Investor presentation - Q3 2020 November 5, 2020 - Exciting Commerce
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Investor presentation
Q3 2020
November 5, 2020
Key highlights
• Continued high new customer intake and loyal behavior from new customers.
• Excluding impact from currency, change of agreement with large brand partner Net revenue growth
and fair use policy, net revenue growth would have been ~29% Q3: 23.0% (22.3%)
YTD: 23.5% (25.6%)
• Adjusted EBIT margin improved 11% -points driven by improved gross margin
and operational improvements in fulfilment.
Adjusted EBIT margin
• Other segment profitable
Q3: 7.4% (-3.6%)
YTD: 5.1% (0.3%)
• Strong cash flow generation driven by improving operating profit and positive
working capital changes
• Expansion into Home segment
2020 Outlook
• Intention to do a dual-listing on Nasdaq Copenhagen and considering a public Net revenue growth: upper end of 20-25%
offering in connection with the listing Adj. EBIT margin: 5.5-6.5%
• Upgraded 2020 outlook due to good current trading and improved stock level
2
KPI highlights
Customer satisfaction
Customer satisfaction
Trustpilot* and Net Promoter Score®**
Trustpilot NPS
73 72
4.6 4.6
Q3 2019 Q3 2020 Q3 2019 Q3 2020
Boozt.com
* Trustpilot.com is a leading customer review site with ranking range from 0 to 5
** Net Promoter Score (NPS) is a tool to gauge the loyalty of a firm’s customer relationships. The metric was developed by and is a registered trademark of Fred Reichheld, Bain & Company and Satmetrix
3
KPI highlights
Average Order Value
Average Order Value *
SEK
817
807
808
801 793
Q3 2019 Q3 2020 YTD 2019 YTD 2020 R12M
Boozt.com
* Net of VAT and returns
4
KPI highlights
Cohort development
Active customers No. of orders per active customer True frequency
Customers who made at least one order during LTM (000) Order frequency from customers buying in Q3 2019
(Q3 2018) and the following 12 months
Excluding ”fair use” customers
1,852
+19%
8.0
1,557
7.1 7.1 7.0
2.44
2.33
Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020
Boozt.com
5
Expansion in Home category
What
• Focus on Nordic mid- to premium priced Home & Interior brands
• More than 100 brands have been signed - target to reach 200 brands during Q4
• Strong team of experienced Home buyers and merchandisers
• Products fit into existing supply chain. No additional CAPEX needed
Why
• Strong category fit with our target customer. High degree of Nordic style in Home
• Uncomplicated and high turnover product selection – e.g. no large furniture offering making it ‘low risk’
• Can offer the Home brands access to the largest group of Nordic customers shopping at mid-to-premium price points
• A significant step towards creating the department store experience online. No further category expansions planned
When
• Launch during Q4 2020
• Expected to be one of the biggest categories on Boozt.com within the next 5 years
“Our ambition is to offer the Nordic customer the full range of the best and most relevant Home brands, covering all rooms in the
house. We have hired a strong team of experienced Home buyers and merchandisers who in combination with our platform,
marketing and fulfilment expertise will create an outstanding customer experience for Home shopping”
6
Strategic considerations on capital allocation and strategic direction
Capital allocation principles
Raising capital to pursue strategic priorities
1
Reinvest for
2
Bolt-on
3
Excess cash
organic growth acquisitions to shareholders
High ambitions for organic growth... Category
Capacity
... but also attractive bolt-on acquisitions in line with expertise
our capital allocation principles Inventory Technology
Nordic market
Innovation
Additonal capital to secure flexibility to act on presence
opportunities People
What we will NOT do
Pursue acquisitions in unrelated areas
Why a dual-listing and public offering in Copenhagen Expand core business outside the Nordics
Jeopardize the unit economics from strategic choices
• Strenghten the Boozt brand among Danish customers
Prioritize short term margin improvement
• Strong investor interest out of Denmark to increase liquidity over longer-term opportunities
Lose focus on cost control & operational efficiency 7
Financial update
Third quarter
2020
Group results
Net revenue Gross profit Adjusted EBIT
SEK million SEK million SEK million
Margin
42.8%
Margin Margin
+23%
35.6% 7.4%
402.7
940.1
Margin
764.1 273.0 69.7
-3.6%
-27.6
Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020
+24% Margin Margin
Margin 39.4% 5.1%
38.2%
2,934.3
1,156.3 149.7
2,375.2 907.0
Margin
0.3%
8.2
YTD 2019 YTD 2020 YTD 2019 YTD 2020 YTD 2019 YTD 2020
Group
9
Boozt.com
16%
1315
14%
1115 Highlights
1070 12%
915 967
10% • Growth driven by high new customer intake, but negatively
860 832
715 794
impacted by lower stock availability.
691 8%
661 665 6.4%
Net revenue
515 584 • Excluding change of agreement structure with large partner, fair
6%
use policy and negative impact from currencies net revenue growth
4.0%
315
Adj. EBIT margin R12M 3.2% 4% have been around 6%-points higher
2.5% 2.7% 2.4% 2.5%
2.1% 1.9%
115 2% • Higher average order value from lower return level driven by
increased share of Kids, Sport, Beauty & Men and fair use policy
-85 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0%
• Gross margin improved driven by unusual high share of campaign
2018 2018 2019 2019 2019 2019 2020 2020 2020
goods but also supported by contractual improvements. Gross
margin YTD ahead of last year.
Q3 Q3 YTD YTD • Adjusted EBIT margin driven by the gross margin improvement
SEK million 2020 2019 2020 2019 and operational improvements in fulfilment costs
Net revenue 793.9 691.2 2,528.7 2,183.4
Net revenue growth 14.9% 18.5% 15.8% 21.4%
Adjusted EBIT 56.2 -32.0 127.9 1.3
Adjusted EBIT margin 7.1% -4.6% 5.1% 0.1%
The Boozt.com segment includes operations related to the Boozt.com site. More than 95% of the
revenue comes from third party brands where the Group carries the inventory risk. 10Booztlet.com
156
Highlights
137
97 • Strong customer KPI’s including increasing AOV
75
Net revenue 58
68 • Adjusted EBIT margin impacted by higher promotional
46 activity and increased marketing spend
36
25 9.6% 10.3% 11.1% 10.8%
Adj. EBIT margin R12M 6.1% 8.5%
8.0% • Adjusted EBIT YTD negatively impacted by taking a
11.3% 11.5%
proportional higher share of the extraordinary stock write-
down in Q1 relative to the share of written down items sold
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2018 2018 2019 2019 2019 2019 2020 2020 2020 • High industry inventory level offer good opportunities for
purchasing high quality stock at attractive prices
Q3 Q3 YTD YTD
SEK million 2020 2019 2020 2019
Net revenue 136.9 68.0 389.2 171.5
Net revenue growth 101% 89.7% 127% 112%
Adjusted EBIT 11.4 8.0 29.7 19.2
Adjusted EBIT margin 8.4% 11.8% 7.6% 11.2%
Segment Booztlet.com includes operations on the Booztlet.com site, which is the Group’s online outlet. 11Other
Highlights
10
• Physical stores profitable for the first time
9
7 6 7
6 5 4
3
• Good traction in all stores
Net revenue
2.0
• Segment expected to be around break-even going forward
-1.6
Adj. EBIT
-3.7 -3.6 -3.3
-5.0 -8.2
-6.1 -7.5
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2018 2018 2019 2019 2019 2019 2020 2020 2020
Q3 Q3 YTD YTD
SEK million 2020 2019 2020 2019
Net revenue 9.3 5.0 16.4 20.3
Adjusted EBIT 2.0 -3.6 -7.9 -12.3
The segment Other includes the Group’s physical retail stores. This includes the Group’s physical retail outlet,
Booztlet, which is a last resort for clearance of unsold inventory from the online business. The segment also
includes the physical retail store Beauty by Boozt. The opening of a physical beauty store has been necessary in
order to get the online distribution rights in the Nordics from many of the leading beauty brands. 12Cost ratios
Share of net revenue, %
Q3 2020 Q3 2019 Change YTD 2020 YTD 2019 Change
Gross margin 42.8 35.6 7.3 pp 39.4 38.2 1.2 pp
Fulfilment cost ratio (11.6) (14.4) 2.9 pp (11.9) (14.3) 2.4 pp
Marketing cost ratio (11.4) (11.4) (0.1 pp) (9.7) (10.0) 0.3 pp
Adjusted1 admin & other cost ratio (9.1) (10.0) 0.8 pp (9.5) (10.4) 0.9 pp
Adjusted2 depreciation cost ratio (3.3) (3.4) 0.1 pp (3.2) (3.2) 0.0 pp
Adjusted EBIT margin 7.4 -3.6 11.0 pp 5.1 0.3 4.8 pp
*where of cost of personnel (6.0) (6.6) 0.6 pp (6.3) (6.6) 0.3 pp
1 Adjusted for social charges related to share based compensation 13
2 Adjusted for one-off costs including write-downs related to the closure of Copenhagen beauty store in Q120Cash flow
Net working capital CAPEX Operational cash flow Free cash flow
SEK million (in % of LTM revenue) SEK million SEK million SEK million
Fixed assets
Intangibles (excl. Goodwill)
8.8 122.8
160.2
64.4 14.8
28.8
-24.3 -97.2
Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020
11.2%
365.9
647.0 570.7
26.8
42.4
0.3% 86.5
40.1
12.8 -92.8
20.6
Q3 2019 Q3 2020 YTD 2019 YTD 2020 YTD 2019 YTD 2020 YTD 2019 YTD 2020
Group
14Outlook
For 2020 the Group expects a net revenue growth in the The adjusted EBIT margin is now expected to be
upper end of 20%-25% range between 5.5% and 6.5%
(previously between 4.5% and 5.5%)
Medium term targets
Net revenue growth Outgrow the Nordic online market
significantly to expand market share
Adjusted EBIT margin Exceed 6% adjusted EBIT margin by 2022
15Disclaimer
The Company’s financial targets set forth above constitute forward-looking information that is subject to considerable uncertainty.
The financial targets are based upon a number of assumptions relating to, among others, the development of the Company’s
industry, business, results of operations and financial condition. Company’s business, results of operations and financial condition,
and the development of the industry and the macroeconomic environment in which the Company operates, may differ materially
from, and be more negative than, those assumed by the Company’s when preparing the financial targets set out above. As a result, the
Company’s ability to reach these financial targets is subject to uncertainties and contingencies, some of which are beyond its control,
and no assurance can be given that the Company will be able to reach these targets or that the Company’s financial condition or
results of operations will not be materially different from these financial targets.
16Appendix
Appendix
Income statement
18Appendix
Financial position (1 of 2)
19Appendix
Financial position (2 of 2)
20Appendix
Cash flow (1 of 2)
21Appendix
Cash flow (2 of 2)
22Company overview
A Nordic technology company selling fashion, sport, beauty and home online
The Boozt snapshot
• Boozt.com launched 2011
• Booztlet.com launched in 2015
Our vision
• Head office in Malmö, Sweden
is to become the leading player
• Boozt AB is listed on Nasdaq Stockholm in Nordic fashion and lifestyle retail
• 2 online shops, Boozt.com and Booztlet.com
• Turnover of more than SEK 4,1bn in 20201
Our mission
• Around 400 employees is to deliver an outstanding online fashion
shopping experience with unrivalled
customer service
Boozt Fulfillment Centre
Our central and automated warehouse Our values
located in Ängelholm are founded on the pillars of trust, freedom
& responsibility. These 3 pillars empower us
• Around 400 robots
as individuals, keep us inspired within our
• Warehouse staff in-housed from 1-Jan 2021 teams and build a more resilient company
High customer satisfaction
Boozt Headquarter
Net Promotor Score Trustpilot
Our headquarter located in Malmö NPS
72 4.6
24Towards Nordic online leadership…
71 71
2011 - 2013 2014 - 2016 2017 - 2020 2020 Net revenue Group +23%
NPS Boozt.com
67
Launch of Expansion & Online Propel +38%
Boozt.com Nordic scale leadership forward
• Multi-brand • Nordic • Strive towards • Outgrow +44%
63
shop opened expansion Nordic 62
leadership • Demonstrate +71%
• Integrated • Funding for margin potential
tech platform growth • Leverage +56%
platform • Consolidate
• Marketing focus • Launch of leadership
in Denmark Booztlet.com • Invest in position
infrastructure
2015 2016 2017 2018 2019
25Large Nordic apparel market with strong online momentum
Online penetration levels at various stages hint to the market potential
Total apparel & beauty market
Total sportswear market1
SEK ~ 280bn
SEK
@ 60% online penetration
SEK ~170bn ~45bn
@ 45% online penetration SEK ~125bn
Total homeware market2
@ 30% online penetration SEK ~84bn SEK
~80bn
2019 SEK ~56bn
@ ~20% online penetration
Penetration AND market share gains drive growth
1) Combined Sportswear market of Denmark, Norway and Sweden, i.e. equivalent estimates for Finland NA
2) Homeware considered household textiles, e.g. furnishing fabrics and bed, table and bathroom linen as well as glassware, tableware and household utensils 26
Source: Company estimates, Euromonitor, EurostatCuration and convenience are key success factors in Nordic online fashion
• Seamless user experience across platforms
• Convenient delivery and return options
• Easy access customer care
• Pay THE (right) price
• Relevant and curated selection
• Personalised yet ”power to the people”
• Nudging and not forcing
• Fully automated warehouse
• Fast free deliveries
• Fast free returns
27Taking responsibility as an industry leader
Sustainable choices made easy Responsibility integrated into our value chain
Direct impact
Indirect impact
We operate our deliveries in a closed loop
Webshops
Same truck delivering orders picks up any returns before
heading back for new orders Brand Packaging
collaboration Fulfilment
Warehouse located close to our customers in the Nordics
& Returns
Curated
Our Nordic operations are optimized and low impact
100% renewable energy. From website hosted on green certified
servers, to automated energy-efficient warehouse. Delivery
Production &
manufacturing
Raw materials
Product
Design
Highlight brands that emphasize sustainability and support use & care
those at the beginning of their journey.
Sustainability selection is based on a strict criteria and accredited certifications
Boozt at forefront of responsible practices to ensure
that we meet the needs of our customers and the industry
Recycled Fairly made Organic Low-impact
28Clearly defined target market for Boozt.com
Diversified customer base with attractive features Curated contemporary and relevant selection
1. Attractive customer characteristics 2. Carefully selected brands with Nordic appeal
Entry Commercial Premium
~65% ~85% ~55%
women live together have kids
Focus on target groups where convenience is key
Customers aged 25-54 represent
One destination for fashion
>70% of net revenue
Competitive offering to modern Nordic fashion followers
29Attractive positon in a market where scale matters
Distinct position based on a curated Nordic selection Higher AOV leaving room for higher marketing
Illustrative Nordic market landscape AOV excl. VAT & returns in EUR *
Selectively active in the Nordic region
Premium
Product segment focus
Commercial
78.4
45.3 47.9
Entry price
41.6
Catch-all Curated
Brand strategy
30
* Based on 2019 fiscal year figures. Zalando subtracted VAT of estimated 20%, Boozt & Nelly converted with an SEK/EUR exchange rate of 0.097, Asos calculated as total revenue/total orders, converted to EUR with an exchange rate of GBP/EUR = 1.10Average order value is key to market-leading growth AND high profitability
Cost split per order 808*
• The relatively high AOV and local scale
yields a high profit per order …
• … Allowing for a high marketing spend
Goods for resale 487 60.3% to drive market-leading growth …
• … While still having a positive margin
with incremental improvements
111 13.7% Fulfilment & distribution
Operational costs
80 9.9% Admin & other
24 3.0% Depreciation
81 10.0% Marketing
Profit per order 107 13.2%
26 3.2% EBIT
31
* Boozt.com AOV 2019 (SEK)Loyal cohorts and new customers drive growth on Boozt.com
Net revenue Boozt.com
4000
Net revenue from
new customers
3000
2000
Net revenue from
existing customers
1000
0
2015 2016 2017 2018 2019 2020e
MsekIncreasingly attractive cohort economics
Loyal cohort behavior and operational improvements strengthens customer lifetime value
- Payback in ~12 months at current customer acquisition costs
Customer lifetime value (CLV) increasing despite lower gross margin assumption
CLV on 2019 numbers with a 39.5% gross margin CLV as of today with a 39% gross margin
First year Year + 1 Year + 2 Year + 3 Year + 4 Year + 5
CLV is defined as gross profit less fulfillment & distribution and marketing costs
33Booztlet with strong momentum
Increases addressable market and a hedge against economic downturn
From life-cycle management to hyper growth Copying the Boozt.com journey and experience
156
137
97 Urgency
68 75
58 Uniqueness
46
23
36
25 Discovery
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 Leveraging the strong brand relationships to create unique offering
Strong growth opportunities Booztlet CLV secures high EBIT margins today (~10%)
Very fragmented competitive landscape
New customers
New markets outside the Nordics profitable first year
(CLV includes marketing costs)
Partner with brands to manage excess inventory in the Nordics
Own buy and special productions to improve “everyday store” feeling
Impact from more marketing (offline initiatives)
First Year Year + 1 Year + 2 Year + 3 Year + 4 Year + 5
34Ecosystem with full value chain coverage for Boozt and brands
BOOZTLET
PHYSICAL STORE
In season Offprice Last resort outlet
Mid-to-premium fashion Prior season stock from Items not sold or
for the Nordic Customer brands and Boozt.com minor defects
Building Building the No waste
the leading Nordic leading Nordic
destination for fashion off-price destination
and lifestyle shopping for the
mid-to-premium customer
35Steadily towards online leadership without overpaying for new customers
Boozt.com + Booztlet.com
Net revenue Adjusted EBIT margin
4000 6%
Net revenue
Adjusted EBIT margin
5%
Net revenue growth
3000
3.7% 4%
3.0%
2000 3%
2.5%
1.6%
2%
1000
1%
0 0%
2016 2017 2018 2019
Msek
36A prerequisite for success is a well invested, data driven operating platform
Homegrown purpose-built infrastructure enables full control over the customer journey
37Automated and scalable fulfilment
Best in class delivery proposition Modular expansion driving scalability
Largest autostore worldwide Revenue capacity (SEK)
Automation Phase 1 ~2
360,000 bins >3,000 2017 billion
+ 360 orders per hour
robots in handling capacity Automation Phase 2 3-4
2018 billion
Capacity of
Automation Phase 3 4-5
Next
1-2
days 4 million+ Own developed
2019 billion
day items and warehouse and robot
>650,000
management system Automation Phase 4 ~6
2020 billion
We are here!
SKU locations
Automation Phase 5 ~7-8
2021 billion
Automation Phase 6 ~8-9
Future billion
Serving 90% of the Nordic region with
Building of new warehouse in progress
100% of the assortment within same or next day
38Capital allocation priorities
Reinvest for organic growth Bolt-on acquisitions Excess cash to shareholders
Capacity Category expertise
Inventory Technology
Nordic market
Innovation presence
1 2 3
People *
*
• Acquired Touchlogic (Boozt Innovation Lab today) in 2019
• Evaluated many Nordic assets since, but none have fitted our strategic and/or financial requirements
39Strategic direction - What we will NOT do
X Pursue acquisitions in unrelated areas
X Expand core business outside the Nordics
X Jeopardize the unit economics from strategic choices
X Prioritize short term margin improvement over longer-term opportunities
X Lose focus on cost control & operational efficiency
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