Klas Balkow President & CEO Q2 Report 2016/17 7 December 2016 - - PowerPoint PPT Presentation

Klas Balkow

President & CEO

Q2 Report 2016/17

7 December 2016

Agenda

• Q2 2016/17
• Six months 2016/17
• Events after period-end
• Strategic update
• Q&A

2

High energy and strong position

3

212 stores in 6 countries

• mni-channel structure

76 million visitors 4,700

service-minded employees High focus on sustainability agenda One of the

strongest brands

in retail in the Nordics

R12 sales

7.7 billion SEK 39 million customers

• Good sales development
• Operating profit negatively effected

by currency

• Further steps in international agenda

− Additional stores and e-com in Germany − New franchise store in Dubai − Continued store optimisation in UK

• Strong sales in November

− Positive start in Q3

Highlights

4

Q2 2016/17

August – October

5

1,614 1,678 1,814 1,846 1,957 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17

• Sales up 5% in local currencies
• LFL sales 3%
• Sales 1,957 MSEK, up 6%
• 1 additional store net compared to

end of period last year (3)

− 3 store openings and 2 store closures in the quarter

Sales Q2

6

MSEK +6%

Hamburg – Germany Stockholm – Sweden Oslo – Norway

15 September 6 October 27 October

7

46% 39% 11% 4%

Sales share per market

8

Sweden Norway Finland Outside Nordics

76

stores

36

stores

86

stores

9

stores

Dubai

2

stores

3

stores

* Number of stores as of end of November 2016

80 85 90 95 100 105 110

9 Source: www.konj.se

96 99 102 105 108 Q2 12/13 Q3 Q4 Q1 13/14 Q2 Q3 Q4 Q1 14/15 Q2 Q3 Q4 Q1 15/16 Q2 Q3 Q4 Q1 16/17 Q2

Sweden Consumer Confidence Sweden Retail Index

Source: HUI

Source: www.hui.se

742 771 803 847 879 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17

• Sales up 4% to 879 MSEK (847)
• Total 86 stores (82)

− 1 new store during Q2 − 4 additional stores net compared to preceding Q2

• Solid position in a stable market

Sweden Q2

10

MSEK +4%

96 98 100 102 104 106 Q2 12/13 Q3 Q4 Q1 13/14 Q2 Q3 Q4 Q1 14/15 Q2 Q3 Q4 Q1 15/16 Q2 Q3 Q4 Q1 16/17 Q2

11

• 12
• 9
• 6
• 3

3 6 9

Norway Consumer Confidence Norway Retail Index

Source: www.opinion.no Source: SSB Source: www.ssb.no

583 629 674 704 746 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17

• Sales up 6% in local currency
• Sales 779 MSEK (716), up 9%
• Total 76 stores (74)

− 1 new store during Q2 − 2 additional stores net compared to preceding Q2

• Increased market share in an

improved market

Norway Q2

12

MNOK +6%

5 10 15 20 96 98 100 102 104 106 108 Q2 12/13 Q3 Q4 Q1 13/14 Q2 Q3 Q4 Q1 14/15 Q2 Q3 Q4 Q1 15/16 Q2 Q3 Q4 Q1 16/17 Q2

13

Finland Consumer Confidence Finland Retail Index

Source: www.tilastokeskus.fi Source: www.tilastokeskus.fi

• Sales up 15% in local currency
• Sales 223 MSEK (190), up 17%
• Total 34 stores (33)

− No new stores during Q2 − 1 additional store net compared to preceding Q2

• Increased market share and strengthened

brand position in a soft market

Finland Q2

14

16.5 18.1 19.3 20.2 23.3 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17 MEUR +15%

• Sales down 8% in local currencies
• Sales 75 MSEK (93)
• Total 12 stores (13), whereof 1 franchise

− 1 new store during Q2 − 2 stores closed during Q2

• Soft development in UK influenced by

restructuring and currency

• Positive start in Hamburg

Outside Nordic countries Q2

15

63 65 84 93 75 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17

UAE

MSEK

UK DE

42.0 43.3 44.8 43.9 41.5 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17

• Gross margin down 2.4 percentage

points to 41.5%

• Negative currency impact (NOK)

Gross margin Q2

16

%

0.95 1.00 1.05 1.10 1.15

Negative hedging effects in NOK

17

Jan 2015 Jan 2016 July 2016

SEK/NOK

July 2015

Currency development

6.2 6.7 7.2 7.7 8.2 8.7 9.2 0.95 1.00 1.05 1.10 1.15 1.20

SEK/USD SEK/NOK

Source: Sveriges Riksbank

Jan 2015 Jan 2016 Jan 2012

18

Jan 2014 Jan 2013

32.9 32.9 33.7 33.4 32.4 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17

• Share of selling expenses 32.4%,

down 1.0 p.p. in the quarter

+ Lower cost in UK – Partly offset by costs for establishment in Germany + Somewhat lower marketing spend to be balanced out during 2016/17

Share of selling expenses

19

%

102 126 151 145 127 2 4 6 8 10 Q2 12/13 Q2 13/14 Q2 14/15 Q2 15/16 Q2 16/17

• Operating profit amounted to 127 MSEK

− Effected by negative currency hedging NOK

• Operating margin amounted to 6.5%
• Earnings per share 1.53 SEK

Profit Q2

20

Operating profit MSEK Operating margin %

Six months 2016/17

May – October

21

• Sales up 4% in local currencies
• LFL sales 1%
• Sales 3,720 MSEK, up 3%
• 6 additional stores net compared

to end of period last year (10)

Sales Q1-Q2

22

3,076 3,184 3,457 3,616 3,720 Q1-Q2 12/13 Q1-Q2 13/14 Q1-Q2 14/15 Q1-Q2 15/16 Q1-Q2 16/17 MSEK +3%

203 218 253 250 202 2 4 6 8 10 Q1-Q2 12/13 Q1-Q2 13/14 Q1-Q2 14/15 Q1-Q2 15/16 Q1-Q2 16/17

• Operating profit 202 MSEK

− Effected by negative currency hedging − Impacted by start-up cost for Germany

• Operating margin 5.4%
• Earnings per share 2.44 SEK

Profit Q1-Q2

23

Operating profit, MSEK Operating margin R12, %

94 68 107 115 126 Q1-Q2 12/13 Q1-Q2 13/14 Q1-Q2 14/15 Q1-Q2 15/16 Q1-Q2 16/17

• Total investments 126 MSEK (115)
• New stores and refurbishments

64 MSEK (40)

• IT-systems 44 MSEK (56)

Investments

24

MSEK

Financial position

• Cash flow from operating activities was 44 MSEK (322)

− Inventory 1,989 MSEK (1,764) − Inventory turnover rate DC 6.4 (6.4)

• Cash flow after investments and financing activities of -389 MSEK (-155)
• Net cash holdings of 100 MSEK (354) after dividend payout in September

25

Events after period-end

662 702 746 809 908 Nov 12/13 Nov 13/14 Nov 14/15 Nov 15/16 Nov 16/17

• Sales 908 MSEK, up 12%
• Sales up 9% in local currencies

− Sweden +10% − Norway +10% − Finland +9% − Outside Nordic countries -20%*

• 7 additional stores net compared

to end of November last year (9)

November sales

27

MSEK +12%

*Effected by store optimization in the UK

Helsinki – Finland Dubai – UAE Jyväskylä – Finland

3 November 10 November 15 November

Hamburg – Germany

24 November

28

• HUI Research assigned the VR headset the

Christmas Gift of the Year Award

• Clas Ohlson carries headsets from

29 SEK to 999 SEK

• Sales boost the week of the announcement

with 1,500 per cent

Christmas gift of the year

29

Christmas gift favourites

30

• Broad range of gifts for the whole family
• Products for the smart home a strong category this Christmas
• Increasing interest in head phones with volume limiter
• Best-selling stove fan popular in the Nordic markets

…and much more

Strategic update

31

• The first smaller format store in Sweden
• pened in October in Stockholm

− Retail space of approx. 300 square meters

• New name Clas Ohlson Compact Store
• Great reception by customers

New store concept

32

• New rental concept ”Rent at Clas Ohlson”

under evaluation

− 4 pilot stores in Sweden, 2 in Norway − Hand tools and power tools from the Cocraft PRO Edition series

New rental concept

33

New product initiative

34

• Crowd sourcing of innovative products

that support a more sustainable lifestyle

− Directed towards inventors, entrepreneurs, start-ups and students

• More than 120 sustainable product

innovations submitted

− Ten finalists announced mid December − Winning products announced end of January

• The winning products will be sold and

marketed in all our channels

• New smaller store format cluster in London

− Positive sales development month by month

• Optimising store network

− Norwich and Cardiff closed in Q1 − Doncaster and Leeds closed in Q2 − Watford to close in March 2017 at the latest − Croydon to close (date to be confirmed) − 1 additional store to close (date subject to negotiations)

Update UK development

35

• New franchise store opened in Mercato

shopping centre in November

− 140 stores in shopping centre − 5 million visitors per year

Update Dubai expansion

36

• Three stores opened in Hamburg

− Central Hamburg, Jungfernstieg, in May − Altona in September − Alstertal in November

• E-com launched in October
• Promising start

− ATV and conversion rate − In-depth shopping of our range offer − Private label highly appreciated

Update German expansion

37

Update new business system

• Continued development and implementation of new ERP platform

− Improved inventory planning − Benefits from true omnichannel platform − Scalable platform for future growth

• Estimated annual investment of 50-70 MSEK during a five year period

(year 2013/14 to 2018/19)

− Updated estimate suggests outcome in the higher range

• Scope of sCORE has expanded

− Related to warehouse and transportation system − Related to customer data and e-com

• Additional annual investment of approximately

75 MSEK during a two-year period

38

• Solid sales growth
• Currency impact
• Strong start to Christmas sales
• High energy for future growth

Summary

39

Q&A

www.clasohlson.com