Born in 1973 Roots was founded by Michael Budman and Don Green. - - PowerPoint PPT Presentation
Born in 1973 Roots was founded by Michael Budman and Don Green. United by a summer camp friendship and inspired by the rugged beauty of Algonquin Park, Investor Presentation they set out to create an enduring lifestyle brand that captured
Roots was founded by Michael Budman and Don Green. United by a summer camp friendship and inspired by the rugged beauty of Algonquin Park, they set out to create an enduring lifestyle brand that captured the essence of the Canadian outdoors.
Investor Presentation
December 2017
Disclaimer
Non-IFRS Measures and Industry Metrics
This presentation makes reference to certain non-IFRS measures including certain metrics specific to the industry in which we operate. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures are not intended to represent, and should not be considered as alternatives to net income or other performance measures derived in accordance with IFRS as measures of operating performance or operating cash flows or as a measure of liquidity. In addition to our results determined in accordance with IFRS, we use non-IFRS measures including EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per diluted share. This presentation also refers to comparable sales growth, a commonly used metric in our industry but that may be calculated differently compared to other
and investors in measuring our financial performance and condition and highlight trends in our core business that may not
the relevant reported measures can be found in our MD&A under “Cautionary Note Regarding Non-IFRS Measures and Industry Metrics”, which is available on SEDAR at www.sedar.com.
Forward-Looking Information
Certain information in this presentation contains forward-looking information. This information is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and are made as of December 5,
information as a result of various factors. Information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. Statements containing forward-looking information are not facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements. See “About this Prospectus – Forward-Looking Information” and “Risk Factors” in the Company's final prospectus filed in connection with its initial public offering on October 18, 2017, which is available on SEDAR at www.sedar.com, for a discussion of the uncertainties, risks and assumptions associated with these statements. Readers are urged to consider the uncertainties, risks and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. We have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law.
Roots was founded by Michael Budman and Don Green. United by a summer camp friendship and inspired by the rugged beauty of Algonquin Park, they set out to create an enduring lifestyle brand that captured the essence of the Canadian outdoors.
Our Story
1 Iconic Canadian brand with rich heritage 2 Diversified product portfolio with enduring icons 3 Broad demographic appeal with strong loyalty 4 Connective omni-channel experience 5 Experienced and passionate management team
Rich Canadian Heritage
Global Reach
Our Story
Helping people embrace the spirit of the open air – wherever they are
Decades of Building a Lasting Portfolio
Our product values:
Our Story
Inspired by our heritage and guided by customer insights
Enduring Icons Perennial Favourites Seasonal Excitement
Stay True to Our Heritage
Leather 13%
Cultivate A Sense of Newness
Apparel 57%
Footwear 3%
Kids 13%
Accessories 13%
New New New
Introduction
styles Y.o.Y.
Our Story
United by a shared passion for the open air
Our Story
Elevated and seamless brand experience in-store and online
Heritage Inspiration Celebrating the Open Air Exceptional Service Storytelling Endless Aisle Delivery and Returns Mobile to Desktop
Increasing eCommerce penetration over the past three fiscal years Omni-channel sales per customers are ~2.0X greater than sales from a single-channel customer Unique Retail Concept Powerful eCommerce Platform
Note: See Disclaimer – Non-IFRS Measures and Retail Industry Metrics.
Our Story
Priscilla Shum
Chief Merchant
Jim Gabel
President and CEO
Jim Rudyk
CFO
25+ years of experience Strong branding and merchandising experience at Joe Fresh and Club Monaco 20+ years of experience Successfully led Shred-it and Canada Cartage through IPO and sale processes 24+ years of experience Diverse leadership experience at Adidas (Adidas, Reebok), Wolverine (Saucony, Merrell), Hanesbrands (Champion) and Mizuno
Alex Jones
VP, Real Estate
15+ years of experience Extensive retail leasing experience at Ivanhoe Cambridge, Oxford Properties and Cadillac Fairview 15+ years of experience Launched eCommerce at Roots in 1999
James Connell
VP, eCommerce and Marketing
Karl Kowalewski
VP, Leather Factory
40+ years of experience Involved with product design, development, manufacturing and sourcing since 1973 25+ years of experience Previous experience at Holt Renfrew and Guess
Almira Cuizon
VP, Retail Operations
20+ years of experience Increasingly senior roles within Roots since 1997
Melinda McDonald
VP, Wholesale and Business Development
20+ years of experience Previous experience at Target and BMW
Michelle Lettner
VP, Human Resources
Global Distribution
116 Canada and 4 U.S. corporate stores 109 Taiwan and 29 China partner-operated stores eCommerce ships to over 50 countries
$307MM Sales $48MM Adjusted EBITDA(1)
LTM 10/28/2017
Channel Mix
87% DTC 13% Partners and other
LTM 10/28/2017(3)
Rich Heritage
44 years of stories and experience
Synonymous with Canada
99% national aided brand awareness
Product Leadership
Premium apparel, leather, accessories and footwear
Relentless Customer Focus
Insights drive designs and elevated brand experiences
Global in Reach
29% of system-wide sales generated
Our Story
Note: See Disclaimer – Non-IFRS Measures and Retail Industry Metrics. (1) A reconciliation of historical Adjusted EBITDA to net income appears in the Appendix to this presentation. (2) In Fiscal 2016. (3) Channel mix as a percentage of sales.
Growth Strategies
Note: See Disclaimer – Forward-Looking Information. (1) SKU reduction by the end of Fiscal 2018 relative to Fiscal 2016. (2) UBR refers to United Brand Range initiative.
Consumer-Focused Merchandising Simplified Pricing Tiers Formalized Sourcing Strategy Defined Go-To-Market Calendar ~40% SKU reduction by the end of Fiscal 2018(1) with implementation of UBR(2)
Multiple levers to drive growth Growth Strategies
1 Leverage operational investments 2 Pursue continued growth in Canada 3 Develop footprint in the United States 4 Expand in international markets 5 Deepen our offering in leather and footwear
Growth Strategies
Transformational initiatives across our business
Growth Strategies
Expand omni-channel productivity and whitespace opportunities
Note: See Disclaimer – Forward-Looking Information. (1) Historical marketing investment and Fiscal 2019 target as a percentage of sales. Increased marketing spend will also support growth outside of Canada. (2) SKU reduction by the end of Fiscal 2018 relative to Fiscal 2016. (3) Fiscal 2014 to Fiscal 2016 (4) Target of 26-30 renovations or expansions and 8-10 new stores between Q4 2017E and the end of Fiscal 2019.
Amplifying Brand Communication Leveraging UBR E-commerce Enhancements Store Optimization Grow Our Store Network
<2% 4% ~40% 44% 26 - 30 8 - 10
Investment(1) Investment(1) SKUs reduction(2) Historical sales CAGR(3) Existing stores by Fiscal 2019(4) New stores by Fiscal 2019(4)
Leverage our High-impact collections, Enhancing online Implement our proven Grow our presence coast- exception brand simplified pricing tiers and shopping capabilities and playbook and updated to-coast in premium street awareness consistent presentation streamlining connectivity retail concept and top-tier mall locations Strategically invest in Drive frequency of customer Drive traffic and Target payback period Target payback period integrated marketing to purchases and increase conversion across our
drive product demand units per transaction
years per store years per store
Majority of expected sales growth through the end of Fiscal 2019 driven by core Canadian business
Growth Strategies
Note: See Disclaimer – Forward-Looking Information. (1) In Fiscal 2016.
Singapore and Malaysia Rest of World
Plan in place with
to establish presence Evaluating 12 markets for longer-term development with new partners
Growth Strategies
Develop presence in existing and new markets
Note: See Disclaimer – Forward-Looking Information.
Opportunity for an additional 20 – 25 partner-operated stores by the end of Fiscal 2019 Continue to drive e-commerce penetration
Taiwan and China
109 partner-operated stores in Taiwan and 29 in China Long-standing partnership with Branded Lifestyle $107MM in system-wide sales in Fiscal 2016 Wholesale and royalty revenue streams Stores designed to replicate Canadian retail experience
Increase penetration in existing markets Market Assessment Criteria
Large opportunity size, aligned cultural values, strong connection to the open air and seasonal relevance Strong local operating partners with established infrastructure and retail expertise Local marketing supported by new go-to-market toolkit
Expand in additional informational markets
Growth Strategies
Elevate Leather Goods
Part of our DNA Leverage longstanding genuine leather credentials Modernizing the range of
Leather customization
Expand Footwear
Where Roots started Cornerstone product category potential Significant footwear experience among management Best-in-class design and manufacturing partner
Note: See Disclaimer – Forward-Looking Information.
Adjusted EBITDA (1) Sales Pro Forma Adjusted Net Income (1)
($ in millions)
Historical Financial Performance
$36 $38 $42 $61 - $68
FY2014A FY2015A FY2016A FY2019E
$17 $20 $21 $35 - $40
FY2014A FY2015A FY2016A FY2019E
$217 $256 $282 $410 - $450
FY2014A FY2015A FY2016A FY2019E
Outlook
Note: See Disclaimer – Non-IFRS Measures and Retail Industry Metrics. See Disclaimer – Forward-Looking Information. (1) A reconciliation of historical Adjusted EBITDA and historical Pro Forma Adjusted Net Income to net income appears in the Appendix of this presentation.
Strong momentum across channels, geographies and products Accelerating earnings growth leveraging transformational
investments
Multiple growth levers
Note: See Disclaimer – Non-IFRS Measures and Retail Industry Metrics. See Disclaimer – Forward-Looking Information. (1) Fiscal 2016 to estimated Fiscal 2019. (2) Estimated Fiscal 2017 to estimated Fiscal 2019.
Average annual comparable sales growth in line with or above FY2016A(2) Footprint expansion
Leverage operational investments
Leadership Merchandising Store productivity E-commerce
Sales $410 to $450 million 13% to 17% Adjusted EBITDA $61 to $68 million 14% to 18% Adjusted Net Income $35 to $40 million 18% to 23%
3-Year Financial Targets
Metric Fiscal 2019 Target CAGR(1)
Increased marketing investment From <2% to 4% of sales FY2016A – FY2019E Renovations and expansions in Canada 26 - 30 Q4 2017E – Q4 2019E E-commerce penetration 20% - 22% of DTC sales End of FY2019E Product expansion Leverage our Heritage in leather and footwear New stores in Canada 8 – 10 Q4 2017E – Q4 2019E New stores in the United States 10 – 14 Q4 2017E – Q4 2019E International markets Continued expansion in Taiwan, China and new markets
Note: See Disclaimer – Non-IFRS Measures and Retail Industry Metrics. For a description of the adjustments referenced in the table above, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Net Income to EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss)” in the final prospectus in connection with the Roots initial public offering filed with SEDAR on October 18, 2017.
Note: See Disclaimer – Non-IFRS Measures and Retail Industry Metrics. For a description of the adjustments referenced in the table above, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Net Income to EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss)” in the final prospectus in connection with the Roots initial public offering filed with SEDAR on October 18, 2017.