Becoming more specialist and most loved 0 - - PowerPoint PPT Presentation

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Becoming more specialist and most loved

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Customer vision: helping pets and their owners live long and happy lives together

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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Market & competitive backdrop reinforces our aspiration to be MORE specialist and MOST loved

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Pet market continues to show resilience & premium growth vs general retail Online participation growth is <1% per year, store collection the fastest growing segment

Pet market General retail 2.6% 2.2% 3.5% 1.5% 2008-12 2012-14 3.4% 5.9% 7.3% 8.6% 2008 2010 2012 2014 Online sales participation of total pet market

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Market & competitive backdrop reinforces our aspiration to be MORE specialist and MOST loved

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12% 14% 75% 72% 5% 3% 1% 3% 7% 9% 2012 2014 44% 53% 47% 35% 9% 12% 2012 2014

Food & Treats* Advanced Nutrition Vet Services Accessories

33% 36% 17% 17% 22% 22% 9% 11% 20% 15% 2012 2014

Source: OC&C data. Vet corporates include CVS, Medivet and Independent Vetcare (IVC) * Total Food including grocery & Advanced Nutrition

Pets at Home Grocers Pet specialists (Incl. vets) Online specialists Other Vet corporates Vet independents

6% 9% 11% 13% 83% 78% 2012 2014

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

We are the only true omnichannel specialist pet retailer UK wide stores & C&C, services, customer loyalty programme

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Store based pet specialists Online pet specialists Store numbers 413 50-100

✗

Transactional website

✓ ✓ ✓

SKU counts c13,000 c3,000-40002 c7,500 – 10,0003 Colleague advice

✓ ✓ ✗

Vets & groomers

✓ ✗ ✗

Customer loyalty programme

✓ ✗ ✗4

Customer acquisition Natural search / CRM CRM driven Paid for3 C&C

✓ ✓ ✗3

Home delivery time1 Within 3 days 2-3 days 2-3 days Avg Free delivery threshold £29 £36 £25 Avg Delivery charge1 £4.95 £6 £3.17

Source: Company websites & Brandmatch data 1 refers to standard UK delivery 2 exception Pampurred Pets 3 exception Amazon 4 exception Zooplus Store based sample includes Pets Corner, Jollyes, Pampurred Pets. Online sample includes PetPlanet, Amazon, Zooplus, Fetch, Pet Supermarket

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

And we have unique attributes & capabilities to leverage

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Market leading brands & customer relationships Incomparable range, innovation, refreshment & sourcing advantages Sector leading colleague expertise & qualified professionals Best value private brands & own labels, plus exclusives

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Delivering on the PawPrint supports the core drivers of growth

Product and Innovation Product Mix & Own Brand Optimised Store & Pet Services Roll Out Key Growth Drivers

Drivers of Core Growth

LFL Space Margin VIP Club Omnichannel Services (Vets & Groomers) Services Maturity

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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Becoming more loved by pet owners

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Our customer is the engaged pet owner

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What defines an engaged customer?

Source: Pets at Home survey of >5,000 pet owners July 2015 Note: 5 = “Strongly agree”, 1 = “Strongly disagree” * Scores reversed for this question 2.00 2.50 3.00 3.50 4.00 4.50 My pets are a very big part of my life I like to pamper my pets and make them feel special I always look for the cheapest prices when buying pet food Nothing that I buy is too good for my pets My pets are my children I tell my pets I love them at least twice a day I take my pets to the vet regularly for check-ups Non PaH customer PaH customer

*

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

To become more loved by engaged owners, we focus on the criteria they value most: range, quality & advice

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Customer rankings of key purchase criteria from 1-5 (where 5 is most important)

2.00 3.00 4.00 5.00 Highly engaged pet owners Low engagement pet owners

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

A wide range of Services & specialist advice from colleagues give customers more reasons to shop with us

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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Showcase our knowledge & passion, to help customers make the most of their lives together

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Widen the range of care plans in our vet practices Be the first place people think of when they buy a new pet Ensure colleagues have more, not less, customer facing time Help every customer to feed a better diet – bridge the gap to AN

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Strengthening our specialist credentials

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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Expand & enhance our range of premium pet food diets

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New brands

Exclusive launch of US brand High quality dehydrated food

Innovate Develop & widen private label New private labels

Wainwright’s frozen Targeted at small breeds

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

And use VIP to move customers towards better pet diets & ultimately, up to Advanced Nutrition

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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Sign up

Blunt relationship

• Customer
• Simple pet info
• Generic communications
• Some pet targeting

Pet Personal

• Advanced Nutrition
• Prescription food
• Tailored food offerings
• Relevant vet benefits
• Tailored health and hygiene
• All key pet types / ages /
• Breeds ...
• 3rd party services

Designed around My VIP We are here

Develop the relationship with our VIPs, moving towards a lifetime value view of the customer

Personalised

• nline offers &

content Repeat order reminders Brand specific rewards Tailored services Pet specific content Best value and priority for VIPS

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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

c50% of our online orders are picked up in-store Store convenience for frequent food purchase

Stores will always be a fundamental part of our proposition

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Vet & grooming services will never be delivered online Live pet & grooming provides entertainment & education Customers want to bring their pet, & talk pet with other

• wners

Average basket <£20, not a natural online market

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Whilst adapting to our customers shopping habits by working towards a seamless offline & online experience

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Order in-store kiosks Increase extended

• nline product

range Order in-store via colleague PetPads Richer online content & imagery Digital screens to showcase extended range Greater potential for

• nline bookings

VIP App

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Trialling new formats offers further routes to growth & retains our specialist edge over the competition

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Niche, additional market segment Highly engaged dog owners Affluent high street locations For the core Pets at Home customer Convenience format Infill locations or towns without retail parks

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Primary Practices In-store or standalone Extended hours Super Surgery 24/7 CT scanner Particular pet specialists

Grow our veterinary business through through convenience & specialisms

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Our primary practices can inter-refer & leverage the benefits of other Vet Partners CT scanner Particular pet specialists Super Surgery In-store or standalone Extended hours 24/7

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Acquiring specialist referral hospitals to access an additional and complementary segment of the market

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Solidifies our specialist credentials & reputation Captures additional market spend Vertical integration Minimises revenue leak from primary practices

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

The long term potential of our retail and services model

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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

We know that Services and omnichannel bring a strong benefit to our retail business

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191 237 179 233 290 417 Store Other Vet, Groom, Web Additional customer spend

Last 12 Month VIP Club Member Spend (£) 145

Captures last 12 month VIP send to start Oct 2015. Vets consist of Companion Care practices. Accounts for total transactions including online

Visit Freq 6.9 9.5 10.0 9.3 14.1 # VIPs 2,262,418 104,682 67,739 207,688 8,490 12.7 22,812 21.4 1,183 17% 26% 40% 30% 69% 36% 81% y/y growth Store only Store + Groomer Store + Online Store + Vet Store + Vet + Groomer Store + Vet + Online Store + Vet + Groomer + Online

71 83 183 297 336 436

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Services will also underpin margin & deliver accretion over time

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Store only Store + Groomer + Vet EBITDA/sq ft from store EBITDA/sq ft from store, groomer & vet fee income

Combined Services Uplift +24%

Vet rent payment to store

Store only represents mature superstores opened FY10 & earlier Store + Vet + Groomer represents mature superstores, mature vets opened in FY08 & earlier, and Groomers opened FY12 & earlier Number of stores used in analysis: Store only = 92, Store + Vet + Groomer = 9

The uplift has grown as vets & groomers mature further

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

FY10 FY11 FY12 FY13 FY14 FY15 > 5 yrs old ≥ 1 yr & ≤ 5 yrs old

Core superstore portfolio is delivering returns in line with our expectations & gives us confidence in our rollout plans

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Growing retail sales densities across the store estate

Store age … Mature stores Immature stores

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

205 130 229 413 83 132 62 120 89 87 Groom Room Standalone Vet In-store Vet Stores Existing Potential Retrofits Potential New

Current Portfolio (excludes Barkers & new formats)

Our opportunity is both large & long term: growth will be fuelled by rollout and maturity benefits for at least another 15 years

Total Potential UK Estate Approximate time to full rollout & maturity

1 1

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>500 >450 >250 >350 11 yrs 16 yrs 16 yrs 10 yrs

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

$33.8m $38.7m H1 FY15 H1 FY16 6.3p 7.2p H1 FY15 H1 FY16 £381.5m £404.5m H1 FY15 H1 FY16

Strong growth & highly cash generative business

EPS Revenue & Like-For-Like Growth 4.2% 1.8% FCF & Conversion 38.0% 47.3% 26 £22.3m £29.5m Net debt / EBITDA

2.0x

H1 FY15

1.5x

H1 FY16

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

Becoming MORE specialist and MOST loved

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Operating as the significant leader in a resilient market Continue to accentuate our strengths with core focus on the engaged pet owner Delivered through our stores, colleagues, services and VIP club Long term maturing store and services opportunity underpinning space and profit growth Consistent cash returns on invested capital & strong cash generation