MARKET EYE INVESTOR CONFERENCE - Cameron Fox CEO & Managing Director Shaver Shop Group Limited - HotCopper
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Shaver Shop Group Limited
MARKET EYE INVESTOR
CONFERENCE
7 May 2019
Cameron Fox
CEO & Managing Director
INTRODUCTION TO SHAVER SHOP
Shaver Shop is a leading, personal care specialty retailer across Australia & New Zealand
Founded in 1986 121 stores across Insert Foreo
Insert Braun AU and NZ
Trusted and (113 corporate image with
respected brand S9 image owned and woman
operated)
Unique Business
High brand model
Insert Dyson awareness Highly
differentiated
Quality Brands at Strong online Strong cash flow
competitive prices
customer and conservative
35 of top 50 selling proposition balance sheet
products exclusive to SSG
Category and market growth fueled by consumers increasing focus on health and beauty 2
STRONG GROWTH TRACK RECORD
Shaver Shop is a leading, personal care specialty retailer
across Australia & New Zealand
Strong Underlying* Sales Growth ($m) Stable Gross Margins
180.0 50.0%
160.0 45.0% 41.8% 42.8% 41.7% 42.7%
5.4 41.4% 41.6%
140.0 12.1 40.0%
120.0 35.0%
100.0 30.0%
4.5 0.2
80.0 25.0%
149.5
60.0 130.4 20.0%
106.7
88.7 95.5
40.0 15.0%
63.2
20.0 10.0%
0.0 5.0%
FY15 FY16 FY17 FY18 1H FY18 1H FY19
0.0%
Underlying business Est. Daigou channel FY15 FY16 FY17 FY18 1H FY18 1H FY19
Consistent Underlying* EBITDA Results ($m) Growing Dividend Payout (cps)
16.0
14.0 2.5
1.2
12.0
1.1 0.0
10.0
8.0
6.0 12.6 12.4 12.0
10.5 11.0
4.0
7.2
2.0
0.0
FY15 FY16 FY17 FY18 1H FY18 1H FY19
EBITDA - Underlying business Est Daigou Channel
* Underlying results exclude the estimated sales and EBITDA contribution from the Daigou reseller channel and have been normalised to exclude one-off items. Further details on
normalisations are included in SSG’s Directors Report to the Financial Report. Daigou reseller sales and earnings are difficult to estimate given these customers come into Shaver Shop’s 3
stores but often buy in higher volumes. Daigou sales are identified by separating sales transactions with > 5 units per transaction for product known to sell into the Daigou channel.
GROWTH DRIVERS
6 GROWTH OPPORTUNITIES
1. Organic growth across men’s grooming market
3X Key growth drivers
2. Investing in our omni-retail capabilities
highlighted in blue
3. New store design (store refits and relocation opportunities)
4. Increasing market share across female hairstyling and beauty
5. Greenfield opportunities (new sites)
6. Franchisee buy-backs
4
GROWTH DRIVER #1
Shaver Shop operates in a mass market
(personal care) that is continuing to grow –
particularly in the male segment
• Hair removal and styling is something everyone needs
• SSG is a men’s and women’s business
• Male beauty regime is becoming increasingly similar to
women
• Multiple tools (Electric shaver, razor, beard trimmer,
body groomer, IPL etc.…)
• Skincare increasingly relevant – for both the millennial
and over 40s segments
• ANZ is behind other global markets in men's beauty tool
adoption and at home/DIY grooming
• Market research indicates SSG is not yet optimizing
engagement with key, growing millenial consumer
• Social media influence and increasing health focus is
creating desire to look good all the time and driving DIY
beauty regime
• Global suppliers (Philips, Proctor & Gamble, Remington,
Panasonic etc…) investing heavily in new product
innovation
• Shaver Shop’s product offering is unique with superior
access to exclusive products
5
GROWTH DRIVER #2
Investing in our omni retail capabilities to
drive better customer experience,
increased relevance and loyalty (repeat
purchase)
• Shaver Shop store teams will always remain a key
differentiator and core to customer experience
SSG net promoter scores (NPS) consistently above 80
• Online sales now represent c. 11-12% of total
network sales with target of 15-20% in 2-3 years
• Creating seamless customer experience across any
sales channel
• Several e-commerce enhancements leading to
improved online metrics (e.g. improved sales
conversion)
• Core CRM platform being launched in late FY19 that
lays foundation for:
Shopper insight - relevance
Personalisation
Loyalty – increasing purchasing frequency
• Social media – both organic and paid presence to
drive sales conversion and retention
• “Always on” marketing strategy to attract more, new
customers and improve engagement with our loyal
base
• Selectively considering marketplace participation
where it makes sense
6
GROWTH DRIVER #3
New store layout and design is currently
driving incremental same store sales
growth of 10%+ and strong initial ROI
• 5 full store refits and 1 store relocation undertaken in
Feb ’19
• New store layout incorporates customer feedback:
Better category segmentation
Improved “shopability”
Increased customer engagement through “touch &
feel” display units
Increased linear wall-space for Hair Styling & Female
Beauty
• First two months refit performance indicate
incremental LFL sales growth > 10% vs total SSG
corporate store network
• 15-20 full store refits/relocations planned over next
12-24 months including a number of key doors
• 4-6 greenfield sites planned for FY20 (one locked-in
to date)
7
GROWTH DRIVER #4
Attracting more female customers with
strong hair styling and beauty ranges that
complement core hair removal categories
• More than 50% of our customers are women
• Generally they are buying for men and don’t fully
understand Shaver Shop’s broadening female beauty
ranges
Hair Styling – ghd, Dyson, Hot Tools, Flair
Female beauty – Flawless, Stylpro, Homedics, Braun,
Philips
Hair Removal – Philips, Braun, SmoothSkin
• Increasing use of social media marketing and SEO
activity is supporting improved brand recognition and
realignment
• Addition of ghd has been a significant win for Shaver
Shop that leverages our staff training and focus on
product knowledge
• Experience indicates female beauty and hair styling
innovation can drive significant, but short term, sales
and earnings contributions
Focused on converting these one-off interactions
into long term customer opportunities
8
GROWTH DRIVER #5
Greenfield site opportunities
140
•
121
120
108
115
8
Shaver Shop continues to find
100
100
13
9
attractive greenfield
84 20 opportunities in ANZ
Store numbers
76
80 72
60
28
• Disciplines to ensure each
113
56
46
95
106
store meets SSG’s minimum
40 80
56
return hurdles
20
16
30
• Currently targeting c. 140
0
FY13 FY14 FY15 FY16 FY17 FY18 FY19 YTD stores across ANZ
Corporate Franchise
* 121 store total excludes Karrinyup, WA
store that is temporarily closed for center 9
renovation
GROWTH DRIVER #6
Franchise store buy-backs
Franchise Store Profile
• Eastland, VIC buyback completed in October 2018 60
50
• Franchise buy-backs still an opportunity but difficult 40
Store numbers
to predict timing and only 8 franchise stores 30
56
remaining 20
46
28
• Remaining stores are strong performers and largely in 10 20
13
9 8
NSW 0
FY13 FY14 FY15 FY16 FY17 FY18 FY19 YTD
Franchise
• Estimated EBITDA in the remaining franchise group is
c. $2.5 million
Franchise buy-back tax benefit ($m)
• Significant tax benefit from completed franchise buy- 1.8
1.6
backs still to be realised in the coming years (c.
1.4
$1.6m in FY19)
1.2
• Will continue to assess opportunities at appropriate 1.0
multiples 0.8 1.6
0.6
1.1
0.4 0.7
0.2
0.3
0.0
FY19 FY20 FY21 FY22
10NEW ZEALAND UPDATE
Strong growth opportunities expected to improve
scale and profitability
• Launched ghd in NZ in April ‘19
Significant addition to product range and
provides strong opportunity for growth
• Opening new store location – Westfield Newmarket –
August 2019
Newly redeveloped center in the heart of
Auckland
Rolling-out latest store design
• Significant improvements being made to e-
commerce site
• Our execution and capability in this market are
improving
• Potentially closing one store – subject to ongoing
assessment
11TRADING UPDATE
12TRADING UPDATE &
OUTLOOK
• Underlying (ex Daigou) same store sales growth of
+8.7% from 1 January 2019 to 30 April 2019 (pcp
+0.8%) driven by:
• Core hair removal categories
• Hair Styling
• Strong online sales performance
• FY19 YTD (30 April 19) underlying (ex Daigou) same
store sales growth +2.6% compared to +0.7% in pcp
• 2H gross profit margins have been broadly in-line
with expectation through to April 2019
• Several exciting omni channel upgrades in testing for
deployment over next 3-6 months
• Store team alignment, customer service metrics and
sales conversion remains robust
• Early and encouraging signs of ghd launch in New
Zealand
Outlook
• Shaver Shop estimates that its full year normalised
EBITDA will be in the range of $12.5 million to $14.0
million (previously $12.0 million to $14.5 million)
13Shaver Shop Group Limited THANK YOU
IMPORTANT NOTICE AND DISCLAIMER
This management presentation (“Presentation”) has been prepared by Shaver Shop Group Limited ACN 150 747 649 (“Shaver Shop”) and contains general background information about Shaver Shop, its
subsidiaries and their activities which is current at the date of this Presentation.
Summary Information
The information contained in this Presentation is of a general nature and does not purport to be complete nor does it contain all the information which a prospective investor may require in evaluating a
possible investment in Shaver Shop or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Cth). This
Presentation should be read in conjunction with Shaver Shop’s other periodic and continuous disclosure announcements lodged with ASX, which are available at www.asx.com.au (Shaver Shop ASX Code:
SSG). This Presentation is not intended to be relied upon as advice to investors or potential investors in Shaver Shop and does not take into account the investment objectives, financial situation or needs of
any particular investor. These should be considered, with our without professional advice, when deciding if an investment is appropriate.
Disclaimer
Neither Shaver Shop, its related bodies corporate nor any of their respective officers, directors, employees, advisers and agents (Shaver Shop Parties) warrant the accuracy or reliability of the information
contained in this Presentation. To the maximum extent permitted by law, each of the Shaver Shop Parties disclaims any responsibility and liability flowing from the use of the information contained in this
Presentation by any party. To the maximum extent permitted by law, the Shaver Shop Parties do not accept any liability to any person, organisation or entity for any loss or damage suffered as a result of
reliance on this Presentation.
Past performance
Past performance, including past share price performance and historical information in this Presentation, is given for illustrative purposes only and cannot be relied upon as an indicator of, and provides no
guidance as to, future performance of Shaver Shop, including future share price performance. The historical information contained in this Presentation is not represented as being indicative of Shaver
Shop’s views on its future financial condition and/or performance.
Forward looking statements
This Presentation contains certain forward looking statements and comments about future events, including Shaver Shop’s expectations about the performance of its business. Forward looking statements
can generally be identified by the use of forward looking words such as ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’
and other similar expressions. Indications of and any guidance on future earnings or financial position or performance of Shaver Shop are also forward looking statements.
Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward looking statements will not
be achieved. Shaver Shop’s 2018 Annual Report, contains details of a number of key risks associated with an investment in Shaver Shop. Many of these risks are beyond the control of Shaver Shop. Should
one or more of these or other risks or uncertainties materialise, or should any assumption underlying any forward looking statement contained in this Presentation prove incorrect, Shaver Shop’s actual
results may differ materially from the plans, objectives, expectations, estimates, and intentions expressed in the forward looking statements contained in this Presentation. As such, undue reliance should
not be placed on any forward looking statement.
Shaver Shop is providing the information contained in this Presentation as at the date of this Presentation and, except as required by law or regulation (including the ASX Listing Rules), does not assume any
obligation to update any forward-looking statements contained in this Presentation as a result of new information, future events or developments or otherwise.
Pro forma and normalised financial information
This Presentation contains pro forma and normalised financial information. The pro forma and normalised financial information and past information provided in this Presentation is for illustrative purposes
only and is not represented as being indicative of Shaver Shop’s views on its future financial condition and/or performance. The pro forma and normalised financial information has been prepared by Shaver
Shop in accordance with the measurement and recognition requirements, but not the disclosure requirements, of applicable accounting standards and other mandatory reporting requirements in Australia.
Shaver Shop uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are referred to as non-IFRS financial information.
Shaver Shop considers that this non-IFRS financial information is important to assist in evaluating Shaver Shop’s performance. The information is presented to assist in making appropriate comparisons with
prior periods and to assess the operating performance of the business. In particular this information is important for comparative purposes with pro forma information in Shaver Shop’s Prospectus.
For a reconciliation of the non-IFRS financial information contained in this Presentation to IFRS-compliant comparative information, refer to the Directors Report that forms part of the Shaver Shop Group
Limited Consolidated Financial Report that has been lodged with the ASX. All dollar values in this Presentation are in Australian dollars (A$), unless otherwise specified. 15
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