Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
Born in 1973
Roots was founded by
Michael Budman and Don Green.
United by a summer camp
friendship and inspired by the
rugged beauty of Algonquin Park,
they set out to create an enduring
lifestyle brand that captured the
essence of the Canadian outdoors.
Investor Presentation
January 2018
Disclaimer
All figures discussed in this presentation are stated in $CAD millions, unless otherwise noted.
Non-IFRS Measures and Industry Metrics
This presentation makes reference to certain non-IFRS measures including certain metrics specific to the industry in
which we operate. These measures are not recognized measures under IFRS, do not have a standardized meaning
prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather,
these measures are provided as additional information to complement those IFRS measures by providing further
understanding of our results of operations from management’s perspective. Accordingly, these measures are not intended
to represent, and should not be considered as alternatives to net income or other performance measures derived in
accordance with IFRS as measures of operating performance or operating cash flows or as a measure of liquidity. In
addition to our results determined in accordance with IFRS, we use non-IFRS measures including EBITDA, adjusted
EBITDA, adjusted net income, and adjusted net income per diluted share. This presentation also refers to comparable
sales growth, a commonly used metric in our industry but that may be calculated differently compared to other
companies. We believe these non-IFRS measures and industry metrics provide useful information to both management
and investors in measuring our financial performance and condition and highlight trends in our core business that may not
otherwise be apparent when relying solely on IFRS measures. Definitions and reconciliations of non-IFRS measures to
the relevant reported measures can be found in our MD&A under “Cautionary Note Regarding Non-IFRS Measures and
Industry Metrics”, which is available on SEDAR at www.sedar.com.
Forward-Looking Information
Certain information in this presentation contains forward-looking information. This information is based on management’s
reasonable assumptions and beliefs in light of the information currently available to us and are made as of December 5,
2017. Actual results and the timing of events may differ materially from those anticipated in the forward-looking
information as a result of various factors. Information regarding our expectations of future results, performance,
achievements, prospects or opportunities or the markets in which we operate is forward-looking information. Statements
containing forward-looking information are not facts but instead represent management’s expectations, estimates and
projections regarding future events or circumstances. Many factors could cause our actual results, level of activity,
performance or achievements or future events or developments to differ materially from those expressed or implied by the
forward-looking statements.
See “About this Prospectus – Forward-Looking Information” and “Risk Factors” in the Company's final prospectus filed in
connection with its initial public offering on October 18, 2017, which is available on SEDAR at www.sedar.com, for a
discussion of the uncertainties, risks and assumptions associated with these statements. Readers are urged to consider
the uncertainties, risks and assumptions carefully in evaluating the forward-looking information and are cautioned not to
place undue reliance on such information. We have no intention and undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, except as required by
applicable securities law.
OurStory
Born in 1973
Roots was founded by
Michael Budman and Don Green
• Created an enduring lifestyle brand
that captured the essence of the
Canadian Open Air
• Founder-led for 43 years with each
founder running a distinct division
• Apparel/Accessories
• Footwear/Leather
Roots Today Is A Successful Company
Global Distribution
116 Canada and 4 U.S. corporate stores109 Taiwan and 29 China partner-operated stores
eCommerce ships to over 50 countries
$307MM Sales
$48MM Adjusted EBITDA(1)
LTM 10/28/2017
Seamless Omni Channel
87% DTC 13% Partners and other
LTM 10/28/2017(3)
RichHeritage
44 years of
stories and
experience
SynonymousWith Canada & The Open Air
99% national
aided brand
awareness
Iconic ProductLeadership
Premium apparel,
leather, accessories
and footwear
Relentless Customer Focus
Insights drive designs and
elevated brand
experiences
Globalin Reach
29% of system-wide
sales generated
outside of Canada(2)
Ou
r Sto
ry
Note:
See Disclaimer – Non-IFRS Measures and Retail Industry Metrics.
All figures discussed on this presentation are stated in $CAD millions, unless otherwise noted.
(1) A reconciliation of historical Adjusted EBITDA to net income appears in the Appendix to this presentation.
(2) In Fiscal 2016.
(3) Channel mix as a percentage of sales.
Strong Financials
Brand potential being unlocked through refined growth strategy and
operational investments
Unlocking The Brand & It’s Business Potential Ou
r Sto
ry
Modernizing The Brand Transforming The Business
Strategic investments leave Roots well-positioned for accelerated growth
Very early in the process of leveraging strategic investments
3 clearly defined consumers
Staying true to the brand’s lasting values
Brand Inspiration: connection to the Open Air and
a healthy lifestyle
Reinventing the brand experience in stores and
online
Heightened brand communication to engage new
consumers
Final brand positioning remains under
development for new markets
Senior Management Team established to operate the
business
Further enhancing existing omni-channel capabilities
United Brand Range: simplifying the business by
editing and then amplifying key products and
categories
Creating a scalable infrastructure: POS, HRIS,
Planning, Roots.com
True business planning, analysis and enhanced
reporting in place to support investments
Improving store operations through enhanced training
and technology
Accelerated Growth Is Underway
Gro
wth
Stra
teg
ies
UBR Unlocks Future Potential and
Simplifies the Business
Note:
See Disclaimer – Forward-Looking Information.
(1) SKU reduction by the end of Fiscal 2018 relative to Fiscal 2016.
(2) UBR refers to United Brand Range initiative.
Consumer-Focused
Merchandising
Simplified
Pricing Tiers
Formalized
Sourcing Strategy
Defined Go-To-Market
Calendar
~40% SKU reduction by the end of Fiscal 2018(1)
Expect operational and cost efficiencies through increased unit volumes to fewer factories
Our Growth StrategiesMultiple levers will drive growth
Gro
wth
Stra
teg
ies
1 Leverage operational investments
2 Pursue continued growth in Canada
3 Strategically Expand U.S Footprint
4 Expand in international markets
5 Deepen our offering in leather and footwear
Gro
wth
Stra
teg
ies
1 Leverage Operational InvestmentsTransformational initiatives across our business
Leadership
Functional expertise and operational experience
Investments already made
Merchandising
Developed consumer-focused strategy
Store productivity
Analytical, data-driven approach to portfolio optimization
E-commerce
Improving our online storefront
Accelerated future growth
Comparable sales growth
Margin expansion
+
Gro
wth
Stra
teg
ies
2 Pursue Continued Growth in CanadaExpand omni-channel productivity and whitespace opportunities
Note:
See Disclaimer – Forward-Looking Information.
(1) Historical marketing investment and Fiscal 2019 target as a percentage of sales. Increased marketing spend will also support growth outside of Canada.
(2) SKU reduction by the end of Fiscal 2018 relative to Fiscal 2016.
(3) Fiscal 2014 to Fiscal 2016.
(4) Target of 26-30 renovations or expansions and 8-10 new stores between Q4 2017E and the end of Fiscal 2019.
Amplifying Brand
Communication
Leveraging
UBR
E-commerce
Enhancements
Store
Optimization
Grow Our
Store Network
<2% 4% ~40% 44% 26 - 30 8 - 10Investment(1) Investment(1) SKUs reduction(2) Historical sales CAGR(3) Existing stores by Fiscal 2019(4) New stores by Fiscal 2019(4)
Leverage our High-impact collections, Enhancing online Implement our proven Grow our presence coast-
exception brand simplified pricing tiers and shopping capabilities and playbook and updated to-coast in premium street
awareness consistent presentation streamlining connectivity retail concept and top-tier mall locations
Strategically invest in Drive frequency of customer Drive traffic and Target payback period Target payback period
integrated marketing to purchases and increase conversion across our of less than three of less than two
drive product demand units per transaction omni-channel platform years per store years per store
Majority of expected sales growth through the end of Fiscal 2019 driven by core Canadian business
Gro
wth
Stra
teg
ies
3 Strategically Expand U.S. Footprint
Note:
See Disclaimer – Forward-Looking Information.
(1) In Fiscal 2016.
High-potential markets under consideration Market development strategy
Long history of
organic demandE-commerce
sales in all 50 states(1)
Demographic
research Grow Roots seeding and digital activations
E-commerce customer acquisition and loyalty program
Retail stores to boost affinity and gain foothold as beacons
and commercial hubs for the brand
10 – 14 new stores by the end of Fiscal 2019
Guiding principles and products resonate with customers
Close proximity to existing infrastructure
Actionable leases for desired locations
Singapore and
Malaysia
Rest of
World
Plan in place with
our current partner
to establish presence
Evaluating 12 markets
for longer-term development
with new partners
Gro
wth
Stra
teg
ies
4 Expand in International MarketsDevelop presence in existing and new markets
Note:
See Disclaimer – Forward-Looking Information.
All figures discussed on this presentation are stated in $CAD millions, unless otherwise noted.
Opportunity for an additional 20 – 25
partner-operated stores by the end of Fiscal 2019
Continue to drive e-commerce penetration
Taiwan and China
109 partner-operated stores in Taiwan and 29 in China
Long-standing partnership with Branded Lifestyle
$107MM in system-wide sales in Fiscal 2016
Wholesale and royalty revenue streams
Stores designed to replicate Canadian retail experience
Increase penetration in existing markets
Market Assessment Criteria
Large opportunity size, aligned cultural values, strong
connection to the open air and seasonal relevance
Strong local operating partners with established
infrastructure and retail expertise
Local marketing supported by new go-to-market toolkit
Expand in additional informational markets
Gro
wth
Stra
teg
ies
5 Deepen Our Offering in Leather and
Footwear
Elevate Leather Goods
Part of our DNA
Leverage longstanding genuineleather credentials
Modernizing the range ofour leather goods
Leathercustomization
Expand Footwear
Where Roots started
Cornerstone product
category potential
Significant footwear experience
among management
Best-in-class design and
manufacturing partner
Note:
See Disclaimer – Forward-Looking Information.
Financial Outlook
Adjusted
EBITDA (1)
Sales
Pro Forma
Adjusted Net
Income (1)
($ in millions)
Historical Financial Performance
$36 $38 $42
$61 - $68
FY2014A FY2015A FY2016A FY2019E
$17 $20 $21
$35 - $40
FY2014A FY2015A FY2016A FY2019E
$217 $256 $282
$410 - $450
FY2014A FY2015A FY2016A FY2019E
Outlook
Note:
See Disclaimer – Non-IFRS Measures and Retail Industry Metrics.
See Disclaimer – Forward-Looking Information.
All figures discussed on this presentation are stated in $CAD millions, unless otherwise noted.
(1) A reconciliation of historical Adjusted EBITDA and historical Pro Forma Adjusted Net Income to net income appears in the Appendix of this presentation.
Strong
momentum
across channels,
geographies and
products
Accelerating
earnings growth
leveraging
transformational
operational
investments
Financial OutlookStrong performance and leveraging transformational investments
to drive accelerated results
Financial Outlook Through 2019Two thirds of the revenue growth coming from Canada
29 %
66%
5%
Percentage of revenue per region
Note:
See Disclaimer – Forward-Looking Information.
(1) Fiscal 2016 to Fiscal 2019.