N BROWN GROUP PLC HALF YEAR RESULTS 9 OCTOBER PDF Free Download

N BROWN GROUP PLC HALF YEAR RESULTS 9 OCTOBER 2014 1

HALF YEAR RESULTS AGENDA INTRODUCTION 2014/15 HALF YEAR RESULTS BUSINESS UPDATE Performance highlights Delivering our change programme SUMMARY Q&A 2

N BROWN GROUP PLC DEAN MOORE GROUP FINANCE DIRECTOR 3

FINANCIAL RESULTS OVERVIEW Financial strategy to drive value for all stakeholders Entered period of change / transition Financial model will alter over time First Half review Guidance 4

KEY FINANCIAL MOVEMENTS 26 weeks to 30 August 2014 2014 m 2013 m vs.ly % Turnover 407.3 409.6-0.6% Operating Profit 45.2 48.4-6.6% Trading Profit 41.6 45.0-7.6% Pre-tax Profit 42.7 44.1-3.2% Adjusted Earnings per Share 11.56p 12.55p -7.9% Dividends per Share 5.67p 5.67p - Cash Inflow from Operations 80.3 36.5 +120% Borrowings 205.2 197.9 +3.7% Receivables 565.1 548.0 +3.1% 5

GROUP REVENUE 26 weeks to 30 August 2014 2014 m 2013 m vs.ly % Sale of goods 290.2 291.3-0.4% Services 117.1 118.3-1.0% Reported Group Turnover 407.3 409.6-0.6% 6

MAJOR REVENUE MOVEMENTS 26 weeks to 30 August 2014 m 440 Customer Base Growth Specialist Growth Rephase Marketing Spend to 2H 430 4.4 13.9 Credit rule change 420 Stores Roll -out 17.1 8.0 Improved arrears - lower F.I. 410 2013 1.7 2.0 International 1.3 2014 409.3 407.3 400 7

GROUP TRADING ACCOUNT 26 weeks to 30 August 2014 2014 m 2013 m vs.ly % Group Revenue 407.3 409.6-0.6% Gross Profit 215.6 215.1 +0.2% Gross Margin % 52.9% 52.5% +40bps Distribution Costs (36.6) (34.2) +7.0% Sales and Administration (133.8) (132.5) +1.0% Operating Profit 45.2 48.4-6.6% Operating Margin 11.1% 11.8% 8

m MAJOR OPERATING PROFIT MOVEMENTS 26 weeks to 30 August 2014 64 61 Net Customer Base Stores 0.6 Specialist 0.6 Marketing Rephase 5.9 58 Cust Sales Incentive 55 13.6 5.0 Credit Rule Change 52 2.5 Dist Costs Efficiency 49 46 2013 2.4 Improved Arrears Lower F.I. International 2.0 Losses 0.2 2014 48.4 43 45.2 40 9

GROUP PROFIT & LOSS ACCOUNT 26 weeks to 30 August 2014 2014 m 2013 m vs.ly % Group Operating Profit 45.2 48.4-6.6% Finance Costs (net) (3.6) (3.4) +5.9% Group Trading Profit 41.6 45.0-7.6% Unrealised FX movement 1.1 (0.9) - Profit Before Tax 42.7 44.1-3.2% Taxation (9.3) (9.7) -4.1% Profit After Tax 33.4 34.4-2.9% 10

PRE-TAX MARGIN Gross Margin Operating Costs Product Bad Debt / Financial Income Yield -50bps +90bps -110bps Finance Costs Higher Borrowings -10bps Pre-tax margin (10.2%) -80bps 11

NET ASSET SUMMARY At 30 August 2014 2014 m 2013 m vs.ly % Non Current Assets 162.1 137.4 +18.0% Inventories 91.3 89.3 +2.2% Receivables/Prepayments 591.1 571.8 +3.4% Creditors/Accruals (138.8) (141.3) -1.8% Retirement Benefit Deficit (5.2) (3.2) +62.5% Net Borrowings (205.2) (197.9) +3.7% 495.3 456.1 +8.6% Gearing 41% 43% 12

RECEIVABLES AND PROVISIONING At 30 August 2014 2014 m 2013 m vs LY % Gross Trade Receivables 609.5 603.9 +0.9% Opening Bad Debt Provision 50.2 55.7 Bad Debt Charge 35.0 35.9-2.5% Debtors Written Off (40.8) (35.7) +14.3% Closing Bad Debt Provision 44.4 55.9-20.6% Provision Ratio 7.3% 9.3% 13

OPERATING CASHFLOW 26 weeks to 30 August 2014 2014 m 2013 m Operating Profit 45.2 48.4 Depreciation & Amortisation/Share Option Charge 11.3 11.5 Increase in Stock (1.3) (2.8) Decrease/(Increase) in Receivables 7.5 (23.1) Increase in Payables 17.5 4.7 80.2 38.7 Pension Obligation 0.1 (2.2) Cash Generated from Operations 80.3 36.5 14

GROUP CASHFLOW 26 weeks to 30 August 2014 2014 m 2013 m Cash Generated from Operations 80.3 36.5 Taxation Paid (13.0) (10.4) Dividends Paid (24.0) (23.0) Investing Activities (30.8) (8.5) ESOT Share Issue - net(purchases)/proceeds 0.5 (0.4) Finance Costs (net) (4.5) (3.4) Net Cash Inflow/(Outflow) 8.5 (9.2) Opening Borrowings (213.7) (188.7) Closing Borrowings (205.2) (197.9) 15

GROUP BORROWINGS At 30 August 2014 Facility m Drawndown m Securitisation Debt 250 220 Bilateral Loans 120 30 Overdraft 9 - Gross Borrowings 379 250 Cash in Hand (45) Net Borrowings 205 16

GUIDANCE Period of change / transition continues September trading immediate impact Delayed impact Financial income Markdown Contingent costs Robust balance sheet Positive cashflow 17

HALF YEAR RESULTS AGENDA INTRODUCTION 2014/15 HALF YEAR RESULTS BUSINESS UPDATE Performance highlights Delivering our change programme SUMMARY Q&A 18

HIGHLIGHTS - Performance Trading profits of 41.6m Active customers up 3.7% 24% reduction in direct mail activity 58% online penetration (+2%) Customer service : No.3 in UK ICS rankings Significant improvement in quality of receivables 19

HIGHLIGHTS - Performance by brand Participation % Growth % JD WILLIAMS 33-3 SIMPLY BE 16 +1 JACAMO SUPPORT BRANDS SPECIALIST 9 31 11 +7-3 +7 20

HIGHLIGHTS - Performance by brand excl. Home & Gift JD WILLIAMS SIMPLY BE JACAMO SUPPORT BRANDS SPECIALIST Participation % 26 13 7 26 10 Growth % Excl H/E -2 +4 +14-2 +10 CORE HOME 18-8 21

HIGHLIGHTS - Product categories m % of Total % Change Ladieswear 171 42-3 Footwear 47 11-1 Menswear 55 14 +5 Specialist 45 11 +13 Home & Gift 89 22-5 407 100-1 22

HIGHLIGHTS - Ladieswear New customers up 26% for Autumn Winter Fast Fashion up 23% on LY in sizes exclusive to us Joe Browns up 41% on LY in sizes exclusive to us Maxi dresses up 40% YOY 23

HIGHLIGHTS - Footwear 11 styles in Curvy Plus boots Occasion footwear Occasion Footwear up 16% up 16% Sports footwear up 68% 24

HIGHLIGHTS - Menswear Fast Fashion sales up 51% Black Label own brand +105% vs.ly 25

HIGHLIGHTS - Home Famous Five categories +5% YOY HOME DECOR HOMEWARES BEDDING OUTDOOR LIVING GIFTS 26

HIGHLIGHTS - Growth in customers Active customer file +3.7% New customers up 3.0% for H1 64% of first order demand placed online New season recruits up 9% - JD Williams up 26% 27

HIGHLIGHTS - Channel Participation 100 90 80 70 60 50 40 30 20 10 0 H1 H1 3% 39% 64% 58% 36% 2008/9 2013/14 Stores UK Phone UK Web 28

HIGHLIGHTS - Online growth fuelled by mobile 46% of traffic from mobile (+14%) 37% of demand from mobile (+11%) 68% 14.5% 17.5% Tablets lead the way Mobile optimisation to drive conversion 54% 19% 27% 29

HIGHLIGHTS - Service Improvements 7 day delivery service launched 8pm next day cut-off moving to 9pm from January Click & Collect parcel shops now at 4,000 increasing to 5,500 before Christmas Enquiries to order ratio improved by 2% Ranked No. 3 UK ICS ratings Tracked services now available for USA & Ireland 30

HIGHLIGHTS - Top 3 for customer satisfaction UKCSI Overall Retail - Non Food 45.0 50.0 55.0 60.0 65.0 70.0 75.0 80.0 85.0 90.0 95.0 100.0 Amazon John Lewis JD Williams Boots Next Argos Superdrug Marks & Spencer Lloyds Pharmacy ebay Wilkinson B&Q Debenhams Homebase Matalan Primark New Look Ikea Currys/Dixons/PC World Sports Direct WH Smith Source: Institute of Customer Service 31

MISSION & STRATEGY Unique plus size capabilities Population is ageing & getting larger Consumer credit drives loyalty A winning formula Modernisation essential to deliver potential 32

2014 CALENDAR Phase 1 of Famous Five strategy for Home & Gift Introduced Pay by Card Adjusting our marketing mix & phasing Kick off systems development HLD phase Launch of new International team for Simply Be USA New store opening programme begins Re-launch JD Williams. - Ladieswear Improvements first New advertising for Power Brands plus Oxford Street opens Multichannel enhancements delivered prepeak PEAK TRADING PERIOD 33

CHANGE PROGRAMME - Famous Five Famous Five growth offset by managed decline in high risk categories Garden (+13%) & gifting (+29%) Offset by electrical (-26%) & H&B (-13%) YOY Total sales -8% vs. last year Lowest level of accounts in arrears since 2006 35

CHANGE PROGRAMME - Recruiting cash customers New Ordering Accounts 100% 90% 80% 70% Roller Credit Rejects Non Roller Cash 60% 50% 40% 30% 20% 10% Typical level of non-rollers 0% SS13 SS14 Cash Non Roller Roller 2nd order rate 23% 27% 65% AOV 45 39 55 Margin 46.5% 45.0% 44.5% 37

CHANGE PROGRAMME - Change in phasing (Illustrative) Newness Fashionability Back Winners Availability Value for money Mail order Investment Profile 4 3 Jan SS Book July AW Book Consumer Spending 2 1 Q1 Q2 Q3 Q4 Low Spend Jan Sale Early Easter Mid Spend Build for spring/summer June Peak Mid Spend Holiday Season A/W launch High Spend Xmas build through quarter 39

CHANGE PROGRAMME - Adjusting our marketing mix Recrutiment Brand Retention 100% 90% 80% 70% 60% 50% 40% 30% 20% Recruitment investment increased to 42% of total Retention investment below 40% Direct mail spend down 24% in the first half 10% 11/12 12/13 Year 13/14 14/15 0% 40

CHANGE PROGRAMME - Increasing customer recruitment Online recruitment value maintained Pre-campaign brand awareness for JD Williams at 4% TV for the season over 40% of recruitment spend 41

CHANGE PROGRAMME - Systems Infrastructure Development (2014/15) 43

CHANGE PROGRAMME - - USA 2014/15 First Half Product demand growth of 16% Dedicated international team Credit & loyalty offer exceeds expectations Won Retailer of the Year at Full Figured Fashion Week 2014/15 Second Half Continued focus on service Marketing activity utilising loyalty proposition Marketing refocused on proven activity 45

CHANGE PROGRAMME - All stores performance 14 stores by year end 2014 5% Halo effect in store catchments 17% store LFL sales growth Existing stores deliver 1m profit Customers recruited in stores 34% more profitable than non-store 47

CHANGE PROGRAMME - Ladieswear improvements Improved product phasing Improved fabrics & finishing Improved styling & fit Improved value for money Improved product presentation Improved brand awareness Best selling blouse..ever! 49

CHANGE PROGRAMME - Contemporary presentation Improved product phasing Improved fabrics & finishing Improved styling & fit Improved value for money Improved product presentation Improved brand awareness 52

CHANGE PROGRAMME - Ladieswear improvements Improved product presentation From. Slippers from 15 in width fittings unique to us 53

CHANGE PROGRAMME - Ladieswear improvements Improved product presentation To. Slippers from 15 in width fittings unique to us 54

CHANGE PROGRAMME - Ladieswear improvements Improved brand awareness Media Value: 3m 55

CHANGE PROGRAMME - Brand Ambassadors 46.3m adults had at least 1 opportunity to view Highest ever traffic to site 30x previous peak hour Christmas Ad airs in November 58

CHANGE PROGRAMME - Brand Ambassadors 59

CHANGE PROGRAMME - Brand Ambassadors 60

CHANGE PROGRAMME - Brand Ambassadors 61

CHANGE PROGRAMME - Multichannel improvements Platform fast and stable Optimised for different devices Web chat roll-out Improvements to zoom Improvements to sequencing & crossselling Rolled out product recommendations Cash to credit online conversion 63

CHANGE PROGRAMME - Multichannel improvements Platform fast and stable Optimised for different devices Web chat roll-out Improvements to zoom Improvements to sequencing & cross-selling Rolled out product recommendations Cash to credit online conversion 67

OUR AMBITION - Route map to growth Recruit more Customers Grow! Build Loyalty Grow Profits! CAPACITY & CAPABILITY Be. Fit for the Future Grow Company Value! 70

OUR AMBITION - Route map to growth Recruit more Customers Grow! Brand Awareness Multichannel Cash & Credit International CAPACITY & CAPABILITY Build Loyalty Grow Profits! Be. Fit for the Future Grow Company Value! 71

OUR AMBITION - Route map to growth Recruit more Customers Grow! Brand Awareness Multichannel Cash & Credit International CAPACITY & CAPABILITY Build Loyalty Grow Profits! Value Newness Service Communication Be. Fit for the Future Grow Company Value! 72

OUR TARGETS - Seven KPIs Progress so far 1. Increase customer satisfaction 2. Grow ladieswear share 3. Grow menswear share 4. Increase online penetration 5. Increase home & gift penetration 6. Grow international revenues No. 3 in UK No.1 online retailer for size 16+ Market share increases to 3.5% 58% (up 2%) Quality of sales improved US demand up 16% 7. Increase operating margin Changes impacted profit in short term 74

SUMMARY Significant change already delivered to ensure the business is fit for the future Difficult Autumn trade has affected outturn projections New customers fuelling growth in customer base which underpins confidence for accelerated growth next year Progress made on 6 of the 7 key performance indicators 75

THANK YOU, ANY QUESTIONS? No.1 online plus size retailer in the UK 76