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SPORTS DIRECT INTERNATIONAL PLC
Interim Results PresentationFor the 26 weeks ended 26 October 2014
Thursday 11th December 2014
Dave ForseyCHIEF EXECUTIVE
FY15 H1: Group Highlights
3SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Sports Retail gross margin increased by 130 bps to 44.5%
• Group underlying EBITDA increased by 10.8% to £203.1m
• Underlying profit before tax up 9.8% to £160.6m
• Underlying free cash generation of £161.5m
• Oxford Street store re-located in May 2014
• Roll-out of large format city centre stores
• 29 new license agreements signed with contracted minimum
royalties of $12m over the life of the agreements
• Continued investment in inventory and strategic stakes while
maintaining a strong balance sheet
• Net debt decreased to £186.5m (£212.0m at 27 April 2014)
Neustadt, Austria
Neustadt, Austria
FINANCIAL REVIEW
+£77.2m
-£2.9m
1,000
1,050
1,100
1,150
1,200
1,250
1,300
1,350
1,400
1,450
1,500
FY14 H1 Sports Retail Stores ¹ Sports Retail - online Premium Lifestyle Brands FY15 H1
+£17.6m -£4.1m
Reve
nu
e (
£m
)
-3.9%
+7.9%
-2.8%
£1,345m
£1,433m+11.1%
FY15 H1: Group Revenue Bridge
• Sports Retail revenue growth of 8.3%
• Group Revenue growth of 6.5%
5SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
(1) Includes Wholesale and Other
Sports Retail Revenue
41.4
40.3
40.9
40.3
43.2
42.9
44.5
39.0
40.0
41.0
42.0
43.0
44.0
45.0
H1'12 FY'12 H1'13 FY'13 H1'14 FY'14 H1'15
Gro
ss
Ma
rgin
(%
)
Gross Margin %
Sports Retail Gross Margin
977 1,055
159
176
400
500
600
700
800
900
1,000
1,100
1,200
1,300
FY14 H1 FY15 H1
Revenue (
£m
)
Online
Stores and Other*
• Online revenue growth of 11.1%
• Stores and other growth of 7.9%
£1,136m
£1,231m
FY15 H1: Sports Retail Overview
• Gross margin increase of 130 bps year on year due to
higher proportion of ‘better’ and ‘best’ Group branded
product
6SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
FY15 H1
(£m)
FY14 H1
(£m)
Change
(%)
Store Wages 120.4 103.7 16.1
Premises Costs 106.8 92.0 16.1
Other Retail Costs 126.7 114.9 10.3
Sports Retail Operating Costs 353.9 310.6 13.9
Sports Retail Underlying EBITDA pre associates 194.2 180.3 7.7
Associates (Heatons & others) 1.6 0.9 77.8
Sports Retail Underlying EBITDA 195.8 181.2 8.1
FY15 H1: Sports Retail Operating Costs
7SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Sports Retail operating costs impacted by the full year effect and proportionally higher costs in our
acquired European businesses
FY15 H1
(£m)
FY14 H1
(£m)
Change
(%)
Revenue 99.9 102.8 (2.8)
Gross margin 38.4 44.2 (13.1)
Gross margin % 38.4% 43.0%
Store Wages 9.9 13.9 (28.8)
Premises Costs 20.7 27.0 (23.3)
Other Costs 15.6 15.2 2.6
Total Operating Costs 46.2 56.1 (17.6)
Division Underlying EBITDA (7.8) (11.9) (34.5)
USC/ Republic
USC/ Republic
Van MildertVan Mildert
Flannels
Flannels
0
20
40
60
80
100
120
FY14 H1 FY15 H1
Re
ve
nu
e
£102.8m £99.9m
CruiseCruise
FY14 H1
• May 2013: acquired remaining 20% of Cruise
• July 2013: acquired 51% of Pulp, a six store retail fashion chain
FY15 H1
• Continued rationalisation of USC business
• Further growth in online sales across the division
FY15 H1: Premium Lifestyle
8SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Gross margin impacted by clearance of surplus stock in Flannels, Cruise and Van Mildert
90.8 86.8
15.4 15.3
0
20
40
60
80
100
120
FY14 H1 FY15 H1
Re
ven
ue
(£
m)
• Revenue: down 3.9%
– Licensing: down 0.6%
– Wholesale: down 4.4%
• Wholesale margin increased to 32.7%
– Up 70 bps
• Licensing:
– FY15 H1: 29 deals completed with contracted minimum royalties of $12m over the life of the agreements
£106.2m
Licensing
Wholesale
£102.1m
FY15 H1: Brands Division
9SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
FY15 H1
(£m)
FY14 H1
(£m)
Change
(%)
Wages 9.7 12.0 (19.2)
Advertising & Promotion 7.6 6.4 +18.8
Other Brands Costs 11.4 11.9 (4.2)
Total Brands Operating Costs 28.7 30.3 (5.3)
Brands EBITDA 15.1 14.0 +7.9
FY15 H1: Brands Operating Costs
10SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
£183.3m
£203.1m£197.0m
+8.1%
+7.9% +1.7%
£14.6m
£4.1m £1.1m (£6.1m)
+10.8%
140
150
160
170
180
190
200
210
FY14 H1 pre Share
Scheme charges
Sports Retail Premium Lifestyle Brands FY15 H1 pre Share
Schemes' non-cash
charges
Share Schemes'
non-cash charges
FY15 H1
+34.5%
UN
DE
RL
YIN
G E
BIT
DA
(£M
)
FY15 H1: Underlying EBITDA Bridge
11SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Group underlying EBITDA (pre Share Scheme charges) increased by 10.8%
• Sports Retail growth includes the acquisition of EAG and SIG (acquired in June 2013 and August 2013, respectively)
FY15 H1
(£m)
FY14 H1
(£m)
Change
(% )
Underlying EBITDA (pre Share Scheme charges) 203.1 183.3 +10.8
Bonus Share Scheme charges (6.1) (6.0) +1.7
Depreciation (33.0) (28.4) +16.2
Interest (4.7) (4.1) +14.6
Investment Income 1.3 1.3 -
Underlying PBT 160.6 146.2 +9.8
Underlying Taxation (36.9) (36.4) +1.7
Non-controlling Interests (0.7) 0.1 nm
Underlying Profit for the period 123.0 109.9 +11.9
Number of shares (000s) (1) 592,294 578,454
Underlying EPS 20.8p 19.0p +9.5
FY15 H1: PBT / PAT / EPS
12SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
(1) The weighted average number of shares includes the impact of the vesting of 24 million shares in August and October
2013 under the 2009 Employee Bonus Share Scheme and the Executive Bonus Share Scheme, respectively
FY15 H1
(£m)
FY14 H1
(£m)
Change
(% )
Sports Retail - Stores, warehouse and amortisation of goodwill 25.1 20.9 +20.1
Sports Retail – Change in estimated useful life – fixtures & fittings 2.5 2.5 -
Total Sports Retail 27.6 23.4 +17.9
Premium Lifestyle 1.6 1.8 -11.1
Brands 3.8 3.2 +18.8
Total 33.0 28.4 +16.2
FY13: The useful life of fixtures and fittings was reduced from 8 years to 7 years
FY14: The useful life of fixtures and fittings was reduced from 7 years to 6 years
FY15: The useful life of fixtures and fittings has been reduced from 6 years to 5 years, and the
depreciation policy has been changed from reducing balance to straight line
FY15 H1: Depreciation & Amortisation
13SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
FY15 H1
(£m)
FY14 H1
(£m)
Reported PBT 149.7 143.1
Standard rate of corporation tax (1) 31.4 32.9
Non-qualifying depreciation 1.9 2.9
Other differences 1.1 -
Effective tax 34.4 35.8
Actual effective tax rate 23.0% 25.0%
FY15 H1: Taxation
(1) The standard rate of corporation tax was 21% in FY15 H1 (FY14 H1: 23%)
14SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
FY15 H1: Cash Flow
(1) Acquisitions in FY14 include EAG, SIG, Yeomans and Gelert
(2) The purchase of EAG included 12 properties with a book value of £67.6 million
(3) Listed investment acquired in FY15 H1 relates to Debenhams
15SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
FY15 H1
(£m)
FY14 H1
(£m)
EBITDA (pre scheme costs) 203.1 183.3
Realised (loss) / profit on FX contracts (7.7) (0.6)
Taxes paid (33.9) (35.8)
Underlying free cash flow 161.5 146.9
Working capital
Inventory (89.6) (49.3)
Debtors / Creditors, Other (2.2) 31.8
Acquisitions (including debt) (1) (2) (2.3) (124.1)
Net (purchase of) / proceeds from investments (3) (33.2) -
Investment income received 1.3 1.3
Capital expenditure (26.7) (31.8)
Proceeds from sale of freehold properties inc. warehouses 21.1 -
Finance costs paid (4.4) (4.1)
Decrease / (Increase) in net debt 25.5 (29.3)
FY15 H1
(£m)
FY14 H1
(£m)
Freehold acquisitions 0.7 9.2
Warehouse and Shirebrook store expansion 3.4 4.4
New stores (leasehold) 9.5 8.0
Maintenance capex 5.2 3.4
Other 4.2 3.1
Sports Retail 23.0 28.1
Premium Lifestyle 1.6 1.9
Brands 2.1 1.8
26.7 31.8
Proceeds on disposal of Fixed Assets (21.1) -
Net Capital Expenditure 5.6 31.8
• FY15: target capital expenditure: c.£90m including commencement of Phase 3 of the Shirebrook extension
FY15 H1: Capital Expenditure
16SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
NE
T D
EB
T (
£M
)
• Investment in working capital, particularly product range and stock availability
212.0186.5
195.4(92.8)
(33.2)(26.7) 21.1 (4.4)
(33.9)
-100
-50
0
50
100
150
200
250Net Debt
27/04/2014EBITDA Working
capital &other
Purchase ofinvestment
CapitalExpenditure
Sale offreeholdproperty
Interest Tax Net Debt26/10/2014
FY15 H1: Net Debt Bridge
17SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
OPERATIONAL REVIEW
Sports Retail: UK Property
19SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
FY15
H1
FY14 H2 FY14
H1
UK Stores (3) 434 418 409
Openings 22 13 19
Closures 6 4 6
Freehold properties 60 59 58
SPORTSDIRECT.com
fascia
420 401 390
Retail Area (sq. ft.) c.4.5m(1) c. 4.5m c. 4.2m
(1) Due to differing methodologies, this implies a range between 4.25m sq. ft. – 4.75m sq. ft.
(2) Excluding Lillywhites Piccadilly
(3) Includes four concessions currently being trialled within Debenhams
• Square footage has remained at c. 4.5m sq. ft. (1)
• Continued enhancement of the store portfolio
• Leasehold expiry profile is now 5.0 years (2)
• 22 new stores opened in the period (3)
• 5 out of the 6 closures in FY15 have been
relocations into larger and better configured space
• Opening of our new Oxford Street store with c.
50,000 sq.ft.
Sports Retail: UK Property
20SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
Targets for FY15 include:
• Target c. 300,000 sq. ft. of existing space to be
refitted
• Target 30 – 40 store openings, 30% of which
are expected to be relocations
• Focus on further large format stores in key
markets
• Continued investment in specialist
performance areas
• Improved visual merchandising
Sports Retail: UK Property
21SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
Oxford Street relocation
• New Oxford Street store opened in May – c. 50,000 sq. ft.
• Enhanced in-store concepts
• Collaboration with key suppliers e.g. Nike, adidas and
Puma
Glasgow city centre extension
• Existing store trades 22,000 sq. ft. over 2 floors
• Extended total area will be c. 50,000 sq. ft. over 5 floors
• Expected to finish redevelopment in Spring 2015
Close to securing other large format city centre store
opportunities
Sports Retail: Fitness Division Update
22SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Acquired 18 former LA Fitness sites
• Aintree sports retail now open and gym due to
open by end of December
• 40,000 sq.ft. retail space over 2 floors
• A separate 20,000 sq.ft. dry gym
• Another two units opening in St Helens and
Keighley in early 2015
23SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
Existing territories No. of Stores
Austria 48
Belgium 44
Estonia (1) 37
Latvia (1) 24
Lithuania (1) 20
Slovenia 15
Portugal (2) 16
Poland 9
France 7
Germany 3
Holland 6
Cyprus 6
Hungary 5
Slovakia 3
Czech Republic 5
Luxembourg 2
Spain 1
Total 251
Sports Retail: International Overview
Associates No. of Stores
Rep. of Ireland (3) 26
Iceland (4) 1
Total 27
(1) Sports Direct owns a 60.0% stake
(2) Sports Direct owns a 50.1% stake
(3) Sports Direct owns a 50.0% stake
• Active in 19 European countries, including Iceland and Ireland
• Opening of Sports Direct store in Letňany, Czech Republic in co-operation with Tesco
• Expansion in the Baltics with new Ülemiste store (Estonia) opened in October under Sportsdirect.com fascia
• Opened eight stores in Europe, while closing four during the period
• Commenced Austrian integration:
• 18 stores in Austria now under Sportsdirect.com fascia
• c. 3.5m sq. ft. total retail space (5)
Letňany, Czech Republic
Ülemiste, Estonia
(4) Sports Direct owns a 40.0% stake
(5) Due to differing methodologies, this implies a range
between 3.25m sq. ft - 3.75m sq. ft.
24SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
Sports Stores: Austria Update
• Remaining 49% equity stake in Eybl and Sports Experts acquired in
March 2014
• Integration of Eybl stores only commenced in April 2014, following
acquisition of remaining equity stake
• Integration process includes significant re-configuration of historic
Eybl business model
• Discontinued low margin wholesale business
• Customer visits / footfall reliant on substantial marketing spend
• Operating costs exacerbated by number of specialist / niche
suppliers
• Sports Direct initiatives include:
• Sports Direct EPOS systems introduced to all stores
• Improve buying and merchandising disciplines
• UK training and retail support
• Supplier rationalisation, focused on building pan European
relationship with largest suppliers
• Continuing sell through of legacy stock
• Investment in core stock availability
• Category led merchandising lay-outs planned for mega stores
• €20 million of cost removed from EAG business over last two years
• Store rebranding options include retention of Eybl fascia for the
largest / mega stores
Vienna, North
Salzburg, Kassern
25SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
Sports Retail: Marketing Campaigns
• In October 2014 we helped adidas to launch
their NEO range of footwear in a pan -
European campaign via windows and in
store POS in over 700 doors and via our
digital platforms
• We revealed the latest ‘through the line’
Firetrap campaign on Halloween. The horror
inspired TV campaign was created by the
award winning director Ian John Powells.
The campaign has been carried further into
print, digital and retail executions
• Karrimor further enhanced its running
credentials by highlighting its winter range of
reflective clothing & footwear through retail
windows & print advertising
26SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
Sports Retail: Forever Sports Magazine
• In April 2014 we re-launched the Sports Direct
magazine as a stand alone Mens Sports &
Lifestyle title, Forever Sports
• The title is stocked in all major retailers
including Tesco, Sainsburys, WH Smiths and
ASDA as well as Sports Direct channels
• In the last ABC figures Forever Sports was
ranked the UK’s 2nd biggest selling Sports,
and 4th biggest Men’s Lifestyle magazine
• The magazine has also received Launch of
the Year and Magazine of the Year awards in
the 8 months since launch Pos Title ABC
1 Four Four Two 79,700
2 Forever Sports 62,277
3 National Club Golfer 59,000
4 Golf Monthly 48,212
Pos Title ABC
1 Mens Health 196,894
2 GQ 113,663
3 FHM 83,136
4 Forever Sports 62,277
5 Esquire 52,859
Source: ABC data, August 2014
Sports Ranking
Men’s Lifestyle Ranking
Online Sports Sales
Sports Retail: Online Overview
Overview
27SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
£80m
£174m
£112m
£265m
£159m
£335m
£176m
0
50
100
150
200
250
300
350
400
HY12 FY12 HY13 FY13 HY14 FY14 HY15
Ecommerce
• Click & collect has been trialled across c. 400 UK Sports
Direct stores
• Responsive design now fully implemented across all
platforms, including Sports Retail and Premium Lifestyle
• Gift cards launched online, purchase and redeem
• Improved foreign language sites, e.g. France and
Germany – significant reduction in ‘dropped baskets’
• Mobile (smart phone / tablet) now equates to 30% of
visits to sportsdirect.com
Objectives
• Developing ‘fast-pay’ check-out solution
• Introducing more European payments methods, e.g.
Ideal, Giro Pay and Sofort
• Developing credit facility
• Developing loyalty scheme, including annual fixed price
delivery options
• Developing ‘cross-platform’ click and collect solution
Premium Lifestyle
Store count
Fascia FY15 H1 FY14 H1
USC 80 81
Republic - 19
Cruise 10 9
Flannels 8 8
Van Mildert 9 10
Other 9 15
Total 116 142
28SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Rationalisation of USC business continues,
including closure of further 20 loss making stores
since the prior year
• Further progress made in mitigating operating
costs related to former Republic business
• Republic brands, including Soulcal, Fabric and
Crafted, continue to perform well at USC
• Supply from major 3rd party brands remains very
challenging
• Strong growth in online revenue
• Click & collect being trialled at all 80 USC stores
• Cruise and Van Mildert back-office functions
moving to Shirebrook head office
• Premium Karrimor K100 collection developed for
Cruise and Flannels
Brands: Wholesale
29SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Reduction in overall wholesale revenue of 4.4%
• US trading in line with expectations
• US now represents c. 40% of total wholesale
revenue
• Sales in Europe up 3.5% despite a tough market
• Wholesale gross margin up by 70 basis points
• Investment in key Group Brands expected to
continue at similar levels to previous years
Brands: Licensing
30SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Sports Direct Retail licensing continues to grow, as stores
open in South East Asia and the Middle East
• 29 new license agreements signed in H1 with guaranteed
minimum royalties of $12m over the contract period
• Everlast, Dunlop & Slazenger continue to drive potential
growth, representing c. 60% of total licensing income
between them
• Dunlop remains a key focus area for expansion into new
categories, notably automotive accessories - now 13 active
license agreements across new Dunlop categories
• Growth in Asia to continue, predominantly across the
Slazenger and Dunlop brands
• Licensing model still regarded as key driver of Brands
division growth and profitability
Lillywhites, Kuwait
Lillywhites, KuwaitSports Direct, Melaka, MalaysiaSports Direct, Melaka, Malaysia
FY15: Outlook Statement
31SPORTS DIRECT INTERNATIONAL PLC / Interim Results Presentation / Thursday 11th December 2014
• Results for the six months were solid considering the adverse impact of
• England’s early departure from the FIFA World Cup in Brazil
• Unseasonably mild weather during Autumn reducing footfall
• Trading since the period end has been in line with management’s expectations
• Performance continues to be driven by
• Investment in product range and availability
• Optimisation of in-store and web product offer
• Growing proportion of ‘better’ and ‘best’ Group branded products in key categories
Delivering exceptional quality and unbeatable value to our customers
• Certain of achieving the final EBITDA target of £300m (before share scheme charges) under the 2011 Employee
Bonus Share Scheme
• Consistent with previous guidance, the Board remains confident of achieving at least our full year internal
underlying EBITDA target of £360m(1)
(1) Excluding the Employee Bonus Share Scheme charges
QUESTIONS?