super retail group presentation macquarie - supercheap auto

Super Retail Group Presentation

Macquarie Securities

2013 Australian Conference

Peter Birtles

Managing Director and Chief Executive Officer

Group Structure

LeisureAuto and Commercial Sports

To provide solutions and engaging experiences that enable our customers

to make the most of their leisure time

Retail OperationsMerchandising

Marketing

12 stores290 stores 105 stores 54 stores

Group logistics

Group operations

13 stores 43 stores93 stores


Marketing


Marketing

Group Strategic Issues

Key External Issues

• Retail becoming a global market place

– Increased world class competition

– Increased consumer choice

– Global pricing pressure

• Proliferation of sales and marketing channels

• Evolution of traditional business models

Key Internal Issues

• Developing the required multi channel capabilities quickly enough and at a reasonable cost

• Underperformance of Rays Outdoors, FCO and Goldcross Cycles

• Sales per square metre across the Leisure division

• Stock turns across the Auto and Leisure • More demanding customer expectations

• Changing workforce demographics

• Technology changes

• Increase in regulatory controls

• Stock turns across the Auto and Leisure divisions

• Increasing complexity of supply chain operations

• Attracting, retaining and engaging the team we need to deliver our plans

Group Development Blueprint

Required Business Capabilities

• We will need to inspire and engage our customers around their leisure passions

TO BE ONE OF THE 5 LARGEST

AUSTRALIAN RETAIL COMPANIES

TO ACHIEVE THE HIGHEST TEAM

MEMBER ENGAGEMENT ACROSS THE RETAIL

SECTOR

TO ACHIEVE HIGHER CUSTOMER

SATISFACTION RATINGS THAN OUR

COMPETITORS

TO DELIVER LONG TERM SHAREHOLDER

RETURNS THAT EXCEED THE ASX 200

BY 5%

Our Goals

• We will need to inspire and engage our customers around their leisure passions

• We will need to understand, communicate with and influence our customers at an individual or segment level

• We will need to facilitate our customers shopping however, where-ever and when-ever they choose

• We will need to develop best in class sourcing, supply chain and fulfillment capabilities

• We will need to operate at least as efficiently and productively as our global competitors

• We will need to attract, engage and retain team members who share a passion for our products and our performance

Group Strategic Programs

Auto and Commercial – Brand, Range and Service

NETWORKEXPANSION(320 STORES)

LFL SALESGROWTH(> 3% PA)

EBITMARGIN(11%)

PRE TAXROC (> 40%)

Multi Format New Store Program :Circa 5 - 10 stores pa

Refurbishment Program- Circa 30 stores paStore of the Future trialSuperstore conversions

Multi Channel

Inventory Optimisation- Stock turn > 3

Trade Partner Collaboration- Data Sharing

(5 year goal)

Range Development- Focus on growth categories- New product introduction

Private Brand Development up to 45% of sales

Multi ChannelDevelopment

- Data Sharing - Forecasting - Inventory Funding - Performance Management - Supply chain efficiencies i

Leveraging Group Programs

Auto Trade Direct trial in NZ

Development of SRG Commercial- Petrol & convenience SCA Club +

Leisure – Brand, Range and Service Development



EBITMARGIN(11%)

PRE TAXROC (> 30%)


Refurbishment ProgramStore of the Future trial

Range Development- Boat, Motor, Camper, Trailer

Multi Channel

Inventory Optimisation- Stock turn > 3

Trade Partner Collaboration- Data Sharing

(5 year goal)


Multi ChannelDevelopment

- Data Sharing - Forecasting - Inventory Funding - Performance Management- Supply Chain efficiencies


Retail space optimisation

BCF and Rays Outdoors clubs relaunch

Rays Outdoors relaunch

FCO business improvement

Sports – Brand, Range and Service Development



EBITMARGIN(11%)

PRE TAXROC (> 21%)


Refurbishment Program- Circa 10 stores paStore of the Future trial

Range Development- Rollout of ranging strategyMulti Channel

Trade Partner Collaboration- Data Sharing - Forecasting - Performance Management- Supply Chain efficiencies

(5 year goal)

- Rollout of ranging strategy- Exclusive brands


Multi ChannelDevelopment –Group on line platform

- Supply Chain efficiencies - Inventory Allocation


Goldcross Cycles store within a store rollout

Rebel and Amart clubs relaunch

SRG Supply Chain Integration

SRG SAP ERP Integration

Customer Understanding and Experience

Objectives:

• Industry leading engaging experience for our

customers across all channels

•Seamless and integrated delivery of

products, information and services across all

channels to the customer on a 24x7 basis

•Effective loyalty programs across all

businesses underpinned by efficient CRM

• Increased understanding of customers at a

2013/14 Key Projects:

• Multi Channel Customer Charter

• Development and rollout of new loyalty clubs

for BCF, Ray’s Outdoors, Rebel and Amart

• Continued development of CRM analytics

and direct marketing capability,

• Implementation of content development

framework and content management tool

• Roll-out of common technology platform to

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• Increased understanding of customers at a

micro level

• Increased use of targeted marketing and

promotion leading to a reduction in mass

media advertising as a % of sales

• Roll-out of common technology platform to

support brand store of the future initiatives

• Common web platform across the Group

• Continued development of online channels

for all brands, including roll-out of relevant

micro-sites and interfaces with online

marketplaces

• Continued development of SCA OSCAR

(parts catalogue) solution

Supply Chain and Inventory Management

Objectives:

•Support the brands inventory optimisation

initiatives

• Development of supply chain optimisation

modelling capability

• Reduce logistics costs as a % of sales by

1%

• Promotions process efficiencies


• Roll-out of JDA forecasting and allocation

• Implementation of common replenishment

system to facilitate multi-user DC’s

• Clear, time-phased inventory targets

• Optimising domestic and international supply

methods

• Group wide purchasing

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• Improved Sales & Operations Planning

process

• Improved trade partner collaboration

• Physical infrastructure, systems and

processes to support a $3bn plus multi

channel multi brand operation

• Group wide purchasing

• 2015 DC network strategy implementation –

Sydney and Brisbane DC’s to be completed

• Group multi-channel fulfilment model

• Master Data processes and workflow

• Enhanced Group promotions planning tool

Group Operating Model & Reporting

Objectives:

•Reduce business operating costs by 2% of

sales

• More flexible and efficient reporting and

analytics

•Clearly defined accountabilities and

responsibilities for all activities across the

Group


• Store productivity

• Rapid action team to focus on sales per sqm

improvement opportunities

• Cross functional process re-engineering –

promotions and new line processes

• Procurement review

• Shared Services efficiency review

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• Improve sales per sqm through retail space

optimisation and effective space planning

• Shared Services efficiency review

• Reporting development

• Continued integration of the Sports Retailing

Division into the Group

Attracting and Engaging Our Team

Objectives:

• Increase team member retention to 75%

•70% of management positions filled internally

•Team Member engagement to 70%

•Time to fill retail vacancies below 4 weeks

•Lost time below 0.2% of total time worked

•30% of Board and senior management

positions to be held by females


• Ongoing development and roll out of team

member learning and development programs

• Ongoing development of performance

management and succession planning

• Ongoing development of the Team Member

Value Proposition

• Enhance OHS strategy, reporting, focus and

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positions to be held by females

•The Group to be widely recognised as a

preferred place to start and develop a career

in the retail industry

•To build talent pools for the position of store

manager and above

• Enhance OHS strategy, reporting, focus and

training

• Ongoing diversity policy and action plan

• HR information systems development

• Master data structure and process

New Areas of Growth

Areas being evaluated

• Development of organic opportunities – e.g., Auto Trade Direct, SRG Commercial

• Traditional or multi-channel retail (e.g., VBM Retail)

• Acquisition of businesses within existing product categories

• Acquisition of businesses in other leisure product categories

Acquisition Criteria

• Bolt-on or new market that is fragmented and greater than $2.5bn• Bolt-on or new market that is fragmented and greater than $2.5bn

• Cultural Fit – providing solutions to help customers get more out of their leisure time

• Opportunity to leverage supply chain and sourcing to drive synergies

• Non premium – non perishable

• Market leading potential

• Deliver a post tax ROC > 15% existing category, > 20% new category

Restructuring Initiatives

• Focus on Camping. Apparel, Hiking and Travel –delivering strong LFL growth in these categories

• Exiting Outdoor Furniture and Backyard Accessories and reducing BBQs

• Current aged inventory in Apparel, Footwear and Camping impacts on presentation standards

• Plan to relay store and significantly clear excess and aged inventory by Christmas 2014

• Associated costs of circa $6 million in the FY13 accounts

• Focus on the store in store model within Amart Sports• To date, five Goldcross stores converted into Amart stores

with a Goldcross Store in a Store concept• Seven additional existing/new Amart stores now have a

Goldcross store in a store• Five further stand-alone Goldcross stores have or will be

converted to other Group formats• The remaining nine stand-alone stores have or will close

and transfer to store in store concepts• Closure costs of circa $10 million will be recognised in the

FY13 accounts

Trading Update

• LFL sales up by 5.1% in the 43 weeks to 27 April (4.9% in the 17 weeks to

27 April)

• Gross margin tracking above PCP

• Full year EBIT margin expected to be circa 30 basis points higher than PCP

• One new store to date in the 2nd half and expect to close one store in the

balance of the half

• LFL sales up by 3% in the 43 weeks to 27 April (3.3% in the 17 weeks to 27

April)


Auto

Leisure

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• Full year EBIT margin expected to be circa 30 basis points higher than PCP

• Three new stores to date in the 2nd half and expect to open two stores and

close two stores in balance of half

• LFL sales up by 7.8% in the 43 weeks to 27 April (7.1% in the 17 weeks to

27 April)


• Full year EBIT margins expected to be circa 30 basis points above first half

• Four new stores and three stores closed to date in the 2nd half and expect

to relocate one store and close three stores in balance of half

Leisure

Sports

Dividends and Capital

• Dividend policy is to determine dividends in the range of 55% to 65% of

underlying profit after tax before restructuring costs

• FY13 capital expenditure expected to be circa $95 million

• Earlier than expected progress in the development of the new Brisbane

distribution centre will move circa $20m capital expenditure forward

Dividends

Capital

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distribution centre will move circa $20m capital expenditure forward

from FY15 into FY14

• FY14 capital expenditure expected to be circa $100 million

• Closing FY13 Net Debt expected to be at circa $330 million with closing

FY14 net debt at a similar level

• Net debt to EBITDA is expected to be circa 1.5 times at FY13 balance

date

Expenditure

Net Debt

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