ZOOPLUS AG FY 2019 RESULTS - INVESTOR & ANALYST PRESENTATION 25 March 2020 - Munich - Dr. Cornelius Patt, CEO, Andreas Maueröder, CFO
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ZOOPLUS AG FY 2019 RESULTS INVESTOR & ANALYST PRESENTATION 25 March 2020 – Munich – Dr. Cornelius Patt, CEO, Andreas Maueröder, CFO
SAFE HARBOR STATEMENT
This document includes supplemental financial measures that are or may be non-GAAP financial measures. These supplemental financial measures
should not be viewed in isolation as alternatives to measures of zooplus’ financial condition, results of operations or cash flows as presented in
accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may
calculate them differently.
This document contains statements related to our future business and financial performance and future events or developments involving zooplus that
may constitute forward-looking statements. We may also make forward-looking statements in other reports, in presentations, in material delivered to
stockholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are
based on the current expectations and certain assumptions of zooplus’ management, and are, therefore, subject to certain risks and uncertainties. A
variety of factors, many of which are beyond zooplus’ control, affect zooplus’ operations, performance, business strategy and results and could cause
the actual results, performance or achievements of zooplus to be materially different from any future results, performance or achievements that may
be expressed or implied by such forward-looking statements or anticipated on the basis of historical trends. Further information about risks and
uncertainties affecting zooplus is included throughout our most recent annual and interim reports, which are available on the zooplus website,
investors.zooplus.com. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results,
performance or achievements of zooplus may vary materially from those described in the relevant forward-looking statement as being expected,
anticipated, intended, planned, believed, sought, estimated or projected. zooplus neither intends, nor assumes any obligation, to update or revise
these forward-looking statements in light of developments which differ from those anticipated.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not
precisely reflect the absolute figures.
FY 2019 Results Presentation 2
UPDATE ON COVID-19
ZOOPLUS CONTINUES TO OPERATE – SAFE AND SUCCESSFUL
ZOOPLUS OPERATES A HIGHLY RESILIENT BUSINESS MODEL, WITH SOLID CRISIS MANAGEMENT IN PLACE
AND EXCELLENT POSITIONING IN EUROPEAN MARKET TO VENTURE THROUGH CURRENT ENVIRONMENT
SAFETY FIRST
STABILITY OF OUR BUSINESS – SECURING OUR
LOYAL CUSTOMER BASE
AVAILABILITY OF PRODUCTS AND SERVICES
3
UPDATE ON COVID-19
ZOOPLUS CONTINUES TO OPERATE SAFE AND SUCCESSFUL
SAFETY FIRST
Employee safety Customer safety
✓ Home-office mandatory, tech equipment in place ✓ Product can be safely ordered directly to doorstep
✓ Confirmed and suspected cases handled by strict ✓ Customer communication on parcel delivery time;
HR-protocol no need to leave the house
Fulfillment staff safety ✓ COVID-19 FAQ on all our shop sites
✓ additional safety and sanitary measures in our 11 Pet safety
FCs operated by our partners ✓ Supporting the welfare by providing essential pet
Partner safety products
✓ Reducing communication to telephone / video
conference
4
UPDATE ON COVID-19 ZOOPLUS CONTINUES TO OPERATE - SAFE AND SUCCESSFUL STABILITY OF OUR BUSINESS – SECURING OUR LOYAL CUSTOMER BASE Management & staff ✓ Daily sync of board members Operations ✓ Communications & updates to staff by CEO ✓ Running FC network at full capacity ✓ Crisis management team in place ✓ Replenishment / Supply-chain management with Business model high-adaptability and quick responsiveness to crisis ✓ Excellently positioned to manage distribution due to strong tech approach across 30 European countries ✓ All FCs currently up and running, last-mile providers ✓ No offline retail dependency and staff exposure to delivering parcels customer contact Financial stability ✓ Loyal customer base – priority access to capacity ✓ Regular liquidity stress testing Infrastructure ✓ Revolving credit facilities of EUR 50 m in place ✓ Top-notch IT infrastructure for remote / home ✓ Monitoring currency expenses and currency office for all team hedging in place ✓ Cloud services in place for shop infrastructure ✓ Clear priorities for cash and cost alignment managed remotely ✓ Ad spend on hold 5
UPDATE ON COVID-19
ZOOPLUS CONTINUES TO OPERATE - SAFE AND SUCCESSFUL
AVAILABILITY OF PRODUCTS AND SERVICES
Product availability Service availability
✓ Ensuring replenishment meets current product ✓ All shop sites up and running
demand ✓ Customer service continues to be available and
✓ Reducing capacity around non-essential SKUs to enhanced social media customer
secure pallet space communication
✓ Focus on stock availability has always been part of
our DNA to ensure positive customer experience Management team in direct contact to key
✓ Alternative products for high-demand product partners
ranges in place ✓ Continued dialogue with our supplier and
✓ Limiting bulk-purchasing to the necessary to ensure logistics partners to ensure supply and delivery
equal availability for all in times of high demand chain is not disrupted
✓ Working together on ensuring product and
service availability for our consumers
6FY 2019 RESULTS PRESENTATION FY 2019 Investor & Analyst Call
SALES INCREASE BY 14% IN 2019
FY 2019 SALES GROWTH RATE WITHIN GUIDANCE RANGE
SALES (in € m)
+14% +14% o Sales driven by customer loyalty, own
FX-adjusted +14% FX-adjusted +14% brands and customer acquisition
1.524 419 o Solid year-on-year development
1.342 368 across all quarters in FY 2019:
+ 182m + 52m o Q1 ´19 vs. Q1 ´18 +41m (+13%)
o Q2 ´19 vs. Q2 ´18 +43m (+14%)
o Q3 ´19 vs. Q3 ´18 +47m (+14%)
o Q4 ´19 vs. Q4 ´18 +52m (+14%)
2018 2019 Q4 2018 Q4 2019
FY 2019 Results Presentation 8ZOOPLUS IS ONLINE MARKET LEADER IN EUROPE BY A
DISTANCE AND GRABBING SHARE FROM OFFLINE
TOTAL MARKET SHARE1 ZOOPLUS SALES BY REGION (in € m)
8% DACH 444 +15%
6% FR 248 +11%
9% BENELUX 171 +15%
Pet supplies market1
14%2 PL +25%
137
EUR 25.3 bn
3% UK , IE 119 +6%
4% IT 116 +7%
5%2 CEE
other than PL
105 +25%
6% NORDICS 94 +9%
5% ES,PT 90 +10%
1) Total net market = online + offline market, based on Euromonitor International 2020 and management estimates; 2) change vs . prior disclosure due to updated market data reflecting an overall larger total market in Poland and CEE; zooplus
continues to outperform total market growth in respective markets. FY 2019 Results Presentation 9GROSS MARGIN STABILIZATION CONTINUED IN FY 2019
GROSS MARGIN1
+0.3%p
(in % of sales) Own Brands Portfolio:
28.7% 29.0% Increased sales share and
positive
margin improvements
Margin stabilization across
neutral
all other food segments
Lower sales share
adverse
of accessories / non-food
2018 2019
1) Gross margin = sales – cost of goods (as a % of sales)
FY 2019 Results Presentation 10OVERPERFORMING OWN BRANDS PORTFOLIO
GROWING TO SUBSTANTIAL SIZE
PRIVATE LABEL SALES FOOD & LITTER (in € m)
+34% CAGR 210
162
o High-margin business in the mid to
120 premium segment contributing to
88 gross margin increase
65
o Launch of first private label
veterinary nutrition brand in 2019
o Growth index own brands / food
2015 2016 2017 2018 2019
1.8 (2019)
FY 2019 Results Presentation 11SALES RETENTION SLIGHTLY REDUCED
RETURN TO PREVIOUS HIGHS IS POSSIBLE
SALES RETENTION RATE1
-4%p o Trademark 94% Revenue
95% 91% Retention took a temporary hit in 2019
o Issues:
Transient
effects o Temporary unavailability of offerings relevant
to customers (food / accessories)
o Relative loss of reach of Direct Marketing
o Loyalty tools drive future revenue retention
o Outlook: Revenue Retention is stabilising (Q3)
2018 2019 and recovering (Q4), trend continues
1) Sales retention (net, non-BMF)
FY 2019 Results Presentation 12ACQUISITION MOMENTUM IN 2019 CAME AT
SUBSTANTIALLY INCREASED COST
REGISTERED NEW CUSTOMERS (in k)
+22%
(Registered new customers) o New customer acquisition confirms
3,053 offline to online migration trend
+44%
2,506 o Per channel / activity:
(Advertising & Traffic acquisition cost)1
o Google: cost per click increase
17 o Alternative channels: performance
issues, KPIs below target
12 o 20-years campaign designed as
brand building exercise
o Outlook: decreasing overall spend,
increase in CpNC efficiency
2018 2019 2018 2019
1) Based on all registered new customers acquired in respective year
FY 2019 Results Presentation 13LOYALTY DRIVEN REPEAT CUSTOMER BUSINESS
WITH STRONG CONTRIBUTION MARGIN
REPEAT CUSTOMER BUSINESS
(in € m)
1,217 Margin improvement reflects:
4.9%
10.7% 12.3%
1,047 o Yield management / reduction in
149
number of loss-making orders
112
o Efficiency gains in logistics and
additional income from shipping fees
Net Sales Contribution Margin 2 Net Sales Contribution Margin 2
2018 2019 2019 o Increased share of own brands
2018
NEW CUSTOMER BUSINESS
307
295 1.1%
o Higher CpNC and lower in-year spend
-4.6%
of new customers
3
-14 o Reduced share of accessories
Net Sales Contribution Margin 2 Net Sales Contribution Margin 2
2018 2018 2019 2019
xx% Contribution Margin 2 = (Sales – CoGs– variable logistics cost– CAC ), as a % of sales 14
FY 2019 Results PresentationCUSTOMER ACQUISITION COST OFFSET BY INCREMENTAL
CUSTOMER VALUE INCREASE WITH LIFETIME
Net Sales / Account 1 Net Sales / Account (Cumulated)
182 € 1,497 €
a + 10
(proj.)
160 €
2019
-36 €
customer CM cumulative
acquisition cost 2 10 years plus
acquisition year 3
1. Only accounts with repurchasing activity
2. Acquisition cost per new account with repurchase activity, reduced by contribution margin of one time- purchasers in respective year
3. CM = contribution margin = net sales – all variable cost (excl. acquisition cost) = 10.7% FY 2019 Results Presentation 15CONSUMERS ARE SHIFTING TO MOBILE DEVICES
MOBILE USAGE FURTHER GAINING TRACTION IN 2019
THIS IS A SUBHEADLINE
VISITS 2018
ORDERS 2018
2019 2019
51%
43% 58%
38% 51% o Mobile / Tablet / App
30%
22% 26% accounting for around 70%
10% 9% 8% 10% 11% 9% 10% 14%
of traffic
Desktop Tablet Mobile- Mobile-App Desktop Tablet Mobile Mobile
Web - Web - App o Desktop traffic is highly
transactional
CONVERSION RATE 2018 2018
BASKET VALUE
2019 2019 o App shows the strongest
21% 21% 57€ 57€ 57€ 58€ 54€ 55€
51€ 51€
15% 14% 16% 16% growth rate
7% 6% o Tablet leading in basket
value
Desktop Tablet Mobile Mobile Desktop Tablet Mobile Mobile
- Web - App - Web - App
FY 2019 Results Presentation 16WE ARE THE ONLY CATEGORY SPECIALIST WITH A
PAN-EUROPEAN LOGISTIC NETWORK
11 fulfillment centers across Europe
» all managed as one integrated pan-European
network Intelligent network solution by zooplus-
» Flexibility and capacity for future growth owned algorithms
» SKU allocation, replenishment, order
routing and packing
» Optimization of transport distances
All FCs operated by partners » Management of parcel allocation to
» Experts in their field, exclusive for zooplus in pet FCs and DSPs
category
» No capex for zooplus
» Quick access to new technology
Optimized last mile distribution with external partners (DSPs)
» At least two DSPs for every country
» Focus on delivery speed and efficiency
» Customer communication for high transparency
Fulfillment center (FC)
Hubs (DSP) - shown are selected relations from FC to Hub of DSPs FY 2019 Results Presentation 17LOGISTICS AS KEY SOURCE FOR EFFICIENCY
GAINS
COST STRUCTURE (IN % OF SALES)
o Overall efficiency superior to online
Advertising / Marketing 2.2% 3.3%
and offline competitors
o Operational improvement and
network synergies drive logistics costs
Logistics1 19.0% 18.3% down by 0.7%p
Payment 2
o Size and scaling effects allow for
1.1% 1.1%
continuous investments in IT and team
IT/Admin
2.5% 2.6% o One-off marketing spend in Q2/Q3
3
Personnel 3.3% 3.5% 2019 for zooplus 20-year campaign
2018 2019
1) Figures for 2018 showing like-for-like IFRS 16 impact comparison
2) Impairment expenses on financial assets reclassified to payment
3) Including LTI & SOP; own work capitalized reclassified to personnel FY 2019 Results Presentation 18EBITDA WITHIN GUIDANCE RANGE FOR FY 2019
FREE CASH FLOW REFLECTING WORKING CAPITAL OPTIMIZATION
EBITDA (in € m) CASH FLOW 2019 (in € m)
+ 3.2
(in € m) 11.8 €28m
- €3m €25m
8.6
2018 2019 Cash flow from Cash flow Free cash flow
operating from investing
activities activities
EBITDA 2019 based on full IFRS 16 application; IFRS 16 impact to EBITDA € 13.9 m, of which € 10.9 m logistics (0.7%p) and € 3.0 m admin costs (0.2%p) go into depreciation;
Free Cashflow based on full IFRS 16 application; Free Cash Flow impact in 2019 due to IFRS 16: EUR +14.3m FY 2019 Results Presentation 19NET WORKING CAPITAL IS ON THE WAY TO ZERO
RELATIVE TO SALES
NET WORKING CAPITAL (absolute in € m)1 WORKING CAPITAL2 (relative to sales)
52 10.4%
63 8.7%
118
7.1%
108
28
4.7%
28 31
27 3.6%
-125
-97
2018 2019 2015 2016 2017 2018 2019
o Increase in inventory turnover
Inventories Supplier receivables
Trade receivables Trade payables o More efficient replenishment process
1) Based on year-end figures (31.12)
o Improvement in payment days
2) WC = Inventory + prepayments + receivables (trade receivables + supplier receivables) - payables FY 2019 Results Presentation 202019: A CHALLENGING YEAR WITH SIGNIFICANT
LEARNINGS AND IMPROVEMENTS
Revenues € 1,524m
Positive Free Cash Flow
(+ € 182m)
(+ € 25m)
EBITDA € 12m ( + € 3m)
Transient issues
Own brand portfolio Overall Margin
denting revenue
growing at 29% improved to 29.6%
retention
Best in class logistics Marketing push
Net Working Capital
with further efficiency led into
further reduced
gains inefficient territory
FY 2019 Results Presentation 21KEY PRIORITIES &
GUIDANCE 2020
FY 2019 Investor & Analyst CallGROWTH WILL BE RETENTION DRIVEN, FOR 2020
AND BEYOND
SALES RETENTION RATE AS A MAJOR REVENUE PERFORMANCE DRIVER (PLANNING SCENARIO)
SALES (in € m)
274 >1,706
307 1,524 94% 2.6m
1,432 € 105 p.a.
1,342 3.05m
1,217 € 100 p.a.
91% 1,387
91%
2018 Total 2019 Repeat 2019 New 2019 Total E 2020 E 2020 New E 2020 Total
Repeat
2020 figure projections based on management estimate at time of FY 2019 publication and are not part of the full year 2020 guidance
FY 2019 Results Presentation 23STRATEGIC GROWTH DRIVERS
Brand Customer Loyalty
Portfolio Experience Drivers
> 200 Pet food & Digital experience Product promotion
accessories brands (Dig. Multichannel) & campaigns
zooplus & bitiba Bonus Points
Delivery
pan-European (auto enrol loyalty
experience
retail brands program)
Care experience Savings Plan
Own brands
portfolio (Customer Care (upfront payment,
and Pet Care) regular savings)
FY 2019 Results Presentation 24EARNINGS AND EFFICIENCY DRIVERS
FOUR KEY LEVERS WE ARE FOCUSING ON IN 2020
Portfolio Strategy Upselling
1 & 2 &
Own Brands Basket Size
Marketing Scaling
3 4
Efficiency Effects
FY 2019 Results Presentation 25PORTFOLIO COVERAGE OF PET FOOD CATEGORY
super
premium
super
premium 20% 60%
premium
premium
aspiring specialty
aspiring specialty
trade 30%
trade 25%
specialty trade
specialty trade
quality grocery
55% quality 10%
grocery grocery
discount / white label
European Pet Food Market
FY 2019 Results Presentation 26KEY PRIORITIES & STRATEGY UPDATE 2020
PUSH OWN BRANDS
VALUE CREATING PORTFOLIO OF OWN BRAND PRODUCTS RETAILED EXCLUSIVELY ON ZOOPLUS SHOPS
WE KNOW OUR CUSTOMERS
• Believe in brands
• Look for natural products and concepts 16% Own Brands sales share
• Open for strong emotional messages 14% of total food & cat litter
+
WE KNOW THE CATEGORY / TRENDS
• Species-appropriate concepts 7% Share of first order
• Holistic concepts 6%
• Special nutritional concepts sales
=
WE ARE BEST POSITIONED TO OPERATE 1.8 Growth index own brands /
A OWN BRAND PORTFOLIO 1.6 food
Figures for FY 2019 and FY 2018
FY 2019 Results Presentation 27GUIDANCE 2020 FY 2019 Investor & Analyst Call
FY 2020 GUIDANCE
ZOOPLUS IS WELL POSITIONED TO CONTINUE ON GROWTH PATH
FINANCIAL YEAR 2020 OUTLOOK
SALES
Taking into account effects related to COVID-19 known at the current stage, we expect:
• Sales growth volume in the same range to prior year, corresponding a year-on-year
increase in sales of at least EUR 180 m
EBITDA
Due to efficiency losses in the total cost ratio, particularly in logistics, in connection to effects
related to COVID-19:
• We expect EBITDA to come in below the prior year‘s level – but in the positive to neutral
range
FY 2019 Results Presentation 29Q&A FY 2019 Investor & Analyst Call
MAJOR KPI’S PER QUARTER
Major KPIs Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019
Sales (in € m) 363 364 378 419 1524
Δ vs. PY 12.6% 13.5% 14.1% 14.0% 14.0%
Private label growth vs. PY 29% 29% 29% 29% 29%
New customer count (in k) 825 794 825 865 3.309
t/o registered new customers (in k) 746 723 761 823 3.053
t/o unregistered new customers (in k) 79 71 64 42 256
Sales retention (net, Non-BMF) 93% 92% 91% 91% 91%
Total Margin 28.8% 29.4% 29.2% 30.9% 29.6%
Cost ratio 28.2% 28.8% 28.6% 29.7% 28.8%
EBITDA (in € m) 2.2 2.3 2.2 5.1 11.8
EBITDA 0.6% 0.6% 0.6% 1.2% 0.8%
FY 2019 Results Presentation 31PROFIT & LOSS
FY 2019
2019 2018
in € m
abs % abs %
Sales 1523.7 100.0% 1341.7 100.0%
Other income 9.5 0.6% 8.6 0.6%
Cost of materials -1082.1 -71.0% -956.8 -71.3%
Personnel costs -53.2 -3.5% -44.3 -3.3%
Other expenses -386.1 -25.3% -340.6 -25.4%
thereof logistics / fulfillment -278.6 -18.3% -263.8 -19.7%
thereof marketing -50.9 -3.3% -29.1 -2.2%
thereof payment -16.7 -1.1% -14.2 -1.1%
thereof other costs -39.9 -2.6% -33.6 -2.5%
Earnings before depreciation, interest
and taxes (EBITDA) 11.8 0.8% 8.6 0.6%
Depreciation -26.3 -1.7% -10.1 -0.8%
Financial income 0.0 0.0% 0.0 0.0%
Financial expenses -1.4 -0.1% -0.8 -0.1%
Earnings before taxes (EBT) -15.9 -1.0% -2.3 -0.2%
Taxes on income 3.8 0.3% 0.2 0.0%
Consolidated net result -12.1 -0.8% -2.1 -0.2%
Differences from currency translation -0.1 0.0% -0.7 -0.1%
Hedge reserve -0.2 0.0% 0.3 0.0%
Items that may be relclassified
subsequently to profit or loss -0.3 0.0% -0.4 0.0%
Comprehensive income -12.3 -0.8% -2.5 -0.2%
Earnings per share in €
basic -1.69 - -0.29 -
diluted -1.69 - -0.29 -
FY 2019 Results Presentation 32BALANCE SHEET
FY 2019
Assets Equity and Liabilities
Dec. 31st. Dec. 31st. Dec. 31st. Dec. 31st.
in € m Δ abs in € m Δ abs
2019 2018* 2019 2018*
A. Equity
A. Non-current assets
I. Capital subscribed 7.1 7.1 0.0
I. PP&E 5.5 55.9 -50.4 II. Capital reserves 102.8 100.8 2.0
II. Right-of-use assets 81.0 0.0 81.0 III. Other reserves -2.0 -1.8 -0.3
III. Intangible assets 12.8 14.2 -1.4 Profit and Loss carried
IV. -7.2 4.9 -12.1
IV. Deferred tax assets 3.6 0.0 3.6 forward
Total non-current assets 102.9 70.0 32.8 Total equity 100.8 111.1 -10.3
B. Non-current liabilities 61.8 41.4 20.4
B. Current assets
C. Current liabilities
I. Inventories 117.7 107.6 10.1 I. Accounts payable 125.1 99.7 25.3
II. Advance payments 0.0 0.4 -0.4 Derivative financial
II 0.4 0.1 0.3
III. Accounts receivable 27.7 28.1 -0.4 instruments
III. Other current liabilities 31.8 25.1 6.7
IV. Other current assets 47.7 35.2 12.6
IV. Contract liabilities 14.0 12.0 2.0
VI. Tax receivables 0.6 0.9 -0.2 V. Tax liabilites 0.2 0.1 0.1
Cash and cash VI. Finance lease 20.4 9.8 10.7
VIII. 64.3 59.5 4.8
equivalents
VII. Provisions 6.5 2.6 4.0
Total current assets 258.1 231.7 26.4
Total current liabilities 198.4 149.3 49.1
361.0 301.8 59.2 361.0 301.8 59.2
* The previous year's figures have been adjusted. Please refer to section 2.1.1 of the notes to the consolidated financial statements.
FY 2019 Results Presentation 33CASH FLOW STATEMENT
FY 2019
Cash Flow 2019
in € m 2019 2018*
EBT -15.9 -2.3
Cash flow from operating activities 28.1 21.7
Cash flow from investing activities -3.2 -7.3
Free cash flow 24.9 14.3
Cash flow from financing activities -20.1 -6.1
Currency effects on cash and cash equivalents 0.0 0.0
Net change of cash and cash equivalents 4.8 8.3
Cash on hand, bank deposits 64.3 59.5
* The previous year's figures have been adjusted. Please refer to section 2.1.1 of the notes to the consolidated financial statements.
FY 2019 Results Presentation 34Q&A FY 2019 Investor & Analyst Call
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