introduction to footasyluminvestors.footasylum.com/~/media/files/f/footasylum... · 2018. 2....

INTRODUCTION TO FOOTASYLUMJuly 2017

FOOTASYLUM

2

Extensive retail experience amongst Executive and Non-Executive Board members

PLC BOARD

Stephen RobertsonIndependent Non-

Executive Director

Chairman of

Remuneration Committee

Brendan HynesIndependent Non-

Executive Director

Chairman of Audit

Committee

John WardleExecutive Chairman

to June 2018

Danielle DaviesChief Financial Officer

Clare NesbittChief Executive Officer

*Barry BownExecutive Chairman

from June 2018

NON-EXECUTIVESEXECUTIVE TEAM

* Barry Bown

▪ Joining company in a consulting role prior to formal appointment to the board

4

▪ Established UK retailer bringing on-trend lifestyle fashion to our

customers

▪ Target market is the 16-24 year old fashion-conscious consumer

▪ Founded by David Makin in 2005 and joined by John Wardle in

2008 – original co-founders of JD Sports

▪ Multiple routes to market

▪ Strong financial track record

▪ Proven store roll out model

▪ Strong eCommerce sales growth

▪ Multi-faceted, well funded growth strategy

Dynamic business with a differentiated proposition led by experienced retail operators

FOOTASYLUM OVERVIEW

65* stores

5dedicated

websites

Nascent

wholesalearm

78.0

110.4

147.0

61.183.2

-

2

4

6

8

10

12

-

20

40

60

80

100

120

140

160

FY15 FY16 FY17 H1'17 H1'18

EBIT

DA

(£

m)

Rev

enu

e (£

m)

Revenue (LHS) EBITDA (RHS)

KEY FINANCIALS

STORE OPENING HISTORY

2 7 10 1421 23 28 30 34

4456 *65

0

10

20

30

40

50

60

70

# st

ore

s at

per

iod

en

d

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

store estate

as of

30/12/17

* 63 of the stores are core Footasylum fascia as of 30 December 2017• Revenue in 44 weeks to 30 December 2017: £173m (2016:£128.4m), an increase of 34.7%

6

KEY STRENGTHS

YOUTHFUL AND RELEVANT CULTURE AND FOCUS

• Trend-leading – continuously identifies and drives emerging trends

• Genuinely understands the core 16-24 year old customer base

SYMBIOTIC RELATIONSHIPS

• A key route to market for global and local brands

• Enjoys preferential status as a key partner for major brands

PERPETUAL ENTERTAINMENT

• Multichannel engagement, thereby enhancing the customer experience

• Projecting the Footasylum brand (our “DNA”) across both high street and social media

CLEAR, FUNDED GROWTH PLAN

▪ Investment in eCommerce platform

▪ Strategic rollout and upsizing

▪ Wholesale distribution opportunities

YOUTHFUL, ON-TREND FOCUS

▪ Trend-leading – continuously identifies and drives emerging trends

▪ Strong understanding of the core 16-24 year old customer base

SYMBIOTIC RELATIONSHIPS

▪ A key route to market for global and local brands

▪ Enjoys favourable access to product as a key partner for major brands

CUSTOMER ENGAGEMENT

▪ Engages with customers across multiple channels, enhancing customer experience

▪ Projecting the Footasylum brand (our “DNA”) across both high street and social media

Competitive Landscape

9

Compelling and differentiated proposition

COMPETITIVE LANDSCAPE

16-24 y/o

target

audience

Young

and

fashion

conscious

Important

channel for

brand

partners

71%*

revenue

menswear

58%*

revenue

footwear

* FY17 dataFOOTWEAR FOCUSED BOTH APPAREL FOCUSED

The Products

12

Footwear is the dominant category with apparel and accessories delivering strong growth both in absolute terms and

share of revenue

PRODUCT PORTFOLIO

FOOTWEAR APPAREL ACCESSORIES

▪ A broad product range provides flexibility and optionality

▪ Higher margin apparel and accessories increased in overall share over the three years to February 2017, accounting for 42% in FY17

▪ Strong growth across categories reflects Footasylum’s ability to identify and deliver in-demand product

32%CAGR

46%CAGR

43%CAGR

62% 63% 58% 34% 34% 38% 4% 3% 4%

of total revenue

49

70

85

-

10

20

30

40

50

60

70

80

90

FY15 FY16 FY17

Reven

ue (

£m

)

Revenue

26

38

57

-

10

20

30

40

50

60

FY15 FY16 FY17

Reven

ue (

£m

)

Revenue

34

6

-

1

2

3

4

5

6

7

FY15 FY16 FY17

Reven

ue (

£m

)

Revenue

of total revenue of total revenue

14

Well balanced product range with no overreliance on any particular SKU

PRODUCT PORTFOLIO

Target customer audience segmented into six key tribes*

▪ age

▪ style

▪ brand preferences

Well balanced product range with no overreliance on a particular SKU

Strategically important long tail of low-volume products

Localised strategic positioning in order to satisfy local demand

Serves predominantly menswear albeit increasing focus on women

and children - supported by closely aligned key brands

▪ The first women’s only Footasylum store launched in Leeds in 2017,

followed by Manchester and Cardiff

* “Tribes” is an internal reference for subcategories within Footasylum’s target audience. Each tribe is defined by a set of individual characteristics as regards age, style and brand preference

FY17 REVENUE BY SKU

-

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% r

even

ue Top 1,000: 55%

Top 500: 41%

Top 100: 18%

Top 20: 7%

16

Increasingly strong relationships with core brands, with growing access to new product and volume

THIRD PARTY BRANDS

Sells c.300 brands across the year

▪ Leading global brands

▪ A long tail of up-and-coming, local brands

▪ Own brands

Sells “on-trend” fashion – brand composition evolves over time

to drive trends with appropriate product focus

▪ e.g. rise in popularity of athleisure has driven a significant

increase in Nike and adidas footwear

Footasylum proactively manages key supplier relationships

(including Nike and adidas who accounted for c.50% revenue in

FY17)

Incubating upcoming brands e.g. Gym King

Top 1: 27% of revenue




circa 300 brands

SELECTED BRANDS

FY17 REVENUE BY BRAND

25%

50%

75%

100%

% c

um

ula

tive r

even

ue

18

Footasylum aims to be a pioneer of fashion trends by leveraging in-house expertise

OWN BRAND AND WHOLESALE

In-house developed own brands address trends and augment third

party branded ranges

▪ In-house design function facilitates shorter lead times from concept to

shop floor

▪ Manufacturing partners in Turkey, China, Hong Kong and Dubai

Launched dedicated wholesale platform in March 2017

▪ Distributes Footasylum’s established stable of own brands

▪ Long term value creation opportunity

Lower gross margin / higher contribution model compared to

retailing

Kings Will Dream first own brand to be distributed wholesale

▪ Contract signed with ASOS

▪ 89 agreements in place as of 25 January 2018

Substantial opportunity

Social and direct

to consumer

Footasylum

groupWholesale

CREATE BRAND

STORY AND

FOLLOWING

GRANT “EXCLUSIVE”

ACCESS TO

FOOTASYLUM

ESTABLISH BRAND

LONGEVITY

DISTRIBUTION CYCLE OF OWN BRANDS

SELECTED OWN BRANDS

Routes to Market

21

Proven store rollout model and track record of executing successful store openings within the current infrastructure

STORE ESTATE AND ROLLOUT

65* - strong store estate (63x Footasylum, 1x Drome and 1x

7Liverpool)

Management targets payback inside 24 months

▪ Average since FY15: 18 months

Store sizes vary from 1,450 sq.ft. to 9,400 sq.ft. selling space

Predominantly high street locations

Regional

shopping

centre

12 stores

Major city

15 stores

Secondary city

9 stores

Town

21 stores

Retail park

8 stores

STORE CATEGORIES

STORE ROLLOUTEXISTING STORE ESTATE

Scope for at least 150 stores in the UK

Target store profile:

▪ 3,000 sq.ft. to 10,000 sq.ft.

▪ Key cities, malls, mega stores

▪ Eight to ten stores per annum

Regimented and thorough new store appraisal process

▪ Healthy pipeline of new properties plus up-sizes and refits of

existing stores

▪ As of 30 December 2017, 9 stores opened FY18.

Ongoing refurbishment programme targeting:

▪ Opportunity for 15-20 upsizes within existing estate

▪ Recent Leeds upsize has outperformed expectations

▪ Womenswear presents growth opportunity

* as of 30 December 2017

23

Strong-performing store estate

STORE PERFORMANCE

FY17 REVENUE PER STORE

FY17 CONTRIBUTION PER STORE

Immature stores

Immature stores

All stores opened since inception (except Oxford Street, London and the first ever store in Wilmslow) provided a positive contribution in FY17*

*Mature stores only

25

33%27% 23% 18%

49% 60% 68%69%

18% 13% 9%7%

6%

-

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY15 FY16 FY17 H1'18

% s

essio

ns

Desktop Mobile Tablet App

18

31

42

-

5

10

15

20

25

30

35

40

45

FY15 FY16 FY17

Inte

rnet

reven

ue

£m

+55% CAGR

Internet represents the largest single “store” with 2-yr revenue CAGR of 55%

ECOMMERCE

INTERNET REVENUE

TRAFFIC SPLIT BY SOURCE

▪ Dedicated sites for each fascia (and apps for two), and Kings Will

Dream direct to consumer site

▪ Dynamic, content-rich site aligned with social media channels

▪ Platform for testing new products / brands ahead of rolling out across

the store estate

▪ Ecommerce accounted for 29% of revenue in FY17

▪ Strategic goal for eCommerce to account for 50% of revenue in the

medium term.

▪ Low returns rate (c.7% of store orders and c.11% of web orders)

▪ Opportunities include:

▪ Marketing

▪ Technology

▪ improvements to drive conversion

▪ International

▪ multi-currency / multi-language websites

Note: for FY15 – FY17 data, app traffic was included within mobile

26

INFRASTRUCTURE TO DELIVER GROWTHTICS

TECHNOLOGY

▪ Improve current systems to support medium term growth

WAREHOUSING FACILITIES

▪ Circa 277,000 sq. ft. distribution centres

▪ 24/7 shifts

▪ Nightshift picking to facilitate next day shipments for store sales up to 10pm and

midnight for web orders

▪ Sufficient capacity to deliver planned growth for the next three years

LOGISTICS

▪ Store deliveries three to seven days per week

▪ Pool of couriers deliver online orders in the UK and internationally

Financial Information

28

Strong revenue growth profile, benefitting from significant operational gearing within the cost base

HISTORIC P&L SUMMARY

▪ Strong revenue and EBITDA growth across the historical trading period

▪ Trading in H1’18 in line with expectations

▪ Gross margin movement due to clearance of ageing stock by the merchandising team

£'00052 weeks ended 22

February 201553 weeks ended 28



August 201626 weeks ended 26

August 2017

Revenue 78,011 110,440 146,963 61,125 83,173

Revenue growth % 41.6% 33.1% 36.1%

Cost of sales (42,504) (61,959) (79,499) (33,290) (45,922)

Gross profit 35,507 48,481 67,464 27,835 37,251

Gross margin % 45.5% 43.9% 45.9% 45.5% 44.8%

EBITDA 2,206 6,138 11,228 3,327 4,359

EBITDA margin % 2.9% 5.6% 7.6% 5.4% 5.2%

Profit before tax 392 3,584 8,140 2,000 1,742

29

Cash generative and well placed to fund future growth

HISTORIC CASH FLOW SUMMARY

* Includes a £2.4m VAT payment and investment in stock for growth

£'00052 weeks ended 22




August 201626 weeks ended 26

August 2017

EBITDA 2,206 6,138 11,228 3,327 3,778

Loss / (gain) on disposal of tangible assets 27 6 20 22 (1)

Working capital (555) (7,888) 3,100 582 (4,032)*

Corporation tax - 110 (1,517) (296) (884)

Net cash generated from operating activities 1,678 (1,634) 12,831 3,635 (1,139)

Capex (2,579) (3,998) (5,643) (2,154) (2,572)

Interest (75) (155) (120) (78) (36)

Other - - 7 (110) 188

Change in cash (976) (5,787) 7,075 1,293 (3,559)

Net cash / (debt) (2,299) (8,086) (19,711) (25,493) (23,270)

of which preference shares / director's loan - - (22,550) (22,550) (22,550)

▪ Immediately post IPO the preference shares and directors loan were redeemed

▪ IPO raised net new funds for the company of £13m

▪ £30m RCF to help fund seasonal working capital

30

CURRENT TRADING 2018

▪ Christmas trading announcement showed YOY revenue growth for the 18 weeks to 30 December 2017,(the “Period”) 33.4% and the 44

weeks to 30December 2017 of 34.7%.

▪ All three sales channels experienced year on year revenue growth in the Period, with eCommerce accounting for a higher proportion of

total revenue than in the comparable period in the prior year.

▪ Footasylum opened six new stores during the Period, meaning that as at 30 December 2017 the Company operated 65 stores in the UK,

63 of which were the core Footasylum fascia.

▪ On track for planned store openings.

Summary

32

Established, high-performing multichannel retailer with significant, well funded growth prospects

SUMMARY

PRODUCT-LED MODEL

aims to get the right product at the right time

MULTIPLE CHANNELS

allows customers to engage across multiple touch points - 65 stores in the UK (as of 30/12/17) in addition to well invested and

rapidly growing internet sales

STRONG BRAND RELATIONSHIPS

with preferential and rising status amongst key global brands as well as extensive access to upcoming brands

WHOLESALE / OWN BRAND

enables Footasylum to quickly capitalise on market trends

STRONG FINANCIAL TRACK RECORD

with double digit growth, good margins and a healthy balance sheet

GROWTH OPPORTUNITIES

across store roll-out and resize strategy, online and wholesale

Appendices: Store Estate / Bestsellers

34

46

42

1750

3

57

491312

322

24

5527 9

26

33 4

1

40 36

7

45

8 19

43

51

1411

48

38

58

375

20

35

16

28

53

4739

54

15

59

234118

6

25

34

29

524431

1022

30

2156

32

2 59

40 36

8 21

5527

45

9

334

1

24

18

31

44

41

6

52

22

23

3010

25

1956

34

60

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

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

Wilmslow

Preston

Middlesbrough

Manchester

Solihull

Romford

Hanley

Liverpool (Paradise St)

Bolton

Westfield London

Bull Ring

Silverburn

Glasgow

Birmingham Fort

Cardiff

Leicester

Metro Centre

Bluewater

Trafford

Merryhill

Bold St, Liverpool

Stratford

Croydon

Meadowhall

Kingston

Teeside

Middlebrook

Nottingham

Birmingham High Street

Oxford St

Lakeside

Blackpool

Trafford Megastore

Drome Mcr

Wolverhampton

Leeds

Coventry

Portsmouth

Bristol

Bradford

Bromley

Braehead

Swindon

Bexley Heath

Speke

Dundee

Reading

Walsall

Glasgow Fort

Sunderland

Redditch

Lewisham

Plymouth

Newport

Wigan

7Liverpool

Carlisle

Milton Keynes

59 Blackburn

65* - STORE PORTFOLIO

60 Hull

STORE ESTATE

61 Manchester Women’s

62 Bury

63 Edge Lane

64 Broughton Park

65 White Rose

65

62

61

64

63

65

6163

64

62

* as of 30 December 2017

35

ANNUAL TOP FIVE BESTSELLERS*

FY12 FY13 FY14 FY15 FY16 FY17

APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR APPAREL FOOTWEAR

# 1

# 2

# 3

# 4

# 5

hoodie

denim

pants

pants

t-shirt

t-shirt

pants

t-shirt

pants

jacket

full suit

t-shirt

Coat / jacket

t-shirt

coat/jacket

t-shirt

hoodie

pants

pants

hoodie

t-shirt

hoodie

pants

hoodie

pants

pants

hoodie

Coat / jacket

pants

hoodie

(Hawksworth)

* With respect to gross profit value

36

DISCLAIMER

This Presentation is not an offer to buy or sell any securities. Save where otherwise indicated, the Company is the source of the content of this Presentation and, accordingly, although care has been taken to ensure that the facts

stated in this Presentation are accurate and that the opinions expressed are fair and reasonable, no representation, warranty or undertaking, express or implied, is made by any of the Company, any of its directors, officers,

employees, affiliates, advisors, shareholders or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the

Company nor any of its directors, officers, employees, affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its

contents or otherwise arising in connection with the Presentation.

The Presentation may contain forward-looking statements, which relate, inter alia, to the Company's proposed strategy, plans and objectives. Such forward-looking statements involve known and unknown risks, uncertainties and

other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. Accordingly, you should not

rely on any forward-looking statements and the Company accepts no obligation to disseminate any updates or revisions to such forward-looking statements. None of the Company, its directors, officers, employees, affiliates,

advisors, shareholders or representatives intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this Presentation or to update or to keep current any

other information contained in this Presentation. The information and opinions contained in this Presentation are provided as at the date of this Presentation and are subject to change without notice.

introduction to footasyluminvestors.footasylum.com/~/media/files/f/footasylum... · 2018. 2....

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