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BoConcept Holding A/SBoConcept Holding A/S
Agenda
BoConcept in short
Strategic focus back on profitable growthStrategic focus back on profitable growth
Latest financial development
Long-term targets and short-term guidance
Forward-looking statement Contacts:Forward looking statementThis presentation includes forward-looking statements, including forecasts for revenue, earnings and cash flow. BoConcept Holding stresses that forecasts are subject to considerable uncertainty with respect to the level of activity we will see in the future due to high global macro-economic volatility and subsequently reduced revenue visibility. The revenue generated by the franchise chain and BoConcept will thus be sensitive to fluctuations in macro economic factors such as GNP growth number of
Viggo Mølholm, President & CEOE-mail: [email protected]
fluctuations in macro-economic factors such as GNP growth, number of home sales, consumer confidence, and disposable income trends in the group's markets. Should these variables deteriorate, the franchise chain will have even tougher sales conditions to contend with, and thus management's expectations with respect to future financial trends may not be realised.
Hans Barslund, EVP & CFOE-mail: [email protected]
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BoConcept in shortBoConcept in shortA retail-oriented concept holder
3
BoConcept – a global brand and business
International retail-oriented concept holder within furniture and lifestyle products for private homes
Affordable luxury products primarily sold via 248 franchise-based BoConcept Brand Stores in approx. 55 countries
Strong brand and highly coordinated and commercial collection with attractive market positioning
VisionTo make BoConcept no. 1 brand within urban interiors
MissionThrough passionate and persistentperformance we make customized and coordinated design furniture and accessories affordable to the urban-minded customer
4
Collections positioned to reduce exposure to price competition
5
one WORLD – one CONCEPT – one BUSINESS MODEL
Americas EMEA ASIA17% of revenue*44 brand stores
65% of revenue*159 brand stores
18% of revenue*46 brand stores
6 * Based on FY 2009/10
Creating a unique customer experience at the centre of our focus
Our brand stores must be inspiring and exiting to visit
Our staff must offer an exceptional Our staff must offer an exceptional and competent service
We will constantly and proactively explore new ways of addressing explore new ways of addressing shopping trends and behavior
Interior decoration service (home consultancy)consultancy)
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Business model based on refined core skills and award winning franchisee model
Sales, delivery and
Customers
Franchisees
Sales, delivery and after-sales services
General
B d t
Franchise masters
General support
BoConcept A/S
Brand, conceptand products
Sourcing and
own-prod.
Supplychainmgt.
Design and
productdev.
Marketing and
comm.
IT, training
and specialist support
Business dev. and admin.
pp
9
BoConcept A/S provides a full business and concept platform for brand stores
Sales, delivery and
Customers
Franchisees
Sales, delivery and after-sales services
General
Franchise masters
General support
B d t
BoConcept A/S
Brand, conceptand products
Concept and business strategy
Design and branding
Sourcing and
own-prod.
Supplychainmgt.
Design and
productdev.
Marketing and
comm.
IT, training
and specialist support
Business dev. and admin.
Design and branding
Specialist support
Development of training programspp
Supply chain and warehouses
IT systems10
Decentral retail organisation provides strong and customised support to franchisees
Sales, delivery and
Customers
Franchisees
Sales, delivery and after-sales services
General
BoConcept A/S plus 6 external partners:
B d t
BoConcept A/S + 8 external
Franchise masters
General support Retail Account Managers (store
assesment)
National marketing
BoConcept A/S
Brand, conceptand products
National marketing
National training
Price levels
Sourcing and
own-prod.
Supplychainmgt.
Design and
productdev.
Marketing and
comm.
IT, training
and specialist support
Business dev. and admin.
Axapta support
pp
11
Brand stores focus on providing customers with a unique experience and increasing same-store-salesg
Customers
Sales, delivery and Approx. 140 across the world:
General
Franchisees
Sales, delivery and after-sales services Rent agreement
Local marketing
Driving sales
BoConcept A/S + 8 external
B d t
Franchise masters
General support
Driving sales
Deliveries and assembly
After sales service
BoConcept A/S
Brand, conceptand products
Sourcing and
own-prod.
Supplychainmgt.
Design and
productdev.
Marketing and
comm.
IT, training
and specialist support
Business dev. and admin.
pp
12
Financial development 2006/07-2010/11EEBIT i DKK
1100
1200
Revenue in DKKm
60
80
100
EBIT in DKKm
800
900
1000
-20
0
20
40
2006/07 2007/08 2008/09 2009/10 2010/11E-20
2006/07 2007/08 2008/09 2009/10 2010/11E
300
Number of brandstores100
Cash Flow in DKKm
150
200
250
300
20
40
60
80
100
0
50
100
2006/07 2007/08 2008/09 2009/10 2010/11E -60
-40
-20
0
006/0 00 /08 008/09 009/ 0 0 0/2006/07 2007/08 2008/09 2009/10 2010/11E
Shareprice development (last 24 months)
190
210
230
250
90
110
130
150
170
50
70
90
Number of A-shares: 240 000Number of A shares: 240,000Number of B-shares: 2,622,119
Shareholders registered by name: App. 1,400
Free float in BoConcept Holding represents 75%
StrategyStrategyFocus back on profitable growth
15
Strategy focused on utilising strong business model and market uptake to increase growth
STRATEGY FOR PROFITABLE GROWTH
TRACK l TRACK ll TRACK lll
Growth though increased
same-store-sales
Growth though more brand stores
Cost reduction though increased productivity
16
Track l: Growth through increased same-store-sales
Highly commercial 2011 collection
2011 collection focused on functionality, flexibility and customisation
Highly commercial 2011 collection - >25% of collection has been renewed - Most introductions in lower end of price range to
accommodate customer demand- Upholds market position as 'affordable luxury'p p y
BoConcept inspiration Camp (BiC) format changed to focus on execution
- Products and store layout at the centre of attentionProducts and store layout at the centre of attention- Moved to May to align with collection roll-out
New mid-year collection introduced in Feb. 2011 f ll l t ' f as follow up on last year's success – focus on
functionality- On display in 220 stores in 45 countries- Huge marketing effort, online and distribution of 4.2
ill fl mill. flyers
17
Track l: Growth through increased same-store-sales
The Multi Channel Retail strategy will
Multi Channel Retail – meet the customers where they want to meet us!
gybecome a cornerstone in increasing traffic to both website and brand stores going forward
Initial platform which integrates with Axapta Initial platform which integrates with Axapta consist of (2010/2011)
- Newly designed website- Home Creator – a new online 3D configuration
programprogram- MyBoConcept – a personal end-user universe
(CRM)
Fi t t f MCR St t i lFirst stage of MCR Strategy in place- Home Creator rolled out in all A-markets and
several B & C markets since Sept. 2010- In Spring 2011 a 3D-roomfunction will be
added to Home Creatoradded to Home Creator- E-commerce platform to be rolled out in the UK
in Sept. 201118
Track l: Growth through increased same-store-sales
Introducing e-learning to accelerate growth in same-store-sales
New e-learning platform will become central in BoConcept University's training activities INTRO
E-LEARNING
SALESE-LEARNING
PRODUCTSE-LEARNING
PRACTI-CAL
SALESFACE TO FACE
INTERIOR DECO.
FACE-TO-FACE
Increase knowledge and service levels to boost hit rate and basket size, while
- Reducing training cost for both BoConcept
FACE-TO-FACE
and franchisees- Reducing time-to-market
Focussed e-learning effort on sales and gcampaign training of staff since Sept. 2010 E-learning programs – all basic sales and all product training are implemented in all product training are implemented in spring 2011
19
Track ll: Growth through more brand stores
To increase brand awareness and traffic,
New BoConcept Inspiration Store concept to complement existing BoConcept Brand Stores
To increase brand awareness and traffic, BoConcept launches BoConcept Inspiration Stores
BoConcept Inspiration Stores are small unitsBoConcept Inspiration Stores are small units- Total of 17 Inspiration Stores worldwide- Central stores in high traffic locations- Concession stores in department stores as Illum,
Harrods Selfridges and ECIHarrods, Selfridges and ECI- Higher sales per m2
- Positive effect on sales generally
Will be a satellite for nearby BoConcept Brand Stores
- Owned by existing franchisees - Generate marketing, administration and logistics
synergies
Test of pup up store20
Track ll: Growth through more brand stores
f f h h b h
Further growth initiatives
Expansion of franchise chain in both A markets and new markets- ADC important part in penetration of
Asian market- Regional director based in Hong Kong
To stimulate pipeline build-up and accelerate opening of new stores BoConcept will opening of new stores, BoConcept will allocate DKK 10m in FY 2010/2011 to facilitate financing for suitable potential franchisees
DKK 2 3 i ll t d l ti i l t t - DKK 2-3m is allocated as location involment to accelerate openings in USA
Allocation of dedicated business development ressources in Germany & France
21
Track lll: Cost reductions through increased productivity
Focus on strengthening profitability and cash
Focus on strengthening profitability and maintaining cash flow
Focus on strengthening profitability and cash flow by reducing cost and optimising capital structure will be maintained
l ' b d l'To utilise BoConcept's business model's potential for high marginal profits, future initiatives will be focused on- Continue to secure attractive contracts
with strategic sourcing partners- Optimise supply chain to enable faster
delivery times at lower costs- Maintain an asset light model and low Maintain an asset light model and low
overheads
22
Track lll: Cost reductions through increased productivity
ADC - an important part in the expansion strategy and the optimisation of the supply chain
New Asian Distribution Centre (ADC) in Shanghai up and running in April 2010
Considerably more efficient and competitive location in terms of sales, delivery time and costs
A central location for providing support to general build-up and brand store penetration of new Asian marketspenetration of new Asian markets
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FinancialsFinancialsDevelopment in Q1-3 2010/2011
24
Double digit revenue growth due to stronger performance and positive currency impact
Underlying markets remains stable, but Development in revenues (DKKm)Underlying markets remains stable, but still influenced by uncertainty and consumer hesitancy
YTD +11 5% to DKK 753 1m (DKK
75345 2
740
760
p ( )
YTD +11.5% to DKK 753.1m (DKK 675.5m)
- Increase in revenues to brand stores accounts for 6.9% of growthIncrease in currencies (USD and JPY)
676
31
680
700
720
- Increase in currencies (USD and JPY) contributes to 4.6% top line growth
Q3 +15.2% to DKK 249.6m (DKK 216 7 )
640
660
216.7m) 620
2009/10 YTD Currency Additional sales to brand
stores
Additional sales to studios
2010/11 YTD
Continuous increase in same-store-sales despite low traffic
Healthy development in same-store-sales (SSS) 30%
Quarterly development in same‐store‐salessales (SSS)
- Invoiced SSS up 6.9% in Q3 (Q2: 6.1%)- Order intake SSS up 5.0% in Q3 (Q2:
8.3%)10%
20%
Invoiced Order intake
Traffic remains lower but is generallybetter qualified than before
‐10%
0%
Persistent growth in hit rate as result of focus on sales-generating activities and training programs, but basket size down in Q3 ‐30%
‐20%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007/08 2008/09 2009/10 2010/11
FY2010/2011 Guidance• Revenue growth: +5-10%• Same-store-sales (invoiced): +5-10%
Positive development in A-markets in Q3 2010/2011
Underlying growth and increasing activity in France
Allocation of revenue last 12 monthsy
Double digit growth and continuous stronger momentum in Germany
21%25% France
Germany
USA
Moderate growth rates in Denmark
Political and economic clarification in 13%4%
1%
USA
Spain
Japan
Denmark
NorwayPolitical and economic clarification in England improve performance
Challenging market conditions in Japan and Spain remain but signs of 10%
3%
6%
4% Norway
England
Sweden
China
B&Cmarketsand Spain remain, but signs of stabilisation in both markets
0%
5%6%6%
B&C markets
Net-additions of brands stores as anticipatedN b f b d t
Positive net-addition of brand stores continues from Q2 200 210 217 224 234 239
256 247 246 245 244 238 236 240 248
Number of brandstores
- Q3: +8 (13 opened/5 closed)- YTD:+10 (27 opened/17 closed)
Five BoConcept Inspiration Stores p popened in Q3, number of inspiration stores now at 17 total
Increasing interest from potential Brand store pipeline
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2007/08 2008/09 2009/10 2010/11
Increasing interest from potential franchisees, especially within new markets such as Asia and Latin America
6964
51 5359
4349 47
39 41 4039 38
p pPhase 2
Phase 3
16 13 105 5 8
1612 13
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FY2010/2011 Guidance• Approx. 35 new store openings
( t dditi f i 10 t ) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008/09 2009/10 2010/11
(net-addition of min. 10 stores)
Gross margin maintained despite increasing FX
42
43
44
Quarterly gross margin (%)
38
39
40
41
42
35
36
37
38
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007/08 2008/09 2009/10 2010/11
Gross margin in Q3 at 42.7% (42.7%) and YTD 2010/2011 at 41.9% (41.6%)- Net effect from currency is neutral- Net effect from more own stores +0.9%
Sourcing cruises at 75%
Overheads increased in nominal terms, but is down relative to turnover
Total overheads increased by DKK 21.4m – affected by hike in currencies
Development in overheads (DKKm)y
and larger number of own brand stores compared to last year
- In pct. of revenues overheads reduced from 39.5% to 38.2%267
288
12 6 4
270
280
290
300
YTD sales and distribution costs at DKK 229.7m (DKK 210.7m) or 30.5% of revenues (31 2%)230
240
250
260
revenues (31.2%)- Currency impact DKK -10m- Own stores impact DKK -6m- Losses and provisions at DKK 10.8m YTD
(DKK 3 1m in Q3)200
210
220
230
(DKK 3.1m in Q3)
Administrative costs up to DKK 56.5m (DKK 52.0m) corresponding to 7.5% of
(7 7%)
Overheads 2009/10 YTD
Currency Own stores Business activity
Overheads 2010/11 YTD
revenues (7.7%)
EBIT margin climbing steadily
Q3 EBIT at DKK 9.9m (margin at 4.0% vs. 1.4% last year) and YTD EBIT at
30
40 EBIT in DKKm y )DKK 27.9m (margin of 3.7%)
Net financials down to cost of DKK 2.0m (DKK 5.1m) as a consequence of 0
10
20
30
(DKK 5.1m) as a consequence of reduced NIBD
PTP for Q1-3 2010/2011 at DKK 25.9m (DKK 9 6m)30
‐20
‐10
0
(DKK 9.6m)‐30
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007/08 2008/09 2009/10 2010/11
FY2010/2011 Guidance• EBIT% of 3-4%• Losses and provisions at DKK 12mLosses and provisions at DKK 12m
NWC normalised at level of long term target
Inventory ramp-up to DKK 127.3m due to increased activity and very 140 14 0%
Net working capital to Sales
due to increased activity and very low levels at beginning of financial year
D bt d i t 40 d 100
120
140
10,0%
12,0%
14,0%
Debtor days remain at 40 compared to 42 last year
Long-term target of NWC at 10% of 60
80
6,0%
8,0%
g grevenues
0
20
40
/ / / / /
0,0%
2,0%
4,0%
FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/10 Q3 2010/11
NWC (DKKm, LHS) NWC % of Sales (RHS) Long term NWC/Sales target (RHS)
Cash flow down as inventories are re-established
YTD CFFO at DKK 4.0m (DKK 70.9m) as NWC is increased
YTD cash flow before instalments on non-current debt DKK -22.0m (DKK 43.8m)
10203040
Cash flow in DKKm
Net investments at DKK 26.0m YTD- Slightly higher than expected
due to acquisition of Swedish -40-30-20-10
010
qmaster rights in August 2010Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2007/08 2008/09 2009/10 2010/11
FY2010/2011 GuidanceFY2010/2011 Guidance• Net investments of DKK 33m
(previously DKK 30m)• Cash flow before instalments at DKK 0
(previously 3% of revenues)
OutlookOutlookLong-term targets and short-term guidance
34
Sales and store expansion strategy to take advantageof market uptake
Reinforced focus on exploiting the improved marked conditions to increase h f l f dgrowth significantly going forward
Optimised asset light business model to increase earnings and cash flow
By FY 2014/2015, BoConcept is expected to- Grow revenue by 10-15% p.a. by increasing same-store-sales and brand
store portfolio to 350-400 units (incl. BoConcept Inspiration Stores)- Maintain the gross margin level- Generate high marginal earnings (>25% on EBIT-level) to realise an overall
EBIT-margin of 12%- Generate cash flows of 6% of revenue and RoA of 30%Generate cash flows of 6% of revenue and RoA of 30%- Maintain asset light setup and equity ratio of 30-40%
Growth and profitability in focus in FY2010/2011Increasing activity level despite low traffic support SSS growth scenario, and brand store openings/pipeline confirm franchise model's attractiveness
Strong emphasis on sales optimisation via collection updates, sales training d i i tand increasing support
Focus on efficiency, optimisation of supply chain and profitability improves earnings
NWC expected to be maintained at approx. 10% of revenues going forward
FY2010/2011E FY2009/2010RGuidance
RevenueSame-store-sales (invoiced)Losses on bad debtEBIT i
DKK 950-1,000m (5-10%)5-10%DKK 12m3 4%
DKK 910m (-9%)-7%DKK 18m1 4%
FY2010/2011E FY2009/2010RGuidance
EBIT-marginCash flow in % of rev.InvestmentsNet chg. # brand stores
3-4%0%∼DKK 33mNet addition min. 10
1.4%8.5%DKK 29mNet reduction of 9
App. 35 openings 21 openings
36
Attractive long-term investment case with upside potential as market gradually improves
Global brand with strong market position in the high end of the global middle market (or in the low end of the high-end market)
Business model and core competencies cover entire value chain from design, branding, marketing, production, supply chain management and sales training
BoConcept's franchise model and concept competencies remain attractive to both customers and franchisees
- Highly attractive collection with focus on customisation- Rewarded and optimised franchise modelp
After considerable restructuring initiatives during the global recession, focus is now back on profitable growth
BoConcept will take advantage of favorable position to grow same store sales and - BoConcept will take advantage of favorable position to grow same-store-sales and increase the number of stores considerably
- BoConcept will generate substantial marginal earnings and high cash flows as growth increases by leveraging on its optimised business model with high cost efficiency and an asset light structureg
37
Thank you for your attention Thank you for your attention For further information visit our website
www.boconcept.com
