES IN TOP3 CITIES IN POLAND. WARSAW • A new design centre responsible for Reserved. • Upgraded Showroom of all brands. GDANSK • LPP’s largest design centre. • The centre is responsible for Reserved, Cropp and Sinsay brands. CRACOW • Design centre for Hou
Slide 19: New Reserved German openings
New Reserved German openings Berlin ` May 2017 Frankfurt am Main, 4Q18 • In 1Q17 2 Reserved stores were opened at high-streets of 2 German cities: Hamburg and Cologne. • Floorspace: 5,700 m2. Germany was LPP’s fifth largest • Berlin city-centre flagship to be opened in May 2017. market in 2016. • 20
Slide 20: First franchise stores in Belarus
First franchise stores in Belarus • April 2017: Belarus becomes LPP’s 19th market. • Belarus development conducted via franchise stores: • lack of operating costs, • no capex on LPP’s side. • First stores of Reserved, Cropp and House in Minsk shopping mall. • Combined floorspace of those 3 stores re
Slide 21: Improved safety conditions in Asia
Improved safety conditions in Asia PLN 16m outlays for audits of working conditions in Bangladesh PLN 16m factories: • 2/3 of the amount for working conditions audit was spent for on-site inspections and audits of working conditions in factories, • the remaining amount comprises of membership fees f
Slide 22: Agenda
1 1 Q 1 7 f i n a n cia l r e s u lts 2 K e y c o r po ra te e v e n t s 3 2 0 1 7 o u t lo o k GLOBAL ASPIRATIONS 22
Slide 23: Double-digit 2017 floorspace growth
Double-digit 2017 floorspace growth Floorspace 2017 former 2017 2016 YoY (ths m2) target target • 11% YoY floorspace growth in 2017. • Reserved stores should be in 22 countries at the end BY BRANDS of 2017. 4 new countries in 2017 encompass: Reserved 509.1 578.1 578.4 14% • Serbia and the UK (own st
Slide 24: Triple-digit e-commerce revenue growth in 2017
Triple-digit e-commerce revenue growth in 2017 2020 TARGET- INTERNET SHOULD CONSTITUTE 7-8% OF GROUP SALES On-line stores of 5 brands in On-line stores of 5 brands in Poland, Czech Rep., Slovakia, On-line stores of 5 brands in Russia and Ukraine. Hungary, Romania and Lithuania, Latvia and Estonia. G
Slide 25: 2017 outlook
2017 outlook 2017 TARGETS OPPORTUNITIES • Dynamic e-commerce development • Revenue growth should exceed (6 new markets on-line). floorspace growth (positive LFLs • LFLs improvement. at all brands). • Pick-up in gross profit margin versus 2016 level. Estimated 2017 group gross profit margin at 52- 53
Slide 26: Growing dividend payments
Growing dividend payments DIVIDENDS VS NET EARNINGS (PLN m) Dividend day: 4 September 2017 -50% YoY 480 Payment day: 351 175 +10% YoY 20 September 2017 58 60 66 2014 2015 2016 2014 2015 2016 Group NI Dividends Dividend shown under the year from which it is paid, not under the year, in which it is pa
Slide 27: Q&A
Q&A GLOBAL ASPIRATIONS 27
Slide 28: Back-up
Back-up GLOBAL ASPIRATIONS 28
Slide 29: Network development
Network development Floorspace (ths m2) 31.03.2015 30.06.2015 30.09.2015 31.12.2015 31.03.2016 30.06.2016 30.09.2016 31.12.2016 31.03.2017 Reserved 402.7 416.3 435.7 461.3 467.1 473.8 487.2 509.1 510.7 Poland 215.2 219.0 223.4 232.5 230.9 235.1 232.0 248.7 245.9 Europe 90.1 95.1 106.5 120.2 124.0 12
Slide 30: 2017 network development details
2017 network development details FLOORSPACE NUMBER OF 31.12.2016 2017 TARGET Nom. growth YoY 31.12.2016 2017 TARGET Nom. growth YoY (ths m2) STORES Reserved 509.1 578.4 69.3 14% Reserved 461 468 7 2% Poland 248.7 265.5 16.8 7% Poland 236 227 -9 -4% Europe 144.1 173.5 29.4 20% Europe 116 122 6 5% CIS
Slide 31: Changes in 1Q17 floorspace
Changes in 1Q17 floorspace CHANGE IN FLOORSPACE BY BRANDS CHANGE IN FLOORSPACE BY REGIONS (ths m2) (ths m2) 920.7 +1.7 -0.4 -2.7 -1.3 0.0 -4.1 0.0 920.7 -11.3 +3.3 +1.2 0.0 913.9 913.9 -6.8 ths m2 -6.8 ths m2 • Reserved development in 1Q17 resulted from: (1) new openings in Germany (2 stores, 5.7 th
Slide 32: 1Q17 revenue growth contributors
1Q17 revenue growth contributors REVENUE GROWTH BY BRANDS PLN m 1Q16 1Q17 YoY +27 -10 1,362 +14 +34 +24 +21 LPP GROUP 1,174.8 1,362.3 16.0% +77 PLN m 1,175 Reserved PL 288.1 295.9 2.7% Reserved EX 249.6 318.4 27.6% Cropp PL 96.2 93.8 -2.5% Cropp EX 71.2 94.7 33.0% House PL 101.0 101.6 0.6% House EX
Slide 33: Revenue and COGS split
Revenue and COGS split 1Q17 REVENUES BY REGIONS TOP5 REVENUES BY COUNTRIES (PLN m) (PLN m) ME CIS 0% 24% Poland 749 Russia 271 Poland 55% Europe Czech Rep. 60 21% Ukraine 53 1Q17 PURCHASES BY REGIONS Germany 49 (PLN m) Far East Turkey 39% 6% Poland 2% Other Poland remains our most important market.
Slide 34: Costs of stores and HQs
Costs of stores and HQs SG&A COSTS SG&A COSTS (PLN m) (PLN m) 719 146 131 125 153 595 115 146 119 90 103 119 +23% 103 YoY 521 537 546 573 +20% 493 476 573 409 434 444 476 YoY 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 1Q17 Costs of stores HQ Costs of stores HQ • Costs of stores encompass cost
Slide 35: Other operating and net financial lines
Other operating and net financial lines OTHER OPERATING ACTIVITY NET FINANIAL ACTIVITY PLN m 1Q16 1Q17 mln PLN 1Q16 1Q17 OTHER OPERATING REVENUES 6.4 7.9 FINANCIAL REVENUES 2.2 1.7 Inventory excess 4.5 3.6 FX gains 1.9 0.4 Gain on sale of assets, write-ups 0.8 4.1 Interest 0.2 1.3 OTHER OPERATING CO
Slide 36: Historical quarterly numbers
Historical quarterly numbers PLN m 2Q15 2Q16 3Q15 3Q16 4Q15 4Q16 1Q16 1Q17 YoY Revenues 1,291.3 1,502.4 1,261.5 1,488.4 1,575.0 1,853.4 1,174.8 1,362.3 16.0% Gross profit on sales 673.4 749.7 663.2 700.6 862.8 941.7 541.8 620.6 14.6% Gross profit margin 52.1% 49.9% 52.6% 47.1% 54.8% 50.8% 46.1% 45.6
Slide 37: Cash flows
Cash flows 1Q17 CASH GENERATION 1Q17 CASH FLOWS (PLN m) (PLN m) 366 142 115 +74 +118 280 -21 -17 -26 -7 -78 -93 -106 -85 -111 -202 -112 1Q16 1Q17 Operating CF Investing CF Financing CF Total CF • Operating cash flow more favourable YoY due to extending the payment terms for suppliers. • Investing
Slide 38: Balance sheet increasingly strong
Balance sheet increasingly strong PLN m 31.03.2016 31.12.2016 31.03.2017 Non-current assets 1,782.7 1,838.7 1,813.8 • Higher YoY fixed assets due to investments in stores. fixed assets 1,241.3 1,291.3 1,272.0 Fall QoQ due to network optimisation in Poland. Intangibles (inc. goodwill) 325.2 330.6 334
Slide 39: Reserved brand
REVENUES CUSTOMER Women, men and children. 828 754 666 661 627 YEAR OF LAUNCH 1998 560 538 614 493 PLN m A fast fashion brand with a broad BRAND CONCEPT customer base; wide range of collections. 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Each store has three sections - women, men and children, dif
Slide 40: Cropp brand
REVENUES CUSTOMER Teenagers – boys and girls. YEAR OF LAUNCH 2004 246 269 217 234 232 196 189 PLN m 167 142 BRAND CONCEPT A casual streetwear brand. 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 The shopping space is designed in the form of squat, garage and industrial halls. Stores encompass special
Slide 41: House brand
Teenagers (boys and girls) who like brave REVENUES CUSTOMER fashion choices. YEAR OF LAUNCH 2001 (in LPP’s Group since 4Q08). 245 216 189 189 PLN m 160 170 159 144 127 Urban fashion brand with folk and vintage BRAND CONCEPT elements. 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 The interior of the s
Slide 42: Mohito brand
REVENUES CUSTOMER Young women. 211 YEAR OF LAUNCH 2008 (in LPP’s Group since 4Q08) 183 192 184 175 146 151 150 PLN m 115 A brand that combines comfort and BRAND CONCEPT elegance for business and informal meetings. 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Concept relates to elegance and beauty. S
Slide 43: Sinsay brand
REVENUES CUSTOMER Teenagers – girls only. YEAR OF LAUNCH 2013 135 117 120 112 105 PLN m Clothes for every day inspirations and 83 83 88 original party outfits. The brand stands out 58 BRAND CONCEPT for original T-shirts with extraordinary prints. 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Fresh an
Slide 44: Tallinder (closed down in 1Q17)
(closed down in 1Q17) REVENUES CUSTOMER Men and women + 30 years old. First stores opened in February 2016. These were closed down in February 2017 YEAR OF LAUNCH due to unsatisfactory sales/ m2 and PLN m 5 4 growing losses. 3 1 1 Fashion brand for customers who BRAND CONCEPT appreciate timeless ele
Slide 45: Glossary
Glossary Poland Retail sales in Poland and other sales of LPP SA. CEE Region including: Czech Republic, Slovakia, Hungary. Baltic Region including: Lithuania, Latvia, Estonia. CIS Region including: Russia, Ukraine and from 2017 also Belarus and Kazakhstan. SEE Region including: Bulgaria, Romania, Cr
Slide 46: Contact information
CONTACT INFORMATION GDAŃSK HEADQUARTERS LOGISTICS CENTRE LPP SA LPP SA Łąkowa 39/44 Tczewska 2 80-769 Gdańsk, Poland 83-800 Pruszcz Gdański, Poland Tel. +48 58 76 96 900 Fax.+48 58 76 96 909 Email: [email protected] MEDIA CONTACT Email: [email protected] CRACOW BRANCH LPP SA Bagrowa 7 30-733 Cracow, Polan