Europris. September Norway s leading discount variety retailer

Transcription

1 Europris September 2018 Norway s leading discount variety retailer

2 Europris at a glance Norway s leading discount variety retailer Europris total revenue development 1 Undisputed market leadership in Norway (NOKm) Nationwide presence Wide assortment at very low prices Efficient sourcing with direct access to end producers years of continuous growth since start in Based on chain sales 2017 (including franchise stores). Source: Europris 2

3 Wide assortment that taps into a large addressable market Groceries General merchandise Europris has a truly mixed assortment 2 Personal Care 9% Laundry & Cleaning 3% Pets 3% Home & Kitchen 15% Candy & Chocolate 5% Total addressable market 1 : ~NOK 280bn Groceries 12% Clothes & Shoes 8% Hobby & Office 7% Handyman 7% House & Garden 11% Electronics 9% Travel, Sports & Leisure 11% Speciality retail Large market Competitive flexibility Resilience 1. Total addressable market for packaged food, home & garden, clothing & shoes, leisure & office, health & beauty, and electronics & appliances. 2. Active SKUs year end 2014 Source: Euromonitor, Europris 3

4 Europris is #1 in Norwegian discount variety retail with NO 1:1 competitor Sales in Norway 2017 (NOKm) Entered in Offering Discount variety retail Tools, car supplies, leisure products Hardware, home, leisure, electrical, multimedia Tools, home, electrical, DYI, garden, leisure, car supplies, clothing Discount variety non-food retail Clothing, textiles, cosmetics, tools, home Home, DIY, tools, garden, leisure, electrical # of stores May Assortment overlap to Europris 2 Source: Euromonitor, Ravninfo, Europris 1. Chain sales including franchise stores. 2. Management estimates. 4

5 Discount variety retail experiences solid growth across all Western geographies 18% 22% 10% Average Sales CAGR Average Sales CAGR Average Sales CAGR Source: 3i Capital Markets Day presentation 2018, 9th March 2018; OC&C research; company information; and Europris estimates Note: Sales CAGRs for each region denotes the straight average of the respective companies highlighted for the relevant years 5

6 Clear long term white space opportunity and a solid near term pipeline Total: 257 Ørnes Seven new stores opened in 2018 Robust pipeline of new stores Two planned for the rest of 2018 Nine stores in pipeline for 2019 and beyond (six stores subject to zoning process) 7 Long-term potential of stores defined in 2015 Digernes Lillehammer Lura Rykkinn 9 Stokke 16 Kjørbekk More than 25k inhabitants per store Between 15k and 25k inhabitants per store 15k or fewer inhabitants per store Note: # of stores updated as per August

7 Preparing the group for future growth New warehouse: capacity 34% up; rental space 13% down Værste Øra Kampenveien Automatic high bay storage 65,000 pallets Traditional warehousing 35,700 pallets Hjalmar Bjørges vei Havnelageret 7

8 while also contributing to significant gains in efficiency Significant efficiency gains long term Expected reduction in the ratio of opex/group revenue of between p.p OPEX in % of group revenue 30,8 % Several drivers of increased efficiency Lower lease expenses Reduction in transportation costs General savings from more efficient operations 30,3 % Reduction of between p.p 29,8 % Period of transition Note: assuming normal course of business, and no other efficiency gains or losses affecting the ratio of operational expenses to group revenue 8

9 A leader in concept development clear shop-in-shop layout and spacing Improved shop-in-shop categorisation Brands more prominently displayed Value for money visualisation one step up The best of all Same investment as previous version Limited cost for roll-out of main elements to existing stores 9

10 Clear category strategy with specific focus on seven destination categories 7 focus Destination product article groups Personal Care Laundry & Cleaning 12 main categories 7 specific Destination areas to drive traffic Candy & Chocolate Petfood & Accessories 40% of sales Prominent positions in stores Proven category management models Home Storage Socks & Underwear Low ticket items Seasonal offerings across all categories underpin category strategy Candles & Napkins Seasonal 10

11 Significant initiatives in category development coffee, tea and accessories 11

12 Significant initiatives in category development pet food and accessories 12

13 Significant initiatives in category development small textiles Building credibility in small textiles 13

14 Focusing on digital capabilities with E-CRM as a first step towards a full online offering INCREASED SOPHISTICATION IN DECISION MAKING TOTAL # OF POTENTIAL CUSTOMERS MER customer loyalty programme customer specific communication and information DIGITAL MARKETING + RECEIPT / CUSTOMER BEHAVIOUR ANALYSES DM LEAFLET / TRADITIONAL MARKETING Analyses of general customer behavior and shopping patterns Better decision making for marketing, campaigns and other customer facing activities 14

15 Launch of e-commerce in June 15

16 Smart sourcing is part of the Europris DNA The Competitive edge The Europris DNA More than 25 years sourcing experience from low cost countries Opportunistic spirit Innovative approach Bargain hunters Relationship driven Highest ethical standards Longstanding relationships with high quality producers Unique Nordic sourcing cooperation together with Tokmanni and ÖoB Direct access to the local end producer Strong product and production knowledge High value chain flexibility and fast execution Source: Europris 16

17 Achieving international competitiveness with a solid Nordic footprint Bringing the segment s two strong players in Norway and Sweden together, leveraging a significantly overlapping assortment, deep retail know-how and a common strategic agenda to create a robust Nordic constellation in discount variety retail # of stores 257 # of stores 94 Retail sales 2017A NOK 5.9bn Retail sales 2017A NOK 3.6bn Note: Numbers for Runsvengruppen converted to NOK using SEK / NOK rate as of Friday, 8 th June

18 Partners with strategic potential on a European scale The Europris & ÖoB partnership emerges among the top three major European structures in the fast growing discount variety retail sector Estimated combined partnership numbers Not PF for Hong Kong Chain sales: NOK 9.5bn Chain sales: NOK 33bn Chain sales: NOK 33bn Chain sales: NOK 4bn EBITDA: NOK 720m EBITDA: NOK 3.7bn EBITDA: NOK 3.0bn EBITDA: NOK 271m Stores: 351 Stores: 1,095 Stores: 927 Stores: countries: Norway and Sweden 7 countries: Benelux, Germany, France, Austria, Poland 2 countries: United Kingdom and Germany 4 countries: Norway, Sweden, Finland, Germany Note: Combined 2017 revenue for Europris / ÖoB. Actual 2017 Adj. EBITDA for Europris and ÖoB (excluding non-recurring items). Rusta figures not adjusted for acquisition of Hong Kong in Finland 18

19 A low-risk synergistic partnership today potential for true European scale tomorrow Strategic Initiatives Turnaround of ÖoB Store initiatives (incl. ÖoB 2.0) Best practice sharing Potential exercise of option to acquire remaining 80% stake Purchasing cooperation Continued store roll-out in Norway Implementation new warehouse Best practice sharing Strategic Initiatives EPR acquisition of 20% ownership stake in ÖoB Nordic discount variety retail champion and platform established true European scale within reach 19

20 Creating a pan-nordic platform in discount variety retail with sourcing power to reflect an even larger grouping (through Shanghai JV with Tokmanni) Representing sales of NOK 17.1bn NOK 3.6bn NOK 5.9bn 351 stores across Norway & Sweden NOK 7.6bn Note: Numbers based on each company s 2017A revenue numbers, converted to NOK as of Friday, 8 th June

21 Key investment highlights 1 Unchallenged market leader in a fast growing retail segment 2 Unique discount variety retail model 3 Impressive track record of growth, high profitability and solid cash generation 4 Strong future growth potential 21

22 Appendix

23 Strong revenue growth Consistent store roll-out and solid LFL growth has driven sales Total sales CAGR: 8% Avg. LFL growth: 5% # of Chain stores (year end) Sales (NOKm) Y-o-Y total sales growth (%) % % % 12% 10% % 7% 8% 6% % % % x # of new store openings General note: Please refer to page 25 for important terms and definitions that apply on this page. Source: Europris 23

24 High and stable profitability Stable gross margin Gross profit (NOKm) Margin (%) Consistently high EBITDA margin Adjusted EBITDA (NOKm) Margin (%) ,1 % ,5 % ,9 % ,6 % 50,0 % 45,0 % 40,0 % 35,0 % ,8 % ,1 % ,0 % 13,5 % 13,0 % ,0 % ,9 % 12,5 % 25,0 % ,0 % 15,0 % 10,0 % ,8 % 12,0 % 11,5 % 5,0 % ,0 % ,0 % ,5 % General note: Please refer to page 25 for important terms and definitions that apply on this page. Source: Europris 24

25 Important terms and definitions Term Definition Chain Chain sales Stores LFL growth Company All Europris stores including both stores owned by the Company (directly operated) and franchise stores Total retail sales of the Chain All stores of the Chain, both franchise and stores owned by the Company (directly operated), unless explicitly stated Measure of growth rate for same-store sales. Same-store sales exclude the sales of a store if the store was not open for the full calendar year and the entire prior calendar year. The stores included in calculating like-for-like growth are redefined each year at the beginning of the year and include both directly owned stores and franchise stores. The measure includes stores that have been refurbished, relocated or expanded during an applicable calendar year Europris ASA (with subsidiaries) Franchise takeover Acquisition of a franchise store and conversion to a directly operated store. Transaction date and consolidation into Company financial accounts may differ from the date of formal merger Accounting standards Gross profit Gross margin EBITDA Adjusted EBITDA Adjusted EBITDA margin EBITA Adjusted EBITA Cash conversion Europris changed the accounting principles for its audited financial statements from Norwegian GAAP to IFRS with effect from 1 January 2014 and has restated its audited financial figures for 2013 and 2012 Gross profit represents Company revenue less the cost of goods sold excluding unrealised foreign currency effects Gross profit as a percentage of Company revenue EBITDA represents operating income before depreciation and write-downs. EBITDA is not a measure of liquidity or performance calculated in accordance with IFRS EBITDA before certain non-recurring operating expenses defined by management Adjusted EBITDA as a percentage of Company revenue EBITDA less depreciation of fixtures & fittings and software (consistent with reported operating income going forward before any impairment charges). EBITA is not a measure of liquidity or performance calculated in accordance with IFRS EBITA before certain non-recurring operating expenses defined by management (the same as for adjusted EBITDA) Adjusted EBITDA less total capital expenditures (excluding amounts under financial lease) divided by adjusted EBITDA. Cash conversion is not a measure of liquidity or performance calculated in accordance with IFRS 25

26 Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides or by accepting delivery of this document, you agree to be bound by the following limitations. IMPORTANT INFORMATION The presentation and any information provided does not constitute or form part of, and should not be construed as, an offer to acquire any securities of the Company or any of its subsidiaries nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase any securities of the Company or any of its subsidiaries, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. FORWARD LOOKING STATEMENTS Matters discussed in this document may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as believe, expect, anticipate, intends, estimate, will, may, continue, should and similar expressions. Forward-looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; and developments in the Company s markets. The forward-looking statements in this Company Introduction are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management s examination of historical operating trends, data contained in the Company s records and other data available from third parties. Although the Company believe that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause the actual results of the Company or the industry to differ materially from those results expressed or implied in this Company Introduction by such forward-looking statements. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved and you are cautioned not to place any undue influence on any forward-looking statement. NO UPDATES Nothing contained in this Company Introduction is or should be relied upon as a promise or representation as to the future. Except where otherwise expressly indicated, this Company Introduction speaks as of the date hereof. Neither the delivery of this Company Introduction nor any purchase of any of the securities, assets, businesses or undertakings of Europris shall, under any circumstances, be construed to indicate or imply that there has been no change in the affairs of Europris since the date hereof. In addition, no responsibility or liability or duty of care is or will be accepted by Europris or their respective Representatives for updating this Company Introduction (or any additional information), correcting any inaccuracies in it which may become apparent or providing any additional information. The information contained in this Company Introduction is necessarily based on economic, market and other conditions as in effect on the date hereof or as stated herein. It should be understood that subsequent developments may affect such information and that Europris have no obligation to update or revise such information. 26

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