Super Cheap Auto – Annual General Meetingmedia.supercheapauto.com.au/corp/files/documents/Managing...
Transcript of Super Cheap Auto – Annual General Meetingmedia.supercheapauto.com.au/corp/files/documents/Managing...
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Super Cheap Auto – Annual General MeetingBob Thorn – Managing Director
21 October 2004
Thank you Dick for the comments on our performance.Given that this is our first AGM, I thought I would take the opportunity to explain a little about SCA to our shareholders.
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Who is
Super Cheap Auto?
First, who is Super Cheap Auto?
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SCA is one of Australia’s fastest growing specialty
retailers of automotive parts, accessories,
handyman items, tools & equipment.
SCA is one of Australia’s fastest growing specialty retailers. Our business covers automotive parts, accessories, handyman items, tools and equipment and more.
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Business OfferA DIY customer’s paradise, Super Cheap Auto retails products relating to:
the carthe housethe garagethe trailer the boat and the yard;
covering everything from automotive parts and accessories, handyman items, tools and equipment to 4x4 and marine.
Estimated market size available to SCA approximately $1.95Bn.
This business is very much about the DIY customer’s paradise covering product that relates to the car, the house, the garage, trailer, boat and the yard. The estimated market size available to Super Cheap Auto is approximately $1.95 billion dollars, and for those who may not be aware, we are definitely NOT franchised.
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The internals of our store are very distinctive through the way we merchandise our extensive range of products and we are renowned for the volume of product we have on display.
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Car Care Tools Interior Exterior Seat Covers Electrical Audio Visual
Leisure/Outdoor Performance Spare Parts Lubricants Paint & Panel Batteries
Product Categories13 Product Categories:
Our product offer is dissected into 13 separate product categories. Some of these categories are what you would expect to see in an automotive business, however the extension into tools, audio visual, leisure and outdoor expands Super Cheap’s offer in comparison to competition.
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Our Brands
The registered brands and trademarks of Super Cheap Auto are an important part of our product offer. Our eight brands generate in excess of 27% of our total turnover.
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Our Store…
Our stores are merchandised through a quadrant layout and through the use of a coordinated merchandise sequences. The primary quadrants deliver sales of approx 22% from tools, 23% from interior, 25% from exterior and 30% from parts. It should be mentioned that parts includes all lubricants, batteries and hard parts.
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Our Signage
Externally, our stores are very distinctive with effective use of our prominent red, yellow and white signage to identify the site.
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Our People
&
Our Culture
A store full of products is nothing without its people and at Super Cheap, our people and our culture, as Dick mentioned, are critical to our success.
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Our Team
Our distinctive uniform is just one part of identifying the Super Cheap Team Member and is a link to our culture.
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Our CultureWe believe in a team approach that:
• Shares the same vision • Commitment to open and effective communication• Enjoyment of the shopping experience• Has a customer service mentality• A commitment to reinvention• Application of standards in all areas, shares a passion for our
business, enjoys working & successes are recognised;• Are committed to learning & career growth• Respect for others, honest, caring and understanding.• Distinct Point of Difference• Is committed to a safe environment.• Sets demanding goals and has a smash-through mentality.
Slide 12 & 13The eleven statements that go to make up our culture are discussed regularly with our team members to help them understand the importance to the business. Recently I also created a small book that explains the spirit of our culture and how our team framework principles can be applied in the way we operate day to day.
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Set clear and precise objectives which areunderstood by everyone.
Trust and respect each other and the team as a unit.
Provide feedback at all stages of the process.
Review and adjust the plan constantly,reset objectives to continually improve.
Praise and encourage fellow team members,recognise/celebrate major achievements.
Team Framework Principles
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Team Culture
Reinvention Logic
Retailing Knowledge
Product & Brand Management
Marketing & Promotions
Property Management
Core Strengths
At Super Cheap, we have developed skills in many areas and we believe our core strengths relates to our team culture, our reinvention logic, our retail knowledge, product and brand management, our marketing and promotional skills and property management.
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Bob ThornManaging Director
Human Resources
Merchandising Finance Property
PeterBirtles
BusinessSystems
Theresa Burrows
Steve Doyle
Rob Dawkins
NickBinns
Supply Chain
SteveTewkesbury
Management Structure
Our Senior Management Team is key to the application of these core strengths and I would like to acknowledge the substantial amount of effort and commitment that the Senior Management Team along with all our team members have shown in achieving our results to date.
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The Way We Market
Our Business
One of our values is to maintain a distinct point of difference and we apply this to the way we market our business.
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The Marketing / Media
TelevisionCatalogues – 8, 12 & 16 page(5 million copies per catalogue)
PressRadioMotorsport
We aggressively promote our business through extensive use of television, supported by catalogue, press, radio and motorsport. Our catalogues which run 12 times per annum each with in excess of 5 million copies printed are distributed to approximately 70% of Australian homes.
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Catalogues
Our catalogues again show that distinct point of difference in the way we present our offer.
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Advertising
As does our TV advertising through its unique style and friendly characters (who are also very inexpensive!)
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Achievements
FY 03/04
I would like to talk about some of our achievements for the 04 financial year.
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Key Highlights for 03/04 Financial YearSuccessful integration of Marlows & Rocca Bros business
Seven week conversion program – 20 stores, 2 DC’s
Launched in New Zealand7 stores on one day – 29th November 2003
Opened 39 new storesAustralia: 20
New Zealand: 19
Increased team members numbersJune 2003: 2408
June 2004: 2964
Implemented new Enterprise Agreement in NovemberTerms of employment agreed for next 2½ years
These highlights included the successful integration of the Marlows & Rocca Bros business. The launch of 7 stores on the 1 day into New Zealand on 29th November 03. The opening of 39 new stores made up of 20 stores in Australia and 19 in New Zealand. An increase in our team member numbers from 2,400 to almost 3,000 by June of 04 and the implementation of our new enterprise agreement in November 03.
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Key Highlights for 03/04 Financial Year
Merchandise Planning InitiativesProduct Forums
Category Planning / Range Reviews
Re-engineered Supply ChainNew DC in Wiri (Auckland), New Zealand
Closed South Australian DC (acquired in Marlow’s transaction)
Re-structure of Western Australia DC
Achieved 36.5% compound sales growth for past 3 years
Successfully listed on ASX – 6 July 2004
Wiri,Auckland
We’ve also implemented new merchandising initiatives involving product forums and detailed category planning processes. We have reengineered our supply chain through the opening of a new distribution centre in New Zealand, the closure of the South Australia Distribution Centre, the restructuring of the WA DC and upgrades to our major distribution centre at Lawnton in Queensland. Our efforts in 2004 financial year have seen us achieve a compound annual growth of 36.5% for the last 3 years and of course, I would have to mention our successful listing on the ASX on 6th July 04.
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EXCEEDED PLANNED STORE OPENINGSExceeded Prospectus forecasts for store openings
Opened 7 stores in June 2004 that had been forecast to open in July 2004
Finished with 183 stores against Prospectus Forecast of 176
EXCEEDED SALES $382.7m ($3.8m ahead of forecast)
39.1% growth on ’03 year
4.0% like for like growth
EXCEEDED EBITDA$32.0m – 8.4% ($1.4m ahead of forecast)23% growth on ’03 year
Key Highlights for 03/04 Financial Year
Our financial year saw us achieve better than prospectus forecast. We exceeded planned store openings by 7 stores to deliver 183 for the year. We exceeded sales by $3.8m and delivered 39.1% growth on 03 financial year. This represented a like for like growth on existing stores of 4%. Our EBITDA was also $1.4m ahead of forecast and showed 23% growth on 03 financial year.
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183 176
020406080
100120140160180200
Jun 01 Jun 02 Jun 03 Jun 04 Prospectus
Store Numbers
183 stores trading by 26 June 047 higher than prospectus forecast39 stores opened during the year
20 stores in Australia 19 stores in New Zealand
194 stores trading at 21 October 04
This graph shows the growth in store numbers since the 01 financial year and at the 21st October, we’re proud to say that we have 194 stores trading.
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Our Sales Growth
Our achievements in 04 have meant that the business has delivered 28.2% compound annual growth for the past 10 years. A result that we are extremely proud of and I would believe is quite unique in the retail industry in Australia.
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2004/05 Outlook
Slide 26 / 27I would now like to talk about the outlook for 05.At this point in time, our sales are in line to achieve prospectus forecasts of $474.3 million, as are our store openings to deliver 205 stores for the 05 year. Our initiatives to achieve improvements in working capital and margin through our supply chain and trading term actions are being realised. These improvements were built into our prospectus forecast. Operating costs are also in line with prospectus forecast at this point.
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04/05 Outlook
Sales in line with Prospectus forecast of $474.3m
Store openings on track to meet Prospectus forecasts of 205 stores for 05 year
Supply chain and trading term initiatives are delivering margin and working capital benefits
Operating costs in line with Prospectus forecast
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04/05 OutlookCurrently 194 stores trading at 21 October 04 On track to achieve 205 stores trading by June 2005 and prospectus forecasts
Store Numbers
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164
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020406080
100120140160180200
Australia New Zealand
04 FY F'cast 05 FY
Sales
$16.0
$366.7
$49.4
$424.9
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Australia New Zealand
04 FY F'cast 05 FY
Total ’04: 183
Total F’05: 205Total ’04: $382.7m
Total F’05: $474.3m
AU
D$
As I have mentioned previously, we have 194 stores trading as at 21st October. By June 05 we see 205 stores with Australia lifting from 164 to 179 stores and New Zealand from 19 to 26 stores in comparison to June 04. Our sales are planned at approximately $425m for Australia and around $49m for New Zealand delivering a total of $474.3m. This will represent an increase of approximately 24% on 04 financial year.
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’05 InitiativesProject FOSIL - Focus on Supply, Inventory and Logistics
Potential to delivering revenue, cost and capital benefits for:
Freight efficiency
DC productivity
Forecasting and replenishment systems
Inventory management
Benefits included in prospectus forecast for 2004/05
Some of the initiatives that we are acting on in the 05 year include Project FOSIL, which is importantly about a focus and improvement on supply, inventory and logistic operations. We see improvements in freight, DC productivity, forecasting and replenishment systems and inventory management. The expenditure of approximately $7.5m associated with this initiative and the benefits coming from it have been included in our prospectus forecast.
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Supplier RelationsContinue improvement with our Suppliers:
Collaborative approach to future requirements
Range development and exclusivity
Own brand
Trading terms
Payment methods
Merchandise PlanningRange reviews
Christmas 04 initiatives covering:Import scheduling
Christmas Promotional Activity
Revised catalogue structures
’05 Initiatives
We are continuing to improve relationships with our suppliers through a more collaborative approach covering range development, own brands, trading terms and payment methods. Combined with our supplier relations are our improved processes in merchandise planning. We have put in substantial effort on initiatives relating to Christmas 04 involving import schedules, promotional activity and catalogue structures.
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Promotional activityFirst quarter: Lower than 04 financial yearSecond quarter: Higher than 04 financial yearThird quarter: In line with 04 financial yearFourth quarter: In line with 04 financial year
Confirmed stores for 2004 calendar yearPort Macquarie, NSWHamilton, NZPalmerston North, NZKalgoorlie, WAStoke, NZFeilding, NZ
’05 Initiatives
On the point of promotional activity, the first quarter saw us with lower activity than the 04 financial year, however we will, in comparison to 04, increase that for the second quarter with the third and fourth quarter being in line with the 04 year. At this point in time we can confirm an additional 6 stores for the calendar year and if these all open on time, it will see us trading with 200 stores for Christmas.
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Quarterly results (week ending 2nd October 2004) for 2004/05 Sales: $118.4mGrowth on ’04 financial year: 22.1%Like for like growth: 4.0%
First Quarter Results
Store Numbers
192
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TotalCompany
First Quarter '04
Sales
$118.4$108.5
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We are comfortable with our first quarter results where we have achieved $118.4m in sales, which was a growth of 22.1% on the 04 financial year and a like for like growth of 4.0%. This result is in line with the Prospectus Forecast. The sales achieved were $108.5m in Australia and $9.9m in New Zealand for the first quarter.
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194 Stores
WA
Perth
15Stores
NT
Darwin
3Stores
QLD
Brisbane
61Stores
NSW
NewcastleSydney
Canberra
48Stores
VIC34Stores
HobartTAS
3Stores
WellingtonChristchurch
Auckland
Our Current Locationsat 21 October 2004
22Stores
SA8
Stores
Adelaide
As at 21st October, we are trading with 194 stores and can boast that we trade in all states and territories in Australia and now both islands of New Zealand.
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In closing I would like to assure you of my commitment and that of our Senior Management Team to the performance and delivery of the forecast numbers for the 05 year.