INTRODUCTION TO FOOTASYLUM July 2017 FOOTASYLUM PLC BOARD - - PowerPoint PPT Presentation

INTRODUCTION TO FOOTASYLUM

July 2017 FOOTASYLUM

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Extensive retail experience amongst Executive and Non-Executive Board members

PLC BOARD

Stephen Robertson

Independent Non- Executive Director Chairman of Remuneration Committee

Brendan Hynes

Independent Non- Executive Director Chairman of Audit Committee

John Wardle

Executive Chairman to June 2018

Danielle Davies

Chief Financial Officer

Clare Nesbitt

Chief Executive Officer *Barry Bown

Executive Chairman from June 2018

NON-EXECUTIVES EXECUTIVE TEAM

* Barry Bown

▪ Joining company in a consulting role prior to formal appointment to the board

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▪ Established UK retailer bringing on-trend lifestyle fashion to our customers ▪ Target market is the 16-24 year old fashion-conscious consumer ▪ Founded by David Makin in 2005 and joined by John Wardle in 2008 – original co-founders of JD Sports ▪ Multiple routes to market ▪ Strong financial track record ▪ Proven store roll out model ▪ Strong eCommerce sales growth ▪ Multi-faceted, well funded growth strategy

Dynamic business with a differentiated proposition led by experienced retail operators

FOOTASYLUM OVERVIEW

65*

stores

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dedicated websites Nascent wholesale arm

78.0 110.4 147.0 61.1 83.2

• 2

4 6 8 10 12

• 20

40 60 80 100 120 140 160 FY15 FY16 FY17 H1'17 H1'18 EBITDA (£m) Revenue (£m) Revenue (LHS) EBITDA (RHS)

KEY FINANCIALS STORE OPENING HISTORY

2 7 10 14 21 23 28 30 34 44 56 *65 10 20 30 40 50 60 70 # stores at period end FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

store estate

as of 30/12/17

* 63 of the stores are core Footasylum fascia as of 30 December 2017

• Revenue in 44 weeks to 30 December 2017: £173m (2016:£128.4m), an increase of 34.7%

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KEY STRENGTHS

YOUTHFUL AND RELEVANT CULTURE AND FOCUS

• Trend-leading – continuously identifies and drives emerging trends
• Genuinely understands the core 16-24 year old customer base

SYMBIOTIC RELATIONSHIPS

• A key route to market for global and local brands
• Enjoys preferential status as a key partner for major brands

PERPETUAL ENTERTAINMENT

• Multichannel engagement, thereby enhancing the customer experience
• Projecting the Footasylum brand (our “DNA”) across both high street and social media

CLEAR, FUNDED GROWTH PLAN

▪ Investment in eCommerce platform ▪ Strategic rollout and upsizing ▪ Wholesale distribution opportunities

YOUTHFUL, ON-TREND FOCUS

▪ Trend-leading – continuously identifies and drives emerging trends ▪ Strong understanding of the core 16-24 year old customer base

SYMBIOTIC RELATIONSHIPS

▪ A key route to market for global and local brands ▪ Enjoys favourable access to product as a key partner for major brands

CUSTOMER ENGAGEMENT

▪ Engages with customers across multiple channels, enhancing customer experience ▪ Projecting the Footasylum brand (our “DNA”) across both high street and social media

Competitive Landscape

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Compelling and differentiated proposition

COMPETITIVE LANDSCAPE

16-24 y/o target audience Young and fashion conscious Important channel for brand partners 71%* revenue menswear 58%* revenue footwear

* FY17 data

FOOTWEAR FOCUSED BOTH APPAREL FOCUSED

The Products

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Footwear is the dominant category with apparel and accessories delivering strong growth both in absolute terms and share of revenue

PRODUCT PORTFOLIO

FOOTWEAR APPAREL ACCESSORIES

▪ A broad product range provides flexibility and optionality ▪ Higher margin apparel and accessories increased in overall share over the three years to February 2017, accounting for 42% in FY17 ▪ Strong growth across categories reflects Footasylum’s ability to identify and deliver in-demand product 32%

CAGR

46%

CAGR

43%

CAGR 62% 63% 58% 34% 34% 38% 4% 3% 4%

• f total revenue

49 70 85

• 10

20 30 40 50 60 70 80 90 FY15 FY16 FY17 Revenue (£m) Revenue 26 38 57

• 10

20 30 40 50 60 FY15 FY16 FY17 Revenue (£m) Revenue 3 4 6

• 1

2 3 4 5 6 7 FY15 FY16 FY17 Revenue (£m) Revenue

• f total revenue
• f total revenue

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Well balanced product range with no overreliance on any particular SKU

PRODUCT PORTFOLIO

Target customer audience segmented into six key tribes* ▪ age ▪ style ▪ brand preferences Well balanced product range with no overreliance on a particular SKU Strategically important long tail of low-volume products Localised strategic positioning in order to satisfy local demand Serves predominantly menswear albeit increasing focus on women and children - supported by closely aligned key brands ▪ The first women’s only Footasylum store launched in Leeds in 2017, followed by Manchester and Cardiff

* “Tribes” is an internal reference for subcategories within Footasylum’s target audience. Each tribe is defined by a set of individual characteristics as regards age, style and brand preference

FY17 REVENUE BY SKU

• 10%

20% 30% 40% 50% 60% 70% 80% 90% 100% % revenue

Top 1,000: 55% Top 500: 41% Top 100: 18% Top 20: 7%

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Increasingly strong relationships with core brands, with growing access to new product and volume

THIRD PARTY BRANDS

Sells c.300 brands across the year ▪ Leading global brands ▪ A long tail of up-and-coming, local brands ▪ Own brands Sells “on-trend” fashion – brand composition evolves over time to drive trends with appropriate product focus ▪ e.g. rise in popularity of athleisure has driven a significant increase in Nike and adidas footwear Footasylum proactively manages key supplier relationships (including Nike and adidas who accounted for c.50% revenue in FY17) Incubating upcoming brands e.g. Gym King

Top 1: 27% of revenue Top 5: 61% of revenue Top 20: 85% of revenue Top 50: 96% of revenue circa 300 brands

SELECTED BRANDS FY17 REVENUE BY BRAND

25% 50% 75% 100% % cumulative revenue

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Footasylum aims to be a pioneer of fashion trends by leveraging in-house expertise

OWN BRAND AND WHOLESALE

In-house developed own brands address trends and augment third party branded ranges ▪ In-house design function facilitates shorter lead times from concept to shop floor ▪ Manufacturing partners in Turkey, China, Hong Kong and Dubai Launched dedicated wholesale platform in March 2017 ▪ Distributes Footasylum’s established stable of own brands ▪ Long term value creation opportunity Lower gross margin / higher contribution model compared to retailing Kings Will Dream first own brand to be distributed wholesale ▪ Contract signed with ASOS ▪ 89 agreements in place as of 25 January 2018 Substantial opportunity

Social and direct to consumer Footasylum group Wholesale

CREATE BRAND STORY AND FOLLOWING GRANT “EXCLUSIVE” ACCESS TO FOOTASYLUM ESTABLISH BRAND LONGEVITY

DISTRIBUTION CYCLE OF OWN BRANDS SELECTED OWN BRANDS

Routes to Market

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Proven store rollout model and track record of executing successful store openings within the current infrastructure

STORE ESTATE AND ROLLOUT

65* - strong store estate (63x Footasylum, 1x Drome and 1x 7Liverpool) Management targets payback inside 24 months ▪ Average since FY15: 18 months Store sizes vary from 1,450 sq.ft. to 9,400 sq.ft. selling space Predominantly high street locations Regional shopping centre 12 stores Major city 15 stores Secondary city 9 stores Town 21 stores Retail park 8 stores STORE CATEGORIES STORE ROLLOUT EXISTING STORE ESTATE Scope for at least 150 stores in the UK Target store profile: ▪ 3,000 sq.ft. to 10,000 sq.ft. ▪ Key cities, malls, mega stores ▪ Eight to ten stores per annum Regimented and thorough new store appraisal process ▪ Healthy pipeline of new properties plus up-sizes and refits of existing stores ▪ As of 30 December 2017, 9 stores opened FY18. Ongoing refurbishment programme targeting: ▪ Opportunity for 15-20 upsizes within existing estate ▪ Recent Leeds upsize has outperformed expectations ▪ Womenswear presents growth opportunity * as of 30 December 2017

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Strong-performing store estate

STORE PERFORMANCE

FY17 REVENUE PER STORE FY17 CONTRIBUTION PER STORE

Immature stores Immature stores

All stores opened since inception (except Oxford Street, London and the first ever store in Wilmslow) provided a positive contribution in FY17*

*Mature stores only

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33% 27% 23% 18% 49% 60% 68% 69% 18% 13% 9% 7% 6%

• 10%

20% 30% 40% 50% 60% 70% 80% 90% 100% FY15 FY16 FY17 H1'18 % sessions Desktop Mobile Tablet App 18 31 42

• 5

10 15 20 25 30 35 40 45 FY15 FY16 FY17 Internet revenue £m

+55% CAGR

Internet represents the largest single “store” with 2-yr revenue CAGR of 55%

ECOMMERCE

INTERNET REVENUE TRAFFIC SPLIT BY SOURCE ▪ Dedicated sites for each fascia (and apps for two), and Kings Will Dream direct to consumer site ▪ Dynamic, content-rich site aligned with social media channels ▪ Platform for testing new products / brands ahead of rolling out across the store estate ▪ Ecommerce accounted for 29% of revenue in FY17 ▪ Strategic goal for eCommerce to account for 50% of revenue in the medium term. ▪ Low returns rate (c.7% of store orders and c.11% of web orders) ▪ Opportunities include: ▪ Marketing ▪ Technology ▪ improvements to drive conversion ▪ International ▪ multi-currency / multi-language websites

Note: for FY15 – FY17 data, app traffic was included within mobile

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INFRASTRUCTURE TO DELIVER GROWTHTICS

TECHNOLOGY ▪ Improve current systems to support medium term growth WAREHOUSING FACILITIES ▪ Circa 277,000 sq. ft. distribution centres ▪ 24/7 shifts ▪ Nightshift picking to facilitate next day shipments for store sales up to 10pm and midnight for web orders ▪ Sufficient capacity to deliver planned growth for the next three years LOGISTICS ▪ Store deliveries three to seven days per week ▪ Pool of couriers deliver online orders in the UK and internationally

Financial Information

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Strong revenue growth profile, benefitting from significant operational gearing within the cost base

HISTORIC P&L SUMMARY

▪ Strong revenue and EBITDA growth across the historical trading period ▪ Trading in H1’18 in line with expectations ▪ Gross margin movement due to clearance of ageing stock by the merchandising team

£'000 52 weeks ended 22 February 2015 53 weeks ended 28 February 2016 52 weeks ended 25 February 2017 26 weeks ended 27 August 2016 26 weeks ended 26 August 2017 Revenue 78,011 110,440 146,963 61,125 83,173 Revenue growth % 41.6% 33.1% 36.1% Cost of sales (42,504) (61,959) (79,499) (33,290) (45,922) Gross profit 35,507 48,481 67,464 27,835 37,251 Gross margin % 45.5% 43.9% 45.9% 45.5% 44.8% EBITDA 2,206 6,138 11,228 3,327 4,359 EBITDA margin % 2.9% 5.6% 7.6% 5.4% 5.2% Profit before tax 392 3,584 8,140 2,000 1,742

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Cash generative and well placed to fund future growth

HISTORIC CASH FLOW SUMMARY

* Includes a £2.4m VAT payment and investment in stock for growth

£'000 52 weeks ended 22 February 2015 53 weeks ended 28 February 2016 52 weeks ended 25 February 2017 26 weeks ended 27 August 2016 26 weeks ended 26 August 2017 EBITDA 2,206 6,138 11,228 3,327 3,778 Loss / (gain) on disposal of tangible assets 27 6 20 22 (1) Working capital (555) (7,888) 3,100 582 (4,032)* Corporation tax

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(1,517) (296) (884) Net cash generated from operating activities 1,678 (1,634) 12,831 3,635 (1,139) Capex (2,579) (3,998) (5,643) (2,154) (2,572) Interest (75) (155) (120) (78) (36) Other

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(110) 188 Change in cash (976) (5,787) 7,075 1,293 (3,559) Net cash / (debt) (2,299) (8,086) (19,711) (25,493) (23,270)

• f which preference shares / director's loan
• (22,550)

(22,550) (22,550)

▪ Immediately post IPO the preference shares and directors loan were redeemed ▪ IPO raised net new funds for the company of £13m ▪ £30m RCF to help fund seasonal working capital

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CURRENT TRADING 2018

▪ Christmas trading announcement showed YOY revenue growth for the 18 weeks to 30 December 2017,(the “Period”) 33.4% and the 44 weeks to 30December 2017 of 34.7%. ▪ All three sales channels experienced year on year revenue growth in the Period, with eCommerce accounting for a higher proportion of total revenue than in the comparable period in the prior year. ▪ Footasylum opened six new stores during the Period, meaning that as at 30 December 2017 the Company operated 65 stores in the UK, 63 of which were the core Footasylum fascia. ▪ On track for planned store openings.

Summary

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Established, high-performing multichannel retailer with significant, well funded growth prospects

SUMMARY PRODUCT-LED MODEL

aims to get the right product at the right time

MULTIPLE CHANNELS

allows customers to engage across multiple touch points - 65 stores in the UK (as of 30/12/17) in addition to well invested and rapidly growing internet sales

STRONG BRAND RELATIONSHIPS

with preferential and rising status amongst key global brands as well as extensive access to upcoming brands

WHOLESALE / OWN BRAND

enables Footasylum to quickly capitalise on market trends

STRONG FINANCIAL TRACK RECORD

with double digit growth, good margins and a healthy balance sheet

GROWTH OPPORTUNITIES

across store roll-out and resize strategy, online and wholesale

Appendices: Store Estate / Bestsellers

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46 42 17 50 3 57 49 13 12 32 2 24 55 27 9 26 33 4 1 40 36 7 45 8 19 43 51 14 11 48 38 58 37 5 20 35 16 28 53 47 39 54 15 59 23 41 18 6 25 34 29 52 44 31 10 22 30 21 56 32 2 59 40 36 8 21 55 27 45 9 33 4 1 24 18 31 44 41 6 52 22 23 30 10 25 19 56 34 60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58

Wilmslow Preston Middlesbrough Manchester Solihull Romford Hanley Liverpool (Paradise St) Bolton Westfield London Bull Ring Silverburn Glasgow Birmingham Fort Cardiff Leicester Metro Centre Bluewater Trafford Merryhill Bold St, Liverpool Stratford Croydon Meadowhall Kingston Teeside Middlebrook Nottingham Birmingham High Street Oxford St Lakeside Blackpool Trafford Megastore Drome Mcr Wolverhampton Leeds Coventry Portsmouth Bristol Bradford Bromley Braehead Swindon Bexley Heath Speke Dundee Reading Walsall Glasgow Fort Sunderland Redditch Lewisham Plymouth Newport Wigan 7Liverpool Carlisle Milton Keynes

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Blackburn

65* - STORE PORTFOLIO

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Hull

STORE ESTATE

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Manchester Women’s

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Bury

63

Edge Lane

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Broughton Park

65

White Rose

65 62 61 64 63 65 61 63 64 62

* as of 30 December 2017

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ANNUAL TOP FIVE BESTSELLERS*

FY12 FY13 FY14 FY15 FY16 FY17 APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR # 1 # 2 # 3 # 4 # 5 hoodie denim pants pants t-shirt t-shirt pants t-shirt pants jacket full suit t-shirt Coat / jacket t-shirt coat/jacket t-shirt hoodie pants pants hoodie t-shirt hoodie pants hoodie pants pants hoodie Coat / jacket pants hoodie (Hawksworth)

* With respect to gross profit value

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DISCLAIMER

This Presentation is not an offer to buy or sell any securities. Save where otherwise indicated, the Company is the source of the content of this Presentation and, accordingly, although care has been taken to ensure that the facts stated in this Presentation are accurate and that the opinions expressed are fair and reasonable, no representation, warranty or undertaking, express or implied, is made by any of the Company, any of its directors, officers, employees, affiliates, advisors, shareholders or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the Company nor any of its directors, officers, employees, affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection with the Presentation. The Presentation may contain forward-looking statements, which relate, inter alia, to the Company's proposed strategy, plans and objectives. Such forward-looking statements involve known and unknown risks, uncertainties and

• ther important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. Accordingly, you should not

rely on any forward-looking statements and the Company accepts no obligation to disseminate any updates or revisions to such forward-looking statements. None of the Company, its directors, officers, employees, affiliates, advisors, shareholders or representatives intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this Presentation or to update or to keep current any

• ther information contained in this Presentation. The information and opinions contained in this Presentation are provided as at the date of this Presentation and are subject to change without notice.