The Warehouse Group Limited 1999/00 Financial Year Results Presentation

1

The Warehouse Group Limited

1999/00 Financial Year Results Presentation

2

Agenda

• Financial results summary

• The Warehouse review

• The Warehouse operations

• Warehouse Stationery review

• Australia

• Current Trading

3

FY2000 Group Highlights

FY00 FY99 %

Sales 1.075b 0.933b +15.3%

Same store sales 10.7% 13.4%

EBIT 111.3m 85.2m +30.7%

NPAT 70.5m 54.4m +29.5%

EBIT Margin 10.4% 9.1% +130bp

EPS1. 24.3c 18.9% +28.6%

Ordinary DPS2. 12.5c 9.5c +31.6%1. Based on average number of shares2. Adjusted for 1:1 bonus issue

4

The Warehouse Group Sales growth in the decade

0

200

400

600

800

1,000

1,2001

99

1

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

$1billion sales target

surpassed in FY2000

Sales ($m)

5

The Warehouse Group Profit growth in the decade

0

10

20

30

40

50

60

70

80

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

NPAT ($m)

29.5% increase in NPAT

to $70.5m

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The Warehouse Group EPS growth

0

5

10

15

20

25

1994 1995 1996 1997 1998 1999 2000

EPS 1.

28.6% increase in EPS

1. Adjusted for 1:1 bonus issue, based on weighted average shares on issue during the year

7

The Warehouse Group EBIT margin in the decade

5%

6%

7%

8%

9%

10%

11%

12%

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

EBIT in excess of

10%

EBIT % (EBIT/Sales)

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Financial Performance Summary

Year Ended31 July ($m) 2000 1999 % Change

Retail Sales Revenue

E B I T

Excl. unusuals

Incl. options scheme

Pre-tax Profit

Net Profit After Tax

932.8

85.2

0.2

(1.6)

82.5 54.4

+15.3%

+30.7%

+31.0%

+29.5%

1,075.3

111.3

1.5

(3.1)

108.1

70.5

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Financial Performance Summary - Unusual Items

Year Ended 31 July 2000 $mProperty Sale Profits

Australia (preliminary acquisition costs)

Business origination costs

Goodwill amortisation

Tax

Post Tax

5.6

(2.2)

(1.6)

(0.3)

1.5

(1.3)

0.2

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Financial Performance Summary - Inventory

Inventory excl GIT of $140m - increase of $24m

Made up of

increase in mobile phone stock $8m

two stores opening early Aug ‘00 $3m

WH Stationery stock increase $4m($3.2m relates to new/extended/planned stores)

General increase in stock$9m

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Dividends

0

2

4

6

8

10

12

14

1994

1995

1996

1997

1998

1999

2000

Ord. Dividendper share

Specialdividend pershare

Cents per share adjusted

for bonus issue• Total pay-out of 21.5

cents incl. specials (adjusted for 1:1 bonus issue) for 1999/2000

• Ordinary dividends up 32% to 12.5c (adjusting for BI)

• No further special dividends planned in the short term

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FY2000 Red Shed H1 and H2 EBIT Comparisons

11.50%

6.40%

9.30%

12.70%

7.60%

10.50%

H1

H2

FY00

2000

1999

The WarehouseThe Warehouse“Red Sheds”

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The Warehouse Customer Statistics

YE July FY00 FY99 %

Paying customers 38.3m 35.1m 9.1%

Weekly foot traffic 1.5m 1.4m

Average sale $26.07 25.27 3.2%

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The Warehouse Property

• 2 new stores (Cambridge, Mt Wellington)• 3 replacement stores (Porirua, Wanganui,

New Plymouth• 14 refurbishment's and 1 extension• Retail space 253,717 square metres (up 5.5%)

1999/2000 Review

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The Warehouse Property

• 5 new stores (Queenstown, Rangiora, Belfast

(ChCh), Auckland Airport, Hillcrest)

• 3 replacement stores (Glenfield Mall, Linwood

(Chch), Whangaparoa)

• 15 store refurbishment's and 7 store extensions

• Total selling space to increase by over 35,000

square metres by Christmas 2000 (+13.8%)

Next 12 months

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The WarehouseMerchandise

1999/2000 Highlights and Review

– Apparel sales up 30%– Green garden sales up 23%– Books up 18%– BBQ’s and related Y2K product up 31%

Next 12 months

– Continue to grow apparel business

– Sanyo brand to be launched in Warehouse at the end of Oct 2000

– Bigger push into sporting goods

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Merchandise Forecasting System

• Accurate short and long range customer demand forecasts– purchase according to forecast demand instead of

replacing sales– share forecasts with suppliers

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• Contribution analysis– work with suppliers to improve performance of

poor sellers, optimise good sellers

• Implementation Time– Pilot November / December 2000– Phased implementation starting Q1 2001

Merchandise Forecasting System

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The Warehouse Operations

“Back dock” to “Red Bag” review• Objectives

– standardise procedures in store – review areas such as price change management,

checkout design, communication, Merchandising standards, debtors, returns, repairs, rainchecks and layby, Customer service.

– 40 projects identified

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The Warehouse Operations

Sprint CheckoutsImprove the checkout processes• Objectives

– Reduction in transaction time by over 30%– Improve customer Interaction– Labour cost savings– Enhance Loss Prevention– OSH improvements

• Implementation– being rolled out to new stores– retro-fits to selected existing stores

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The Warehouse Logistics


– NIDC extension completed on time for Christmas ‘99– 300% increase in suppliers moving to cross dock (200

suppliers versus 65 in Aug. 1999)– Escalation of partnership agenda’s with suppliers– Continued to improve forecasting accuracyNext 12 months

– Implement 12 major supply chain development projects within Clints

– Apparel automation project to support next 5 years growth in apparel

– Integration Merch. Planning with Supply Chain development

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The Warehouse Operational Performance

• Operations highlights– shrinkage down for H2 2000

• Safety– LITFR 1997 - 5.28– LTIFR 1998 - 3.07– LTIFR 1999 - 1.64– LTIFR 2000 - 2.94

The higher rate in 2000 reflects longer time off period

per injury rather than an increase in injury frequency

• Team Member Satisfaction – 83% of team members agreed that “The Warehouse

is where people come first” (up from 76%)

Warehouse Stationery“Blue Sheds”


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FY00 FY99 %

Sales 63.1m 45.9m +37.4%

Same store sales 23.3% 29.0%

EBIT 5.0m 3.0m +64.9%

NPAT 3.2m 2.0m +62.5%

EBIT Margin 7.9% 6.6%


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FY2000 Blue Shed H1 and H2 EBIT Comparisons

6.20%

7.00%

6.60%

8.10%

7.80%

7.90%

H1

H2

FY00

2000

1999

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• Stores – Six stores added in the year– retail space 29,062 - up 40%

• New Categories and initiatives – Gateway computers– Revamp of four major categories– E-Commerce Trial– Exploring alternative markets– NZ’s first priced stationery catalogue

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The next 12 months

• Store rollout – 7 new stores in FY2001, with 6 in place by Christmas – Pukekohe– Taupo– Paraparaumu– Timaru– Blenheim– Downtown (Auckland)

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Australia

Clint’s and Solly’s– acquisition effective from 1 August 2000– expect settlement at the end of September 2000– debt raising mandate awarded for A$150m Clint’s fund

raising– buyback of up to A$33m will begin after settlement,

planned start of buyback October 2000– strategy is to improve infrastructure and systems to

provide a sound base for sustainable profitable growth– strategy is long term, with benefits coming from year 3– seeking ASX Foreign Exempt listing late in 2000

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Current Trading and Future Outlook

Good start to the new financial year – Warehouse store total sales up 15% on August 1999– Warehouse Stationery total sales up 40% on August 1999– Clint’s trading on plan

Macro conditions: – Consumers sentiment rattled by higher petrol prices and

increased mortgage interest rates– Current trading suggests consumers are still spending but

they are being more price sensitive– Too early to draw any conclusions about H1 2001

‘Where Everyone Gets a Bargain’

Thank you for your attendancefrom the people at The Warehouse

The Warehouse Group Limited 1999/00 Financial Year Results Presentation

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Transcript of The Warehouse Group Limited 1999/00 Financial Year Results Presentation