Brait Plc · JSE:BAT
Brait — New Look Retail Group — FY2018 Earnings Presentation
24 slides from Brait's earnings presentation, June 2018
Slide 1: Investor Presentation FY18
Investor Presentation FY18 52 weeks to 24 March 2018
Slide 2: Disclaimer
2 This presentation has been prepared by New Look Retail Group Limited and its subsidiaries (“New Look”) solely for informational purposes and does not constitute, and should not be construed as, an offer to sell or issue securities or otherwise constitute an invitation or inducement to any person t
Slide 3: Agenda
3 AGENDA KEY HEADLINES Alistair McGeorge, Executive Chairman TURNAROUND PLAN Alistair McGeorge FINANCIAL REVIEW Richard Collyer, CFO SUMMARY & OUTLOOK Alistair McGeorge Q&A Alistair McGeorge Richard Collyer
Slide 4: Key Headlines
4 KEY HEADLINES ALISTAIR MCGEORGE Executive Chairman
Slide 5: Key Headlines
5 Key Headlines • We have had a difficult year: • Product focussed on ‘young’ & ‘edgy’ customers • Higher priced offering compromised our reputation for value • Drive for improved margins impacted our speed to market • Chased e-commerce sales at the expense of profitability • Performance impacted by
Slide 6: Turnaround Plan
6 TURNAROUND PLAN ALISTAIR MCGEORGE Executive Chairman
Slide 7: Return to proven broad appeal product
7 Return to proven broad appeal product • We’re returning to the compelling proposition of value-led fast seasonal fashion and wardrobe basics with reduced emphasis on directional fashion • Thorough review of individual product areas during H2 FY18 (and continuing) led by Roger Wightman and Tom Sing
Slide 8: Lower prices delivering better value
8 Lower prices delivering better value • Robust revision of our pricing framework to ensure we reclaim our historical reputation for exceptional value: • Compelling entry prices • Over 80% of our Spring/Summer range planned to be priced under £20 • Focus on full price sales and profitability – ‘firs
Slide 9: Fundamentally realigned supply chain
9 Fundamentally realigned supply chain • Collaboration is closer than ever with our suppliers, cementing longstanding key relationships • Re-established focus on speed to market and regaining our agility • Overall product options reduced by 15%-20% v. last year • Tighter management of stock commitme
Slide 10: Symbiotic commercial multichannel model
Symbiotic commercial multichannel 10 model Multichannel • Leveraging our store and online presence • Pricing now aligned between channels • Improved & consistent imagery and value messaging • ‘Click and Collect’ now first in delivery options hierarchy • ‘Store Stock Look Up’ functionality launched t
Slide 11: Efficiency and cost savings
11 Efficiency and cost savings • Certainty and confidence in significant cost savings • Approval of Company Voluntary Agreement (CVA) in March 2018 addressed the over-rented position of UK estate with estimated annual cost savings of c.£40m: • Rent reductions across 393 stores • 60 stores in the UK
Slide 12: People
12 People • Structure • Changes made to senior leadership team • Stores: • Reduced excessive task load and product double-handling • Re-investment to improve customer service • Returned to the 5 core values our employees connect with: • Think Customer • Take Responsibility • Keep it Simple • Act wit
Slide 13: Financial Review
13 FINANCIAL REVIEW RICHARD COLLYER CFO
Slide 14: Summary Consolidated Income Statement
14 Summary Consolidated Income Statement FY18 FY17 • Revenue declined by 7.3% (£106.9m). Under the previous operating model, (52 weeks) (52 weeks) we were committed to higher than necessary volumes of stock, which was £m £m also focussed on the younger, edgier customer. This resulted in continuous R
Slide 15: Segmental Performance
15 Segmental Performance SALES(1) • UK Retail sales declined by 7.4% (£72.3m) due to significant promotional and discounting activity, coupled with a decline in footfall • E-commerce (2) sales declined by 19.2% (£44.2m) due to the same promotional strategy as UK Retail and lower traffic • 3PE sales
Slide 16: Summary Consolidated Balance Sheet
16 Summary Consolidated Balance Sheet As at 24 Mar 18 As at 25 Mar 17 £m £m • Inventory reduced by £9.5m compared to last year, as a result of the higher level of stock provisions and movement in foreign exchange Derivatives - 33.1 Other non current assets 866.3 915.2 rates Non current assets 866.3
Slide 17: Summary Consolidated Cash Flow Statement
17 Summary Consolidated Cash Flow Statement FY18 FY17 (52 weeks) (52 weeks) • Operating profit declined by £228.9m compared to FY17 as £m £m a result of the decline in sales and increase in cost of sales Operating (loss)/profit (152.5) 76.4 and administrative expenses Non cash items 100.1 51.7 • Cas
Slide 18: Capital Expenditure
18 Capital Expenditure • Capital additions have reduced £28.9m during FY18 • Capital expenditure during FY18 focussed primarily on the UK and E- Q4 FY18 Q4 FY17 (52 weeks) (52 weeks) commerce; £m £m • UK new space – opened 10 core stores, 1 mens standalone with 10 store Total UK 32.6 54.0 closures N
Slide 19: Liquidity and Operating Facilities
19 Liquidity and Operating Facilities FY18 FY17 (52 weeks) (52 weeks) £m £m Cash, cash equivalents and bank overdrafts1 59.3 73.2 • Total Liquidity and Operating facilities £200.0m Available liquidity facilities • £100.0m RCF (fully drawn) Overdraft facility 15.0 5.0 Revolving Credit Facility 2 - 10
Slide 20: Underlying Earnings Contributors
20 Underlying Earnings Contributors • Management is confident in our ability to deliver on the 7.0 100.3 turnaround plan from FY19 30.0 • This confidence is underpinned by several key measures we have identified and actioned: 40.0 • £34m of one-off items in FY18 EBITDA that management does not belie
Slide 21: Summary & Outlook
21 SUMMARY & OUTLOOK ALISTAIR MCGEORGE Executive Chairman
Slide 22: Summary & Outlook
22 Summary & Outlook • Significant progress has been made to achieving financial and operational stability • Turnaround plan well under way • Considerably improved stock position to start the new financial year – and will be clean into Q2 • Certainty and confidence in cost savings already delivered
Slide 23: Q&A
Q&A ALISTAIR McGEORGE Executive Chairman RICHARD COLLYER CFO
Slide 24: Appendix – Cost of Sales & Administration Expenses Breakdown
24 Appendix 1 – Cost of Sales & Administration Expenses Breakdown FY18 FY17 (52 weeks) (52 weeks) • Staff costs increased £18.2m. This comprised a £2.7m increase in £m £m exceptional staff costs, £7.2m increase in the share based payments charge Cost of inventories 614.8 595.8 Inventories write down