Adairs Ltd. · ASX:ADH
Adairs — FY2015 Earnings Presentation
26 slides from Adairs's earnings presentation, Aug 25, 2015
Slide 1: FY15 results presentation
For personal use only FY15 results presentation 25 August 2015
Slide 2: Pro Forma Results highlights
Pro Forma Results highlights For personal use only LFL sales Sales growth $210.9m up 25.6% 21.6% Gross profit margin CODB 44.1% of sales 62.0% down from 46.5% EBIT $33.1m NPAT Up 51.8% $22.0m Variances refer to pro-forma FY15 highlights compared to pro-forma FY14 highlights 1
Slide 3: Agenda
Agenda For personal use only 1. Operational highlights – Strong gains and milestones achieved 2. Financial performance – FY15 ahead of Prospectus Forecast 3. Outlook – Well positioned for continued growth and achievement of FY16 Prospectus Forecast
Slide 4: FY15 operational highlights
FY15 operational highlights For personal use only Continued focus on product and range differentiation • Strong performance from fashion bedlinen and home furnishings • Improved performance of Adairs Kids category Four net new stores opened with ongoing store refurbishments • Three Adairs, two A
Slide 5: LFL sales momentum strong +21.6%
LFL sales momentum strong +21.6% All store formats delivering strong LFL sales growth For personal use only 31 consecutive months of LFL sales growth Second half delivered 24.1% growth 1 18 6 2 Growth in transaction numbers driving sales 11 5 Core formats performance driven by expansion in
Slide 6: Growth in all categories
Growth in all categories Both Fashion & Decorator and Staples sales For personal use only Fashion & Decorator vs Staples Sales Mix growing above market Staples growing above market at 12% Fashion & Decorator category remains the key driver, growing at 39% Expanding our offer in new categorie
Slide 7: Agenda
Agenda For personal use only 1. Operational highlights – Strong gains and milestones achieved 2. Financial performance – FY15 ahead of Prospectus Forecast 3. Outlook – Well positioned for continued growth and achievement of FY16 Prospectus Forecast
Slide 8: FY15 above Prospectus Forecast
FY15 above Prospectus Forecast For personal use only Adairs has successfully executed it’s strategy to deliver pro-forma FY15 results above Prospectus Forecast Pro-forma FY15 Prospectus $ million Statutory FY15 Pro-forma FY15 forecast Variance Sales 210.9 210.9 203.4 3.7% Gross Profit 130.7 130.7 12
Slide 9: Strong growth across key metrics
Strong growth across key metrics For personal use only Sales revenue growth +25.6% Pro-forma, $ million FY15 FY14 Change Like for like sales growth +21.6% Sales 210.9 167.9 25.6% Gross Profit Margin of 62.0%, below Prospectus forecast of 62.7% Gross Profit 130.7 103.8 25.9% Pro active approa
Slide 10: Continued operational improvement
Continued operational improvement For personal use only Cost of doing business (CODB) Cost of doing business down to 44.1%, from 46.5% prior year Lower than FY15 pro-forma Prospectus Forecast of 45.0% Significant investment in recent years has positioned the business to leverage the team and i
Slide 11: Strong balance sheet supports growth
Strong balance sheet supports growth For personal use only Statutory Pro-forma Balance sheet in line with $ million 28 Jun 2015 28 Dec 2014 Change expectations Cash and equivalents 9.4 (11.5) Pro-forma net debt of $39.4m (adjusted for transaction costs Inventories 23.2 20.9 11.1% pending payment
Slide 12: Strong cash flow from operations
Strong cash flow from operations For personal use only • $26.2 million cash from operating FY14 activities Pro-forma (continuing $ million FY15 operations) Change Strong operating cash flow due to improvement in working capital Net cash flows from management (i.e. stock turns) and 26.2 21.8 20.3%
Slide 13: Investing for growth
Investing for growth For personal use only Capital expenditure Continued focus on opening new stores Pleasing results from stores refurbished in FY15 Remain committed to ongoing investment in existing stores Continue to seek opportunities to expand in high performing homemaker centres Majo
Slide 14: Agenda
Agenda For personal use only 1. Operational highlights – Strong gains and milestones achieved 2. Financial performance – FY15 ahead of Prospectus Forecast 3. Outlook – Well positioned for continued growth and achievement of FY16 Prospectus Forecast
Slide 15: Positioned for category growth
Positioned for category growth For personal use only Adairs has the structure to support continued product and range differentiation and expansion. Leverage product design, development and sourcing capabilities to drive: On trend fashionable merchandise Speed to market Product quality Coor
Slide 16: Core store format provides proven growth path
Core store format provides proven growth path For personal use only Roll out of core store formats remains the largest driver of growth of our store network 7 – 10 of the new stores to be opened annually for the next 5 years expected to be Adairs and Adairs Homemaker Majority of new sites are
Slide 17: Emerging formats offer growth opportunity
Emerging formats offer growth opportunity For personal use only Adairs will recommence the roll-out of Adairs Kids and Urban Home Republic Adairs Kids Improving performance metrics will see more stores open in FY16 New store format developed and will be progressively rolled out Urban Home Re
Slide 18: Leveraging investments to support growth
Leveraging investments to support growth For personal use only Excellence in retail execution supports Adairs’ future growth Enhance online customer experience and omni-channel marketing Growing online email database More product available online Continue to switch marketing dollars from mas
Slide 19: International expansion opportunity
International expansion opportunity For personal use only A disciplined and selective international expansion may offer an additional pathway to growth Adairs is evaluating the potential to commence international expansion trial stores in New Zealand or South Africa Further diligence on these tw
Slide 20: Well positioned for continued growth
Well positioned for continued growth For personal use only Successfully listed on ASX in June FY15 result ahead of Prospectus forecast Attractive growth opportunities – new products, new stores, new markets Well positioned to achieve FY16 Prospectus forecast Reaffirm the prospectus dividend
Slide 21: Questions?
For personal use only Questions? 20
Slide 22: Appendix
For personal use only Appendix
Slide 23: Leading Australian home furnishings retailer
Leading Australian home furnishings retailer For personal use only Adairs has a long history in Australia and now supplies home furnishings across five different formats nationwide, plus an online store Strong sales and profitability growth across all formats “Core” formats key to growth over ne
Slide 24: Pro-forma – statutory profit and loss reconciliation
Pro-forma – statutory profit and loss reconciliation For personal use only $’000 FY15 Notes Statutory profit / (loss) after income tax 2,942 $1m ahead of Prospectus forecast for continuing operations Transaction expenses 14,727 IPO transaction costs in line with Prospectus Finance expenses 12,094 Pr
Slide 25: Pro-forma – statutory cash flow reconciliation
Pro-forma – statutory cash flow reconciliation For personal use only $’000 FY15 Notes Statutory net increase in cash and cash (7,896) equivalents Difference between income tax paid and pro forma Income tax (paid)/refunded (9,355) assumed tax paid at 30% of profit before tax. Net incremental costs as
Slide 26: Disclaimer
Disclaimer For personal use only Some of the information contained in this presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Adairs Limited current intentions, plans, expectations, assumptions