September 2019 Strategy & 2Q19 Results - El Puerto de ...
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September 2019 Strategy & 2Q19 Results
Safe Harbor
This presentation has been prepared by El Puerto de Liverpool, S.A.B. de C.V. (together with its subsidiaries, “Liverpool”), is strictly confidential, is not intended for general
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become bound by the above referred confidentiality obligation and agree that you will, and will cause your representatives and advisors to, use the information contained herein only
to evaluate a credit rating for Liverpool and for no other purpose. Failure to comply with such confidentiality obligation may result in civil, administrative or criminal liabilities. The
distribution of this presentation in other jurisdictions may also be restricted by law and persons into whose possession this presentation comes should inform themselves about and
observe any such restrictions.
Although the information presented in this document has been obtained from sources that Liverpool believes to be reliable, Liverpool does not make any representation as to its
accuracy, validity, timeliness or completeness for any purpose. The information set forth herein does not purport to be complete and Liverpool is not responsible for errors and/or
omissions with respect to the information contained herein. Certain of the information contained in this presentation represents or is based upon forward-looking statements or
information. These forward-looking statements may relate to Liverpool’s financial condition, results of operations, plans, objectives, future performance and business, including, but
not limited to, statements with respect to outlooks and growth prospects, liquidity, capital resources and capital expenditure, growth in demand for our products, economic outlook
and industry trends, development of our markets, competition in areas of our business; and plans to launch new products and services, and the effect of legal proceedings and new
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or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions are generally intended to identify forward-looking
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forward-looking statements, and will not publicly release any revisions they may make to this presentation that may result from events or circumstances arising after the date of this
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Any projections included herein have been prepared based on Liverpool’s views as of the date of this presentation of future events and financial performance and various
estimations and assumptions, including estimations and assumptions about future events, may prove to be incorrect or may change over time. The projections have been prepared
and are set out for illustrative purposes only, and do not constitute a forecast. While the projections are based on assumptions that Liverpool believes are reasonable under the
circumstances, they are subject to uncertainties, changes (including changes in economic, operational, political, legal, and other circumstances) and other risks, all of which are
beyond Liverpool’s control and any of which may cause the relevant actual, financial and other results to be materially different from the results expressed or implied by such
projections. No assurance, representation or warranty is made by any person that any of the projections will be achieved and no recipient should rely on the projections. None of
Liverpool, its affiliates, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated or any of their respective directors, officers, employees, partners,
shareholders, advisers and agents makes any assurance, representation or warranty as to the accuracy of the projections. Nothing contained in this presentation may be relied upon
as a guarantee, promise or forecast or a representation as to the future. Liverpool undertakes no obligation to update the projections or any of the information contained in this
presentation. (1.0)
2
OMNI-EXPERIENCE ENTITY
121 stores (Nationwide presence)
126 boutiques (Presence in
+65% of country)
- Digital Sales
Omni-experience - Click & Collect
138 stores (Nationwide presence) - Liverpool Pocket
- Seller´s App
- Extended Catalog
- Private label cards *
- VISA cards
- 5.2M card holders
27 Shopping malls (Presence
across 17 states)
*For Liverpool & Suburbia.
3
STRATEGIC PRIORITIES
Omni-experience
Digital
Transformation
Customer Experience
Profitability Suburbia´s
Improvement Growth
4
DIGITAL CHANNEL PRIORITIES
Logistics: Shipments
Marketplace Launch &
Consolidation &
Liverpool Pocket
Delivery Time - Marketplace: 5% of commercial offering
Improved delivery time - Liverpool Pocket: 67% increase in downloads
& New DC for 2021
Continue Development
New Payment of Click & Collect
Methods Half of e-commerce sales
IT Platform
Extended Catalog World class web
page (P.W.A.)
As of June 30th 2019 5
CUSTOMER EXPERIENCE & BIG DATA PRIORITIES
Clients, channels, Customer Holistic customer view
products payment Segmentation
360° View
methods, etc.
-Descriptive analytics
-Customer identification Business Advanced -Predictive models
-Unique customer Intelligence Analytics -Prescriptive models
-Cognitive models (AI)
-Comprehensive knowledge Customer Customer -Personalized communication (CRM)
of customer behavior Knowledge Service -Increase RFM
-Experiences design & value
generation
6
Maintain successful SUBURBIA´S PRIORITIES
business model
Accelerated expansion
Omni-experience
to reach 250 total
launch
World class units by 2022
Suburbia.com platform
Development of
our own credit card Create CRM
Launched in July 2018 capabilities
Best in class IT Talent development
(SAP S/4 Hana) model
Implementation
completed
7
In USA: RETAIL EVOLUTION: USA & MEXICO
Up to 1970s
Category Killers
New Breed of
Supermarkets
Price Clubs
Fast Fashion
Discount Stores
Overexpansion
E-commerce
Department
Stores Growth
Replaced mom and
pop’s with a
convenient and self
service shopping
place. - Offer a wide variety
Department stores of consumer goods.
closed some of these
departments. - Some of them follow
the EDLP (everyday - Based on Quick
Offer convenient Response method.
low price) policy. Usually offering surplus
prices on selected Physical department
items. - The supply chain merchandise from stores declined in
is the backbone of mayor retailers or from As well as the
sales and traffic overexpansion, one
these business. their parent brand at while B&M openings
discount prices. of the main reason
were increasing . of the B&M fall.
In the USA, department
stores failed on adapting to
new customer needs.
In Mexico:
Mexico has
endured these
evolution steps
Apply for Mexico Shopping malls and Departmental stores remain
department stores quickly as a destination point for
adapted to the new trends consumers.
Doesn´t apply for Mexico
8
OMNI-EXPERIENCE RIGHT TO WIN
Retail Assortment, Store Network
Extended Catalog -Click & Collect (half of e-commerce sales)
-Extended Catalog (Seller´s App)
& Market Place -Store fulfillment (+80% of orders)
-Customer Service
-Mobile POS (+10K units in store)
-Returns
Logistics Infrastructure Liverpool Cards
121 Stores - Payment Solutions
2 National DCs - Online and B&M
1 Central Warehouse - Preferred Payment Method (+65%)
Arco Norte under construction
Liverpool Pocket
Downloads (67% increase YoY) Highly Recognized
Most important digital channel Liverpool Brand
9
LIVERPOOL DIGITAL ACHIEVEMENTS
As of June 30th 2019:
LIVERPOOL POCKET
67% increase in downloads
EXTENDED CATALOG
Items 3.4x vs. YA
CLICK & COLLECT
Half of e-commerce sales
DIGITAL SALES
8.3% of total sales
CUSTOMER 360° (BIG DATA)
Technological infrastructure on customer data.
Algorithms to create focused promotions.
Customer personalization.
Data on over 6M customers.
Liverpool.com.mx
50% increase in website visits.
Top three in bounce rate &
visit average time.
MARKETPLACE
5% of commercial offering
E-COMMERCE SALES
30.2% increase 2019 YTD
10LIVERPOOL POCKET
Our most important digital channel
104% sales growth
10% of total customers
Representing 25% of total Liverpool sales
Inventory Availability
by Store
Credit Card Payments
Access to Market Place through the App
& Extended Catalog
Account Balance
Click & Collect option
Account Monthly Statement
Online Support
Safe Transactions
Follow Up
Order Tracking
Delivery Promise
(94% delivered on or before time)
11CUSTOMER EXPERIENCE & BIG DATA
Hyper-personalization
SMS/Push
SMS / Unique Customer Program
Push In order to get to improve our customer knowledge.
Mail
App Analytics Models
Allow us to make a next offer that
generates value to our customers.
Communication Platform
Will allow us to personalize this offers.
Web
Contact
Center
Seller’s
App 2018 – Unique Customer Program
SMS /
Push 2019 – Next Offer & Action Model Design
2020- Personalized Communication Enabled
12CURRENT LOGISTICS PLATFORM
80% of home
deliveries
from store
94% delivered Department Stores
on or before
time
Supplier
14% reduction
in average
delivery time Delivery
Customer
Distribution Center
Savings by 121 Stores
using store + 165 M +4.6 M 95% SKU´s
1 Central WHS Products delivered Annual home
network to 2 National DCs by our DCs 1 deliveries 2 Centrally received
deliver
1 On a 12 month base
2 Packages & Big ticket
13LOGISTICS PLATFORM
CONTINUED GROWTH
ARCO NORTE PROJECT
900 mts
BEST-IN-CLASS
TECHNOLOGY & PROCESSES
1800 mts
Consolidation of our
DCs operations. 175 hectares
$8.5MM MXP 1.2M sqmt
Optimization of our Estimated CAPEX
Omni-experience (2019-2021)
logistics strategy.
$16.8MM MXP
Estimated Total CAPEX Hard Lines 2021
LARGEST Master Plan Soft Lines 2022
LOGISTICS CENTER
IN LATIN AMERICA
Sustainability
Flexibility Scalability
14STORE ECOSYSTEM: EXPANDING EXPERIENCES
Click & Collect Seller´s App Kiosks Experiencia Gift Registry &
Gourmet & BX beauty
Liverpool Pocket Extended Catalog
Liverpool Viajes
15CAPEX (Ps $ in millions)
Logistics
Capex % Revenue
10K 20%
Stores &
Shopping
9K
Mall
8K
$8,418 $8,592 15% Expansion
7K $7,958
6K
Store
5K 10%
Openings
4K $4,970
$4,873
3K
5%
2K $3,944 $3,403
1K
0 0% Maintenance
2014 2015 2016 2017 2018 2Q18 2Q19
IT
Investment
16FINANCIAL HIGHLIGHTS
2018
Total Income * 10.9%
NIIF 9
Gross Margin * 39.8% Recognized in 2018
Net Income * 18.5% NIIF 16
Recognized in 1Q19
SG&A * 10.3%
EBITDA * 10.3%
EBITDA Margin 14.9% 1
Total Debt 16.6%
Net Debt / EBITDA 0.73x
* YoY (1) Flat vs. YA 17LIVERPOOL AT A GLANCE
REVENUES RETAIL SALES 2
2Q2019 $35,663M 2Q19 8.7% increase
YTD $63,133M YTD 8.1% increase
CARD HOLDERS
More than 5.3M
SSS 1 EBITDA
2Q19 6.8% increase 2Q2019 $5,212M
YTD 5.6% increase YTD $7,718M
CREDIT CARD3
46% of total retail sales
EBITDA MARGIN CAPEX
2Q19 14.6% increase $3,403M
YTD 12.2% increase YTD
NPL´s
5.6%
2Q2019
OPERATING CF STORE OPENINGS
$820M 2 Liverpool Stores
YTD 3 Suburbia Stores
through 2019
1 Liverpool + Suburbia + Digital *Figures in Million MXP
2 Liverpool + Suburbia
3 Liverpool only.
**All figures without IFRS 16 17RETAIL SALES
2Q19 ANTAD Departamental Stores 2Q19
15% 15%
10% 10%
5% 5%
8.7% 7.1% 5.0% 4.8% 6.9%
0% 0%
Retail SSS SSS SSS Department
Sales Liverpool Suburbia Stores
SSS
2019 YTD ANTAD Departamental Stores 2019 YTD
15% 15%
10% 10%
5% 5%
8.1% 6.1% 2.5% 5.1% 3.6% 5.3%
0% 1.0%
0%
Retail SSS SSS Average Traffic SSS Department
Sales Liverpool Suburbia Ticket Liverpool Stores
Liverpool & Suburbia Liverpool SSS
19SAME STORES SALES GROWTH
Annual Growth: 2017 2018 2019
Liverpool 5.8% 6.5% 6.1%
Suburbia 4.6% (1) 10.6% 2.5% Consistent
growth above
TOTAL 7.1% 5.6% ANTAD
Quarter Growth:
20%
Liverpool
15% Suburbia
ANTAD
10%
17.1%
11.4% 11.5%
5%
6.8% 7.4% 7.1%
6.1% 6.3% 6.4% 6.6%
4.7% 5.9% 4.9% 5.0%
4.1% 5.1% 3.2% 7.3%
0%
(0.5%)
-5%
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q19 1Q19 2Q19
(1) Starting in April ´17
20CREDIT CARD DIVISION
NPLs Change vs. YA
2Q2019
6% 20%
5%
15%
4%
3% 5.7% 5.8% 5.6% 10%
5.0% 5.6% 5.1% 5.2%
4.5% 4.5% 4.5% Preferred
2%
payment method
5%
1% online and in
B&M
0% 0%
-2.5%
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q19 1Q19 2Q19
NPL´s within
2nd Quarter YTD company targets
Millions 2019 2018 Dif. % 2019 2018 Dif. %
Initial balance of reserve 4,014 3,086 30.1% 3,982 3,086 29.1%
(+) New Reserves 1,431 1,280 11.8% 2,236 2,029 10.2%
(-) Write off (809) (726) 11.4% (1,583) (1,475) 7.3%
Ending balance of reserve 4,636 3,640 27.3% 4,636 3,640 27.3%
21DEBT STRUCTURE & MATURITY PROFILE
Million Pesos (as of June 30th 2019)
Total Debt: Mx$28,394.1 (not including IFRS16) By Instrument: By interest type:
(Includes derivative instruments acquired for hedging 34.9%
purposes) Local Bonds Fixed
Average interest rate: 7.97%
Average life: 6.5 years 144A Reg S
14,546 (2) 65.1% 100.0%
By currency: 34.9%
3,948 (1) Pesos
3,000 3,400 3,500 Synthetic Pesos (3)
65.1%
2019 2020 2021 2022 2023 2024 2025 2026 2027
Local Bonds 144A Reg S
Leverage
2.0
1.5 Debt/EBITDA
Net Debt/EBITDA
1.0 1.8x
1.6x 1.6x
1.4x 1.4x
1.2x 1.1x 1.1x
0.5 1.0x 0.9x 0.9x
0.7x 0.8x
0.6x 0.4x 0.06x
0
2013 2014 2015 2016 2017 2018 2Q18 2Q19
(1) LIVEPOL24 144A Reg S US$300 million, fixed exchange rate 13.15 MxPs/USD
(2) LIVEPOL26 144A Reg S US$750 million, fixed exchange rate 19.39 MxPs/USD 22
(3) Fully hedged in Pesos: principal + interestAppendix
• Financial statements
• Main financial indicators
• Growth history
23INCOME STATEMENT
2Q2019
24INCOME STATEMENT
2019 YTD
25BALANCE SHEET
2Q2019
26CASH FLOW
27FINANCIAL PERFORMANCE TRENDS
Revenues EBITDA and EBITDA margin
$135,535
(Ps $ in millions)
$122,168 (Ps $ in millions)
$20,237
21,000
$100,442 $18,350 36.0%
$91,293 $16,051
$81,214 $14,870 31.0%
$74,504 16,000
$63,133 $12,536 $13,024
10% $57,896 26.0%
11,000 21.0%
8% 16.9% 16.1% 16.3% 16.0% $7,224 $7,718
7% 8% 7% 15.0% 14.9%
6% 6% 6% 16.0%
6,000
12.5% 11.0%
12.2%
2013 2014 2015 2016 2017 2018 2018 Σ2Q 2019 Σ2Q 1,000 6.0%
Same store sales growth 2013 2014 2015 2016 2017 2018 2018 Σ2Q 2019 Σ2Q
Operating Cash flow Cash flow
(Ps $ in millions) $12,453 40.0%
$11,691 $11,650 %Revenue
12,000 35.0%
10,000 30.0%
$8,652
25.0%
8,000
$6,506 4.8% 20.0%
4.1%
6,000 11.6% 15.0%
8.7% $4,821 9.5% 9.5% 9.2%
$2,802 $2,582 10.0%
4,000
5.9% 5.0%
2,000 0.0%
2013 2014 2015 2016 2017 2018 2018 Σ2Q 2019 Σ2Q
Liverpool has been a consistent performer, delivering solid results throughout the years 28COMPELLING STORY OF DISCIPLINED
GROWTH FOR THE LAST 170 YEARS
140
Historically, Liverpool has reinvested its profits to expand its operations (Number of Stores)(1) 136 137 8
131 131
128
1847 – J.B. Ebrard arrives to Mexico 1982 – Inaugurates its first stores 1998 – Acquisition of Salinas y 2017 – Liverpool buys 100% of
City from France outside of Mexico City Rocha, allowing Liverpool to increase Suburbia with its 122 stores (April) 123
its portfolio by 11 stores 7
120 114
112
2013 – Reaches 100 department 104 106
1934 – First Liverpool department 1988 – Acquisition of Fábricas de
store inaugurated in Mexico City Francia, incorporating 5 more stores stores 99 6
100
90
85 5
1962 – Second Liverpool opens in 1997 – Acquisition of Las Galas, a
80 Insurgentes, Mexico City department store chain with 7 outlets
70
4
61
1965 – Launches IPO in the Mexican
60 Stock Market
56
51
3
43
40 1980 – Liverpool begins to operate 36
the Perisur mall, being its first real 1.7x 1.8x 2
estate operation 26 1.4x 1.4x
1.0x 1.1x
20 15 0.9x 0.9x 0.9x 0.8x
0.6x 0.6x 0.7x 1
8 0.5x 0.4x
2 4 0.06x
0 1
0 0
Liverpool Stores Suburbia Stores Net Debt/EBITDA
Profitable growth and significant value creation through the development of a dense network of stores across Mexico and selected acquisitions.
Source: Company website and annual reports.
(1) Includes Liverpool and Fábricas de Francia formats. Does not include Suburbia 29Stock Information
Bolsa Mexicana de
Valores (BMV): LIVEPOL
Contact Information
emgrinang@liverpool.com.mx
IR: www.elpuertodeliverpool.mx
www.liverpool.com.mxNOTES
31NOTES
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