Kathmandu : KMD Final Results Presentation July 2015

Slide 1

FY15 Results Presentation September 2015

2	Key Line Items

3	Country Results

4	Cash Flow, Balance Sheet, Dividend

Contents

1	Results Overview

A	Appendix 1

5	FY16 & Growth Strategy Update

6	FY16 Outlook

7

Questions

2

Results Overview

Key Points

Challenging year impacted by aggressive clearance in Q1 and market downturn 1H

New CEO and management team in place

Return to comparable sales growth at improved margins in Q4

Sales and Margin

Sales growth $16.5m (+4.2% at actual exchange rates, +3.7% at constant exchange rates)

Same store sales decreased 1.9% at constant exchange rates (-1.4% at actual exchange rates)

Gross margin 61.5%, 160 bps lower than FY14

Operating Costs

Operating expenses increased 550 bps as a % of sales to 50%. Investment for future growth did not deliver immediate top line sales performance

Profit

EBITDA $47.1m, down 36.8%

NPAT $20.4m, down 51.7%, (after $1.4m post-tax non-recurring items)

4

RESULTS NZ $m*1	FY15	FY14	Var $	Var %
SALES	409.4	392.9	16.5	4.2%
GROSS PROFIT	251.9	248.1	3.8	1.5%
Gross Profit Margin	61.5%	63.1%
Insurance Claim	-	1.3	(1.3)
OPERATING EXPENSES	(204.8)	(175.0)	(29.8)	17.0%
% of Sales	50.0%	44.5%
EBITDA	47.1	74.5	(27.4)	(36.8%)
EBITDA margin %	11.5%	19.0%
EBIT*2	33.2	64.3	(31.1)	(48.4%)
EBIT margin %	8.1%	16.4%
NPAT	20.4	42.2	(21.8)	(51.7%)
Permanent Open Stores*3	160	149	11

1. FY15 NZD/AUD conversion rate 0.915 (FY14: 0.921), FY15 NZD/GBP conversion rate 0.495 (FY14: 0.512).

2. EBIT YOY exchange rate impact in FY15: $0.0m (FY14 negative $5.8m).

3. Ten new stores opened during FY15, plus Cashel St Re-Start (Christchurch) reclassified as a permanent store. Excludes Online store. 5

4. Rounding differences may arise in totals, both $ and %.

   
   

   RESULTS NZ $m*1

   1H FY15

   1H FY14

   Var $

   Var %

   2H FY15

   2H FY14

   Var $

   Var %

   
   

   SALES	179.4	167.6	11.8	7.0%	230.0	225.3	4.7	2.1%
   GROSS PROFIT	106.3	107.1	(0.8)	(0.7%)	145.6	141.0	4.6	3.3%
   Gross Profit Margin	59.3%	63.9%	63.3%	62.6%
   Insurance Claim	-	-	-	-	1.3	(1.3)
   OPERATING EXPENSES	(99.5)	(84.5)	(15.0)	17.8%	(105.3)	(90.5)	(14.8)	16.4%
   % of Sales	55.5%	50.4%	45.8%	40.2%
   EBITDA	6.8	22.6	(15.8)	(69.9%)	40.3	51.9	(11.6)	(22.4%)
   EBITDA margin %	3.8%	13.5%	17.5%	23.0%
   EBIT*2	0.6	17.6	(17.0)	(96.6%)	32.6	46.7	(14.1)	(30.2%)
   EBIT margin %	0.3%	10.5%	14.2%	20.7%
   NPAT*2	(1.8)	11.4	(13.2)	(115.8%)	22.2	30.8	(8.6)	(27.9%)
   Permanent Open Stores	157	139	18	160	149	11

5. Rounding differences may arise in totals, both $ and %.

6. After $1.4m post-tax / $1.9m pre-tax impact of non-recurring items relating to the relocation of the Australian distribution 6

centre and Christchurch support office, along with costs from the Briscoe takeover process.




Key Line Items




SALES: +4.2% to $409.4m

Group Sales (NZD $m) *1







• Sales growth year on year:*2 AU 6.3%, NZ -1.3%, UK 17.3%;

• At constant exchange rates sales

  growth $14.5m / 3.7%;

• Online sales 6.2% of total sales.




$306.1




$347.1

$384.0 $392.9$409.4




FY11 FY12 FY13 FY14 FY15




Australia (AUD $m)

$227.8$242.1

New Zealand (NZD $m)

$143.3$166.0

$198.4

$110.3 $126.1 $137.0 $141.0$139.1




FY11 FY12 FY13 FY14 FY15

FY11 FY12 FY13 FY14 FY15




1. UK Sales: £2.8m FY15 vs £2.4m FY14.

2. Calculated on local currency sales results (not affected by year-on-year exchange rate variation).

3. Country sales totals exclude inter-company sales. 8

4. Rounding differences may arise in totals, both $ and %.

   AU NZ

   14.4%

   
   

   6.5%

   
   

   6.7%

   
   

   6.9%

   
   

   -2.7%

   
   

   12.3%

   
   

   9.2%

   
   

   4.4%

   
   

   -0.1%

   
   

   -1.1%

   
   

   • Same store sales: *1,*2

     -1.4% actual exchange rates

     -1.9% constant currency:

     • Stores only -3.2%

     • Online only +22.7%

       FY11 FY12 FY13 FY14 FY15

       GROUP - Actual Rates GROUP - Constant Rates

       15.7%

       
       

       12.9%

       • UK SSS +15.7%

       
       

   • Winter season Group same store sales growth of 1.4% at constant currency







5.7%




1.8%

7.0%




5.6%




4.2%







-2.7%

-1.4% -1.9%

FY11 FY12 FY13 FY14 FY15




1. Measurement period for FY15: 53 weeks ended 2 August 2015.

2. Same store sales measurement includes Online and all stores from their 53rd week of trading. 9

   
   

   68.8%

   
   

   AU NZ UK GROUP

   
   

   66.9% 66.3% 66.3% 65.5%

   63.4%

   
   

   60.6%

   
   

   57.6% 57.7% 58.2%58.5%

   
   

   57.4%

   63.2% 63.0% 63.1%

   
   

   61.5%

   
   

   53.9%

   
   

   51.9%

   
   

   49.6%

   
   

   50.0%

   
   

   FY11 FY12 FY13 FY14 FY15

   
   

   • 1H gross margin decreased 460 bps YOY due to:

     • Excess stock clearance;

     • Below target sales in higher margin summer

       apparel product groups.

       
       

   • 2H gross margin increased 70 bps YOY due to less discounting during Winter.




10




OPERATING EXPENSES: +17% to $204.8m




8.5	19.1%
21.3 29.8 3.7 33.5	16.3% 17.0% 36.3% 18.1%

• Operating expenses increased YOY

  550 bps / 5.5% of sales;

  
  

• Rent expenses include expanded New Zealand Distribution Centre and Australian Support Office;

  
  

• Other operating expenses increased 390 bps / 3.9% of sales:




FY15

FY14*1

DIFF $

NZ $m

Rent 53.0 44.5

% of Sales 12.9% 11.3%

Other operating expenses 151.8 130.5

% of Sales 37.1% 33.2%

% of Sales 50.0% 44.5%

Depreciation 13.9 10.2

DIFF %










1. FY14 excludes one-off insurance claim benefit from the Christchurch earthquake.

2. FY15 total operating expense increase attributable to year-on-year exchange rate movement $1.1m.

3. Rounding differences may arise in totals, both $ and %. 11




EBITDA $47.1m -36.8%

71.4 66.5 74.0 74.5




47.1




64.0

EBIT*1 $33.2m -48.4%

63.4 64.3

57.0




33.2

NPAT $20.4m -51.7%




39.1

44.2 42.2

34.9




20.4




FY11 FY12 FY13 FY14 FY15

FY11 FY12 FY13 FY14 FY15

FY11 FY12 FY13 FY14 FY15




23.3%

19.2%

19.3%

19.0%

11.5%

20.9%

16.4%

16.5%

16.4%

8.1%

EBITDA %

EBIT %

12.8%

10.1%

11.5%

10.7%

5.0%

NPAT %




1. EBIT YOY exchange rate impact in FY15: $0.0m (FY14 negative $5.8m).

12