Annual Results to 31 st January 2014

Transcription

1 Annual Results to 31 st January 2014

2 o Improvement in performance and key trends o Turnaround gathered momentum in H2 as initiatives gained traction o New team performing well o Reduced operating expenses o Improved underlying Group operating loss o Reduced UK retail losses o Challenging market conditions in North America impacted results o Improved working capital with strong cash position 2

3 12 months to 12 months to 31 Jan Jan 2013 o Revenue m m o Gross margin 47.6% 47.9% o Operating expenses m m o Other operating income 6.1 m 6.5 m o Store disposal costs 1.7 m 1.3 m o Closing net cash 28.2 m 28.5 m o Underlying Group Operating Loss (4.4) m (7.2) m 3

4 Revenue o UK/Europe LFL momentum; H2 +1.4%, H1-4.5%, resulting in -1.4% for the year o Shortened sale periods in UK o 10 non-contributing store closures (9 UK, 1 N.Am.) o Good ecommerce growth particularly UK o Tough trading in North America o Continued sales improvement in Toast FY14 FY13 Retail m m Revenue 4.8% Gross Margin 56.9% 55.8% Underlying Operating Loss (11.6) (15.4) Margin o o Lower discounting, higher full price sales in UK/Europe gave a 240bp improvement in GM% Offset by increased discounting in North America Percentage of Group Revenue Underlying Operating Margin 62.0% 62.5% (9.9%) (12.5%) Selling and distribution expenses o Overall reduced by 6.9% o Closure of non-contributing stores o Reduction in underlying cost base: staff scheduling Underlying Operating Loss o 3.8 m reduction in losses 4

5 o We continue to focus on optimising the overall store portfolio underpinned by the right operating model o 10 non-contributing stores were closed during the year across the Group (9 UK, 1 N.Am.) o o o o A further 3-5 non-contributing stores are planned to close in FY15 Store segmentation has been very successful in FY14, with merchandising specifically targeted for local markets Outlet stores have delivered an improved margin in H2 with reduced levels of clearance stock requiring lower markdowns The average lease length of the UK retail estate is 5 years. When renewals are made they are for a maximum of 10 years, with a 5 year break 5

6 o Group ecommerce grew by 8% in the year, now representing 20% of Group retail sales o The Group multichannel offering continues to be a strong one with new initiatives and service channels for customers to choose from o Website improvement initiatives over the year led to an increase in conversion rates o Greater choice of delivery options will be launched in FY15 FY14 FY13 Multichannel m m Revenue Percentage of Group Retail Sales 20.2% 17.8% Growth 8.1% 6.7% o Over 27% of ecommerce orders were serviced through Click and Collect from store o Mobile and tablet revenue constitutes 40% of UK/Europe ecommerce sales. This is very high against any external benchmark and reflects our customer profile and being one of the first to market with a fully responsive website o Opportunities for growth include international ecommerce (12% of UK ecommerce sales) 6

7 Revenue o 2.9% increase in UK/Europe over the year o North America impacted by tough trading conditions Margin o Improvement in UK/Europe margin offset by deeper discounting required in North America Selling and distribution expenses o Costs well controlled and reduced by 2% Underlying Operating Profit o 2.2 m reduction in profit FY14 FY13 Wholesale m m Revenue 2.7% Gross Margin 32.5% 34.9% Underlying Operating Profit Percentage of Group Revenue Underlying Operating Margin 38.0% 37.5% 16.3% 18.8% 7

8 o The Group continues to operate with a significant international coverage o New territories in the year generated incremental revenue of 0.45 m and included Bulgaria, Azerbaijan, Czech Republic and Saudi Arabia o After a reduction in licensed and franchised locations in H1, we have added 9 locations in H2 mainly in India bringing the total to 272 o Overall the Group serves 61 countries across established fashion centres and growth markets o Our joint ventures in China and Hong Kong continue to perform well with improved LFL s and increased share of profit delivered o We continue to seek new ways to serve our international customers including opportunities through our ecommerce channel 8

9 o Global Licensing is a key driver of profit and reflects the strength of the Brand o Licensing deals cover multiple territories across the globe e.g. Australia and India, with Product licensing mainly in USA, UK and Hong Kong FY14 FY13 Other Operating Income m m Licence Income o As reported at the half-year the loss of Sears license and NF buying office fees have had an adverse impact year on year. For FY15 this will no longer be a drag on comparators o New licensees in the UK, such as furniture with DFS, are showing good growth and are supplementing the longer term deals e.g. Boots and Specsavers o New licensees in the US continue to show growth generating over 0.3 m in year one o We will continue to seek new deals over the coming year 9

10 o A continued focus on overheads has again yielded positive results in the year o Total Group Operating Expenses were reduced by 6.9% o Overheads remain a focus area for the coming financial year as we continue to improve operating efficiency 10

11 o A strong cash position throughout the year, no debt. Working capital reduced o Capital expenditure lower as the prior year included the fit-out of two new outlet stores, two other store re-sites, as well as an investment in infrastructure within our IT estate o No Dividend recommended. Distribution policy will continue to be actively reviewed o Working capital will continue to be a focus with the aim of achieving ongoing efficiencies in stock management Group Cash Flow FY14 FY13 m m Operating Result before changes in working capital (3.2) (4.7) Movement in working capital Cash flows from operations 1.8 (3.7) Income tax paid (0.2) (0.5) Interest income Capital expenditure (0.8) (1.7) Store disposal costs (1.7) (0.2) Disposal of discontinued operations Dividends from joint ventures Dividends paid Movement in Cash (0.4) (5.7) Opening net cash Non-cash movements Closing net cash

12 o The Group displays momentum with both year on year and half on half improvements in core areas o We continue to focus on sustainable improvement through self-help initiatives o And review selective plans for growth opportunities in valuable sectors o A continued focus on our stock ordering and management to improve gross margin o Plans to maintain our year on year reductions in overheads and non-trading costs to improve operating margins 12

13 o Encouraging start to Spring 2014 o Continued traction and full year effect of initiatives in UK/Europe retail to reduce losses still further o We expect trading in North America to continue to be challenging in FY15 o Continue to look for opportunities to drive down overheads o Licensing income growth expected 13

14

15 m m Revenue: Retail Wholesale Group Revenue Gross Profit Retail Gross Margin 56.9% 55.8% Wholesale Gross Margin 32.5% 34.9% Composite Gross Margin 47.6% 47.9% Underlying Operating (Loss)/Profit Retail (11.6) (15.4) Wholesale License Income Common & Group overheads (11.3) (12.8) Finance income Share of profit from Joint ventures Underlying Group Operating Profit (4.4) (7.2) Underlying Operating Margin Retail -9.9% -12.4% Wholesale 16.3% 18.8% Underlying Group operating margin -2.3% -3.6%

16 m m Intangible assets Tangible assets Investments Deferred tax assets Total non-current assets Inventories Debtors Cash at bank Derivative financial instruments Total Current Assets Total Assets Non-current liabilities Creditors Current tax payable Provisions Derivative financial instruments 0.2 Total Liabilities Net Assets

17 Note 2014 m Note m Operating activities Operating activities Loss for the period Loss for the period (6.0) (10.5) (6.0) Adjustments for: Adjustments for: Depreciation and impairment Depreciation and impairment Impairment of goodwill Impairment of goodwill Finance income Finance income (0.1) (0.1) Currency translation Currency differences translation differences - (0.1) - Share of profit of joint Share ventures of profit of joint ventures (0.6) (0.6) (0.4) Non-operating loss Non-operating store disposals loss on and store closures disposals and closures Income tax credit Income tax credit (0.1) (0.1)- Operating loss before Operating changes loss in before working changes capital in and working provisions capital and provisions (3.2) (3.2) (4.7) Decrease in inventories Decrease in inventories Decrease in trade and Decrease other receivables in trade and other receivables Increase/(decrease) Increase/(decrease) in trade and other payables in trade and other payables 1.9 (6.8) 1.9 Cash flows from operations Cash flows from operations 1.8 (3.7) 1.8 Income tax paid Income tax paid (0.2) (0.2) (0.5) Cash flows from operating Cash flows activities from operating activities 1.6 (4.2) 1.6 Investing activities Investing activities Interest received Interest received Proceeds from investments Proceeds in from joint investments ventures in joint ventures Acquisition of property, Acquisition plant and of property, equipment plant and equipment (0.8) (0.8) (1.7) Net costs from sale Net of property, costs from plant sale and of property, equipment plant and equipment (1.7) (1.7) (0.2) Disposal of discontinued Disposal operations of discontinued operations Cash flows from investing Cash flows activities from investing activities (2.0) (2.0) (0.5) Financing activities Financing activities Dividends paid Dividends paid (1.0) - Cash flows from financing Cash flows activities from financing activities - (1.0) - Net decrease in cash Net and decrease cash equivalents in cash and cash equivalents 24 (0.4) 24 (0.4) (5.7) Cash and cash equivalents Cash and at cash 1 February equivalents at 1 February Exchange rate fluctuations Exchange on rate cash fluctuations held on cash held Cash and cash equivalents Cash and at cash 31 January equivalents at 31 January

18 31 January January 2013 Locations sq ft Locations sq ft Operated locations UK/Europe French Connection Stores , ,115 French Connection/Great Plains Concessions 51 33, ,134 Toast Stores 12 15, ,407 YMC Stores 2 1, , , ,011 North America French Connection US Stores 7 22, ,900 French Connection Canada Stores 9 24, , , ,225 Total operated locations , ,236 French Connection licensed and franchised UK/Europe 7 7, ,821 North America 1 2, ,000 Middle East 6 9, ,842 Australia 72 72, ,329 Hong Kong 5 6, ,031 China 23 34, ,556 India , ,129 Other 48 44, ,240 Total licensed and franchised locations , ,948 Total branded locations , ,184