2017/18 Interim Results Analyst & Investor Presentation November 2017 Ready to put our foot on the gas and accelerate growth
2017/2018 Interim Results Disclaimer • This Document comprises the written materials/slides for a presentation concerning Majestic Wine PLC (the “Company”) and its unaudited Interim results for the 26 weeks ended 2 October 2017 (the “Interim Results”) . • By reviewing this presentation you agree to be bound by the conditions set out below. • No reliance may be placed for any purposes whatsoever on the information in this document or on its completeness. The presentation is intended to provide a general overview of the Company’s business and does not purport to deal with all aspects and details regarding the Company. Accordingly, neither the Company nor any of its respective directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance may be placed on, the fairness, accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither the Company nor any of its respective directors, officers, employees or advisers nor any other person shall have any liability whatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith. • Certain statements in this presentation regarding the Company are or may be forward-looking statements. These forward-looking statements are neither historical facts or guarantees of future performance. Such statements are based on current expectations and belief and, by their nature, are subject to a number of known and unknown risks and uncertainties which may cause the actual results, prospects and developments of the Company to differ materially from those expressed or implied by these forward-looking statements. • The information contained in this presentation is for background purposes only. The subject matter of the presentation may be subject to change and the Company does not take any responsibility for updating or amending the contents to reflect such changes. The material contained in this presentation reflects current legislation and the business and financial affairs of the Company which are subject to change without notice and audit, and is subject to the provisions contained within legislation. • This presentation summarises information contained in the Interim Results. Without prejudice to the generality of these conditions, this summary information, including any views given or implied, or any statement made, in relation to such information should not be relied upon, nor should it be treated as accurate or complete. This presentation and all such information contained herein should be read subject to the Interim Results. • The information contained in this presentation has been obtained from Company sources and from sources which the Company believes to be reliable but it has not independently verified such information and does not guarantee that it is accurate or complete. • No statement in this presentation is intended to be a profit forecast and no statement in this presentation should be interpreted to mean that earnings per Company share for current or future financial years would necessarily match or exceed the historical published earnings per Company share. 2
2017/2018 Interim Results Reminder: 2 years into a 3 year plan and we are on track: 1 2 3 1 2 3 FY2016 FY2017 FY2018 FY2019 Test and learn Prove the model Heavy Lifting Processes and Infrastructure Roll Out Back the winners 3
2017/2018 Interim Results Context: We are operating in a tough market Weak UK consumer demand Higher input prices UK competition tough Global supply challenges Expect the short term to be tough 4
2017/2018 Interim Results Ready to accelerate growth 1 2 3 We have the Profits Foundations investment UP SOLID opportunities to GROW Coming to the end of the Restored ROIs Group Adjusted EBIT up heavy lifting Continue to grow our £6.9m because: Key ongoing projects on investment in new Naked profitable AND budget and on track customer acquisition in GROWING in all 3 markets Building confidence that the Retail and Naked Retail transformation flowing Retail transformation is Ready to grow - on track through to the bottom line sustainable long term with our three year plan 5
2017/2018 Interim Results Ready to accelerate growth 1 2 3 We have the Profits Foundations investment UP SOLID opportunities to GROW 6
2017/2018 Interim Results Group profit growth driven by Naked Wines Group oup Adj Adj EBI BIT ( Underlyi ying ) FY18 H1 vs FY17 H1 GBP m 9 8 0.1 0.7 1.3 7 6 (and flattered by 5 £1.3m of investment phasing 4 7.3 6.0 to be spent in H2) 3 2 1 0.6 0.8 0.4 - FY17 H1 Adj EBIT Retail Commercial Naked Wines NW spend L&W PLC FY18 H1 Adj EBIT Underlying phasing *Retail and Naked Wines adjusted for IT cost reallocations to PLC *Retail and Naked Wines adjusted for IT cost reallocations to PLC 7
2017/2018 Interim Results Naked Wines profit driven by the USA Nak aked W ed Wines ines EBI BIT FY18 H1 Total: £4.7m Naked USA now the most profitable part of Naked Wines 8
2017/2018 Interim Results That growth has been driven primarily by growth in contribution Naked Nak ed Wines ines EBIT EBIT (Under (Underlying) ying) 6 FY18 H1 vs FY17 H1 GBP m 5 0.3 4 3 3.2 4.7 2 1 0 3.8 -1 -2.5 -2 -3 FY17 H1 EBIT Mature Angel Contribution Change in spend Change in Fixed Costs FY18 H1 EBIT 9
2017/2018 Interim Results We have grown Mature Contribution DESPITE lower investment in marketing Matur Ma ture Angel e Angel Contribution Contribution 30 FY13-FY18 H1 GBP m 25 20 FY18 H1 Mature 15 Angel contribution is 33.3% or £3.8m 10 higher 5 0 FY13 FY14 FY15 FY16 FY17 FY18 H1 Full year Contribution hasn’t grown because we’ve cut marketing - it has grown because we: 1. Did not repeat the Direct Marketing mistake in the USA 2. Became more efficient through our test and learn program 10
2017/2018 Interim Results .. Because we’ve built a real community 11
2017/2018 Interim Results Ready to accelerate growth 2 1 3 We have the Profits Foundations investment UP SOLID opportunities to GROW 12
2017/2018 Interim Results We are coming to the end of the heavy lifting Data tools to New Majestic give single Website on Naked Platform customer view NFC now shipped 154 of 210 stores 170,000 next day now have shelving orders Product Launched Availability now Franchise - Lite 84% 13
2017/2018 Interim Results Ongoing heavy lifting projects are on track EPOS Accounting Systems IT update New Till systems to be To be rolled out in FY2019 Replacing 20 year old rolled out across the systems with modern to get consistency across estate in FY2019 giving resilient systems the Group single customer view 14
2017/2018 Interim Results Building confidence that the Retail transformation is sustainable +2.0 -3.9 +4.1 +7.4% +2.0% ppts ppts ppts Repeat Sustained 5 star Customer Team LFL sales Customer base Retention service growth Retention Email capture rate % Franchise-Lite “From Command and Control culture to empowering people to Franchise - Lite KPIs are be entrepreneurs” trial begins improving 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 15 Week
2017/2018 Interim Results Key to engagement – The Store Meritocracy INPUTS SERVICE WINE RECOMMENDATIONS CUSTOMER ENGAGEMENT 16
2017/2018 Interim Results Key to engagement – The Store Meritocracy OUTPUT GROSS PROFIT GROWTH 17
2017/2018 Interim Results Key to engagement – The Store Meritocracy Stor Store e Le Leagu gue e Table ble SAILING SAILI NG NAILI AILING NG Input Score - Store Behaviours FAILI AILING NG AILI AILING NG Output Score - Gross Profit 18
2017/2018 Interim Results Key to engagement – The Store Meritocracy Stor tore Lea e League gue Table ble – Sca catter tter Graph ph Week eek 32 (6 w 32 (6 weeks after F eeks after Franc anchise hise – Lite Lite launc launch) h) Sailing Nailing Input Score - Store Behaviours Failing Ailing 19 Output Score - Gross Profit
2017/2018 Interim Results What does this mean in practice? TO.. ... FR FROM.. OM... £500 Frugal Fund Stores had to ask for consent Meritocracy - the best managers get Everyone treated the same more responsibility and opportunity Focus on sales Focus on Gross Profit Focus on Outputs Focus on Inputs e.g. customer service e.g. sales Coaches – Regional Managers - here to support policemen Paper folders and records Tableau data tools Average bonus – Target Bonus – £500 £10k 20
2017/2018 Interim Results What has not worked.. 1. Commercial 2. Retail Customer Retention No progress until 2018 when we have Confident that with Team Retention and the systems to support growth engagement moving in right direction, this will come 21 21
2017/2018 Interim Results Ready to accelerate growth 1 2 3 We have the Profits Foundations investment UP SOLID opportunities to GROW 22
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