FULL YEAR RESULTS 26 TH APRIL 2018

Transcription

1 1 FULL YEAR RESULTS 26 TH APRIL 2018

2 2 Overview Profit growth in a challenging market Simply Be standout performance Strategic momentum: UK market share gains USA +21% in H2 New partnerships announced Financial Services enabled H2 trading Current year expectations unchanged

3 FINANCIALS 3

4 4 Financial Summary Revenue 922.2m, +3.9% Product revenue +4.1%; gross margin -250bps to 52.2% Financial Services revenue +3.5%; gross margin +550bps to 61.2% Group gross margin 54.8%, -20bps Trading Profit 81.6m, +1.3% EBITDA 118.6m, + 2.3% Adjusted EPS 23.06p, +0.1% Net debt 346.8m; significantly exceeded by 598.8m net customer loan book Full year dividend of 14.23p unchanged

5 5 Revenue by quarter m FY18 FY17 Change Product % Financial Services % Group % m Q1 (13wks) Q2 (13wks) Q3 (18wks) Q4 (8wks) Product +10.2% +4.9% +2.7% (4.1%) Financial Services (4.9%) +7.2% +4.6% 8.2% Group +5.6% +5.6% +3.2% +0.0%

6 6 Product revenue by brand m FY18 FY17 Change JD Williams % Simply Be % Jacamo % Power Brands % Secondary Brands (3.8%) Traditional Segment % Product total % Financial Services % Group Revenue %

7 7 Product revenue by category m FY18 FY17 Change Ladieswear % Menswear % Footwear & Accessories % Home & Gift % Product total %

8 8 Product gross margin Product gross margin FY %, -250bps (FY17: 54.7%) Product Gross Margin Bridge FY18 H1 H2 Buying in Margin +110bps +80bps +140bps FX Cost Headwind (120bps) (140bps) (100bps) Impact of $ Hedge Rates YoY (160bps) (240bps) (70bps) Promotions (50bps) +110bps (220bps) P&P (30bps) - (70bps) Total Movement (250bps) (190bps) (320bps)

9 9 FX sensitivity $ exposure; pre mitigating actions FY19 FY20 % Hedged 100% 43% Hedging rate PBT headwind yoy (unhedged exposure at 1.40) 5 cents movement sensitivity (on unhedged position) c. 3m tailwind c. 3m tailwind - c. 2m

10 10 Financial Services gross margin Financial Services gross margin 61.2%, +550bps (FY17: 55.7%) Financial Services Gross Margin Bridge FY18 H1 H2 Underlying quality of the loan book +180bps +150bps +100bps Minimum payment changes +200bps +70bps +340bps Initiatives +160bps +100bps +270bps Debt sale +10bps (170bps) +220bps Total Movement +550bps +150bps +940bps

11 11 Operating expenses m FY18 FY17 Change Product gross profit (0.8%) Financial Services gross profit % Group gross profit % Warehouse & fulfilment (85.8) (79.6) +7.8% Marketing & production (164.0) (162.5) +0.9% Admin & payroll (137.2) (130.3) +5.3% EBITDA % EBITDA margin 12.9% 13.1% (20bps) Depreciation & amortisation (28.1) (27.6) +1.9% Operating Profit % Operating margin 9.8% 9.9% (10bps)

12 12 Group profit m FY18 FY17 Operating profit Net finance costs (8.9) (7.7) Trading profit Impact of 53 rd week Exceptional costs (56.9) (25.2) Unrealised FX movement (8.5) 0.2 Profit before tax Taxation (3.7) (13.3) Net Profit / (Loss)

13 13 Exceptional costs m FY18 Customer redress for historic insurance products (40.0) Store closures (13.8) External costs related to tax matters (3.1) (56.9)

14 14 Balance sheet m 3 March March 2017 Change Non current assets % Inventories % Net customer loan balances % Other receivables and prepayments % Total receivables % Creditors / Accruals (153.2) (120.5) +27.1% Provisions (49.2) (19.9) Retirement benefit surplus Net Debt % Net Assets (3.9%)

15 15 Balance sheet refinance Extending our securitisation facility to enable future growth Opportunity to increase headroom given quality of the Financial Services loan book Previous financing structure: 125m RCF and 280m Securitisation New financing structure secured until September 2021: RCF 125m Leverage covenant excludes securitisation debt Customer loan book securitisation facility up to 500m Pricing rates comparable to existing facility terms

16 16 Receivables & provisioning m 3 March March 2017 Change Trade receivables % Payment arrangements (37.1%) Gross trade receivables % Opening bad debt provision (33.6%) Gross bad debt charge (12.3%) Debtors written off (115.4) (146.4) (21.2%) Closing bad debt provision (24.6%) Provision ratio 7.5% 10.8% (330bps)

17 17 IFRS 9 Significant change to our provision calculation, effective FY19 onwards IAS 39 IFRS 9 Based on current customer balances Credit customers who are up to date with balances and not displaying financial risk largely not provisioned against No macro-economic overlay Based on expected future lifetime customer balances All credit customers have a provision against them to some extent Macro-economic overlay; changes in macro assumption can impact provision

18 18 IFRS 9 Potential impact on FY18 of IFRS 9 (illustrative only; takes effect FY19): Provision rate increases to a maximum of 27% (vs 7.5% reported), equating to an increase of up to 120m Associated reduction of balance sheet net assets Inclusion of undrawn credit balances still being assessed; exclusion of these would approximately halve the provision increase FY19 P&L impact likely to be broadly neutral, assuming no significant macroeconomic changes, changes in the quality of the book or risk profile of new credit customers In a typical year, likely positive effect in H1 and negative in H2

19 Net debt bridge 19

20 20 FY19 Guidance Product gross margin flat to +100bps Financial Services gross margin -100bps to -200bps Group operating costs +1.5% to +3.5% Depreciation & Amortisation 32m to 33m Net interest 12m to 13m Tax rate c.22% Capex c. 40m Net debt 425m to 450m assumes 25m to 50m loan book growth Exceptional costs c. 4m

21 FINANCIAL SERVICES 21

22 22 Financial Services Strong performance in Financial Services, driven by quality of the loan book and minimum payment changes Refinance enables growth over the medium-term IFRS9 comes into effect FY19 KPI s TY LY Change Customer account arrears rate (>28 days) 8.7% 9.9% (120bps) Provisions rate 7.5% 10.8% (330bps) New credit recruits (rollers) 122k 129k (5.4%)

23 23 Minimum payment changes Most customers had 5% minimum payment charge At the end of H1 we moved all customers to 4% Change was made to give customers more flexibility in managing their finances Proportion of customers who go into arrears down 6% 60% of customers pay more than the minimum, up 10% on FY17 On average 7% of balance paid per month, down 1ppt Cash flow impact expected to normalise over the next 12 months

24 FY18 PERFORMANCE 24

25 25 KPI dashboard CUSTOMER ONLINE PRODUCT Actives +3.6% Power Brand actives +2.4% Loyals (H2) -0.2% Customer satisfaction 85.8% Online revenue +10%; Power Brands +17% Online penetration 73% New customer online penetration 81% Conversion 5.3% 5.6% ladieswear size 16+ share, +60bps 2.7% menswear chest size 44 share, +30bps 27.1% returns rate 76% traffic from mobile

26 26 Customer Satisfaction Source: UK Institute of Customer Services

27 27 KPI dashboard CUSTOMER ONLINE PRODUCT Actives +3.6% Power Brand actives +2.4% Loyals (H2) -0.2% Customer satisfaction 85.8% Online revenue +10%; Power Brands +17% Online penetration 73% New customer online penetration 81% Conversion 5.3% 5.6% ladieswear size 16+ share, +60bps 2.7% menswear chest size 44 share, +30bps 27.1% returns rate 76% traffic from mobile

28 28 Investing in digital marketing and technology Digital marketing now 62% of spend, versus 40% five years ago Significant improvement in page load speed Investment in Apps Delivery subscription rolled out to five brands

29 29 KPI dashboard CUSTOMER ONLINE PRODUCT Actives +3.6% Power Brand actives +2.4% Loyals (H2) -0.2% Customer satisfaction 85.8% Online revenue +10%; Power Brands +17% Online penetration 73% New customer online penetration 81% Conversion 5.3% 5.6% ladieswear size 16+ share, +60bps 2.7% menswear chest size 44 share, +30bps 27.1% returns rate 76% traffic from mobile

30 Shape of promotions through H2 30

31 Number of lines 31 Winning in the Plus Size market Digital fit further differentiating our proposition Great choice for our customers whatever their size Source: Company analysis

32 Winning in the Plus Size market 32

33 Winning in the Plus Size market 33

34 34 Power Brands Go-to online brand for year old curvy confident women Revenue +16.3%; active customers +>20% Rollout of Perks loyalty scheme SS18 Rules Rewritten campaign our boldest yet

35 35 Power Brands Go-to online brand for year old curvy confident women Catering for year old men of all body shapes, from small to 5XL Revenue +16.3%; active customers +>20% Rollout of Perks loyalty scheme SS18 Rules Rewritten campaign our boldest yet Revenue +5.1% Live your Moment campaign Strengthening our fashion credentials

36 FROM THIS. TO THIS.

37 37 Power Brands Go-to online brand for year old curvy confident women Catering for year old men of all body shapes, from small to 5XL The online department store for Midsters Revenue +16.3%; active customers +>20% Rollout of Perks loyalty scheme SS18 Rules Rewritten campaign our boldest yet Revenue +5.1% Live your Moment campaign Strengthening our fashion credentials New brand launch a great success New customers +21% following relaunch 19% online growth

38 FROM CALLS COST 13P PER MINUTE PLUS Y OUR PHONE COMPANY S ACCESS CHARGE into new VISIT JDWILLIAMS.CO.UK OR CALL

39 39 Fifty Plus migration Brand migrations important in an online retail world From AW17, migrated Fifty Plus customers received JD Williams marketing programme Fifty Plus: c.200k customers FY17 revenue c. 45m Online shoppers, similar shopping habits as JD Williams Fifty Plus customers more classic in their fashion choices; relaunched JD Williams online proposition didn t resonate with them as strongly as planned Corrective actions taken, early results encouraging

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41 OUR GROWTH LEVERS 41

42 42 Our growth levers Gain share in the UK Improve customer experience International expansion USA our first priority Partnerships Capsule ranges on other retailers sites Develop product offer Global Ship Anywhere Influencer marketing Improve brand cutthrough Leverage our strengths Access to new customers Focus on customer acquisition and loyalty Continue to invest in the business to grow revenue

43 43 1. Gain share in the UK Improve customer experience Develop product offer Improve brand cutthrough The key enablers Flexible supply chain Continued investment in customer experience Good value for money Compelling brand campaigns Expansion into new categories and third party brands FY18 performance Market share gains Integrated supply chain, logistics and product teams Further lead time reduction Success in expanded Athleisure ranges

44 44 2. International expansion The key enablers FY18 performance USA our first priority Global Ship Anywhere Leverage our strengths New USA website live Global Ship Anywhere Growing brand awareness Targeted local presence Simply Be brand relaunched in USA, initial response very encouraging USA H2 revenue +21% Global Ship Anywhere launched Global culture

45 45 3. Partnerships The key enablers FY18 performance Capsule ranges on other retailers sites Strength of our own label brands Increasing use of influencers, with strong success in the USA Influencer marketing Access to new customers Fit expertise Global brand credibility Live on ASOS and Zalando; announced deals with THE ICONIC (Australia) and Lamoda (Russia)

46 46 Summary Clear leaders in the plus size fashion market Strong Power Brand performance Online penetration continues to grow International expansion prospects are strong Partnership portfolio developing well Financial Services loan book healthy and growing Recent refinancing underpins future growth plans

47 Any questions? 47

48 APPENDIX 48

49 49 Customer KPI s TY LY Change Active customer accounts 4.45m 4.30m +3.6% Power Brand active customers accounts 2.22m 2.17m +2.4% % growth of most loyal customers -0.2% +3.6% -3.8ppts Customer satisfaction rating 85.8% 83.7% +210bps

50 50 Online KPI s TY LY Change Online penetration 73% 69% +4ppts Online penetration of new customers 81% 77% +4ppts Conversion rate 5.3% 5.6% -30bps % of traffic from mobile devices 76% 71% +5ppts

51 51 Product KPI s TY LY Change Ladieswear share, size % 5.0% +60bps Menswear share, chest size % 2.4% +30bps Group returns rate 27.1% 26.8% +30bps

52 52 Operating cash flow m FY18 FY17 Operating profit Depreciation, Amortisation & share option charge Increase in Inventory (5.1) (4.0) Increase in Receivables (77.6) (21.6) (Decrease)/increase in Payables 33.0 (0.2) Increase in Provisions Pension obligation (0.3) (0.2) Cash generated from operations

53 53 Group cash flow m FY18 FY17 Cash generated from operations Taxation paid (12.1) 1.9 Dividends paid (40.3) (40.2) Capital expenditure (39.2) (42.3) ESOT share issue net proceeds Net finance costs (8.6) (7.8) Net cash outflow (55.9) (1.2) Opening Net Debt Closing Net Debt

54 54 Financial calendar Q1 trading statement 14 th June 2018 Half year results October 2018

55 55 IR contact details Bethany Barnes (nee Hocking) Director of Investor Relations and Corporate Communications Tel: Mobile: