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
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 N Brown Group plc
KEY FINANCIAL MOVEMENTS 26 weeks to 30 August 2014 2014 2013 vs.LY £m £m % 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 N Brown Group plc
GROUP REVENUE 26 weeks to 30 August 2014 2014 2013 vs.LY £m £m % 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 N Brown Group plc
MAJOR REVENUE MOVEMENTS 26 weeks to 30 August 2014 £m £440 Specialist Growth Rephase Marketing Customer Base Spend to 2H Growth £4.4 £430 £13.9 Credit rule change £420 £17.1 Stores Roll -out £8.0 Improved arrears - lower F.I. £410 2013 £1.7 International £2.0 2014 £1.3 £409.3 £407.3 £400 7 N Brown Group plc
GROUP TRADING ACCOUNT 26 weeks to 30 August 2014 2014 2013 vs.LY £m £m % 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 N Brown Group plc
MAJOR OPERATING PROFIT MOVEMENTS 26 weeks to 30 August 2014 Marketing Stores Specialist £64 Net Customer Rephase Base £0.6 £0.6 £5.9 £61 Cust Sales Incentive £58 £5.0 £13.6 £55 Credit Rule £m Change £52 Dist Costs £2.5 Efficiency Improved 2013 £49 £2.4 Arrears Lower F.I. International £2.0 Losses £46 2014 £0.2 £48.4 £43 £45.2 £40 9 N Brown Group plc
GROUP PROFIT & LOSS ACCOUNT 26 weeks to 30 August 2014 2014 2013 vs.LY £m £m % 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 N Brown Group plc
PRE-TAX MARGIN • Gross Margin Product -50bps Bad Debt / Financial Income Yield +90bps • Operating Costs -110bps • Finance Costs Higher Borrowings -10bps • Pre-tax margin -80bps (10.2%) 11 N Brown Group plc
NET ASSET SUMMARY At 30 August 2014 2014 2013 vs.LY £m £m % 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 N Brown Group plc
RECEIVABLES AND PROVISIONING At 30 August 2014 2014 2013 vs LY £m £m % 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 N Brown Group plc
OPERATING CASHFLOW 26 weeks to 30 August 2014 2014 2013 £m £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 N Brown Group plc
GROUP CASHFLOW 26 weeks to 30 August 2014 2014 2013 £m £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 N Brown Group plc
GROUP BORROWINGS At 30 August 2014 Facility Drawndown £m £m Securitisation Debt 250 220 Bilateral Loans 120 30 Overdraft 9 - Gross Borrowings 379 250 Cash in Hand (45) Net Borrowings 205 16 N Brown Group plc
GUIDANCE • Period of change / transition continues • September trading – immediate impact • Delayed impact • Financial income • Markdown • Contingent costs • Robust balance sheet • Positive cashflow 17 N Brown Group plc
HALF YEAR RESULTS AGENDA • INTRODUCTION • 2014/15 HALF YEAR RESULTS • BUSINESS UPDATE • Performance highlights • Delivering our change programme • SUMMARY • Q&A 18 N Brown Group plc
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 N Brown Group plc
HIGHLIGHTS - Performance by brand Participation % Growth % JD WILLIAMS 33 -3 SIMPLY BE 16 +1 JACAMO 9 +7 SUPPORT BRANDS 31 -3 SPECIALIST 11 +7 20 N Brown Group plc
HIGHLIGHTS - Performance by brand excl. Home & Gift Participation % Growth % Excl H/E -2 26 JD WILLIAMS 13 +4 SIMPLY BE JACAMO 7 +14 SUPPORT BRANDS 26 -2 SPECIALIST 10 +10 18 -8 CORE HOME 21 N Brown Group plc
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 N Brown Group plc
HIGHLIGHTS - Ladieswear Joe Browns Fast Fashion New up 41% on LY up 23% on LY customers up in sizes in sizes 26% for exclusive to exclusive to Autumn us us Winter Maxi dresses up 40% YOY 23 N Brown Group plc
11 styles in HIGHLIGHTS Curvy Plus boots - Footwear Occasion Occasion footwear Footwear up 16% up 16% Sports footwear up 68% 24 N Brown Group plc
HIGHLIGHTS - Menswear Fast Fashion Black Label sales up 51% own brand +105% vs.LY 25 N Brown Group plc
HIGHLIGHTS - Home – Famous Five categories +5% YOY OUTDOOR LIVING GIFTS HOME DECOR HOMEWARES BEDDING 26 N Brown Group plc
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 N Brown Group plc
HIGHLIGHTS - Channel Participation H1 H1 100 3% 90 80 39% 70 64% 60 Stores 50 UK Phone 40 UK Web 30 58% 36% 20 10 0 2008/9 2013/14 28 N Brown Group plc
HIGHLIGHTS - Online growth fuelled by mobile • 46% of traffic from mobile (+14%) 14.5% 17.5% 68% • 37% of demand from mobile (+11%) • Tablets lead the way • Mobile optimisation to drive 19% conversion 54% 27% 29 N Brown Group plc
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% Tracked services • Ranked No. 3 UK ICS ratings now available for USA & Ireland 30 N Brown Group plc
HIGHLIGHTS - Top 3 for customer satisfaction 45.0 50.0 55.0 60.0 65.0 70.0 75.0 80.0 85.0 90.0 95.0 100.0 UKCSI Overall Retail - Non Food 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 31 N Brown Group plc Source: Institute of Customer Service
MISSION & STRATEGY • Unique plus size capabilities • Population is ageing & getting larger • Consumer credit drives loyalty • A winning formula • Modernisation essential to deliver potential 32 N Brown Group plc
2014 CALENDAR Phase 1 of Adjusting Kick off ‘Famous Introduced our systems Five’ ‘Pay by marketing development strategy for Card’ mix & HLD phase Home & Gift phasing Launch of Re-launch new New store JD Williams. International opening - Ladieswear team for programme Improvements Simply Be begins first USA New Multichannel PEAK TRADING advertising for enhancements Power Brands PERIOD delivered pre- plus Oxford peak Street opens 33 N Brown Group plc
2014 CALENDAR Phase 1 of Adjusting Kick off ‘Famous Introduced our systems Five’ ‘Pay by marketing development strategy for Card’ mix & HLD phase Home & Gift phasing Launch of Re-launch new New store JD Williams. International opening - Ladieswear team for programme Improvements Simply Be begins first USA New Multichannel PEAK TRADING advertising for enhancements Power Brands PERIOD delivered pre- plus Oxford peak Street opens 34 N Brown Group plc
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