today’s store front - verkkokauppa.com · qliro group (swe), etailer, 2014 14.2% 14.3% 33.5%...
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TODAY’SSTORE FRONT
RETAIL IS GOING ONLINE. COME ALONG.
Verkkokauppa.com Oyj Q4/2014, 13.2.2015, Samuli Seppälä, CEO
Questions during presentation - [email protected]
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Continuing strong sales growth - boosted by good development in December while retail sector and more product categories are going online.
Verkkokauppa.com Q4 sales +15.3%
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Retail is going online - Q4 sales +15.3%
E-commerce is natural development andevolution of retail business .
Why are consumers buying online?
• E-commerceofferscustomerslower prices enabledbylowerfixedoperatingcosts.
• Wider selection, without need to keep everything in stock and needing less capital.
• Quicker and easier way of purchasing andfindinginformation.
• Notallretailbusinesscanbeprofitableonline. €>0?
”15€ avg. savings
per 100€”
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• Revenue was 86.6 (75.1) million euros, +15.3%• Grossprofitwas13.2(11.9)millioneuros,+10.4%• Grossmarginwas15.2%(15.9%)ofrevenue
• Personnelexpenses5.7(4.6)million,+22.7%• Depreciationandamortiz.0.3(0.2)million,+11.7%• Otheroperatingexpenses4.5(3.8)million,+18.7% • EBITDAwas3.0(3.5)millioneuros,-15.2%• Operatingprofitwas2.7(3.3)millioneuros,-17.0%• Operatingprofitwas3.2%ofnetsales(4.4%)
• Netprofitwas2.1(2.0)millioneuros,+6%• Earningspersharewere0.28(0.38)euros
• Board of directors proposes dividend of 0.85euro(0.04)persharetoAGM.
Verkkokauppa.com Q4 sales +15.3%
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• Revenuewas275.8millioneuros,+15.9%• Grossprofitwas42.6(37.4)millioneuros,+14.0%• Grossmarginwas15.4%(15.7%)ofrevenue
• Personnelexpenses18.8(16.4)million,+14.4%• Depreciationandamortiz.1.0(0.9)million,+8.3%• Otheroperat.expenses15.5(13.5)million,+14.6% • EBITDAwas8.4(7.5)millioneuros,+12.0%• Operatingprofitwas7.5(6.6)millioneuros,+12.5%• Operatingprofitwas2.7%ofnetsales(2.8%)
• Netprofitwas4.5(4.2)millioneuros,+6.8%• Non-recurring items relating to the IPO decreasednetprofitby1.9millioneuros.• Earningspersharewere0.64(0.80)euros
Verkkokauppa.com 1-12/2014 +15.9%
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Verkkokauppa.com Q4/2014main sales growth drivers
• Retail going online• Appliances, phones and televisions• Bolder, growth oriented pricing
• 22yearsofexperienceandvisibility• NASDAQ First North -publicity• Brand marketing increased
Once again, nearly all main categories hadsalesincreaseduringQ4,withoutany new main categories being launched during this quarter.
Finnish consumer electronics market was veryweakinQ4,change-3.8%(GfK),butalsowholeretail sector (w/o cars) continued to decline,being -1.6% in December (Statistics Finland).
Q4 +15.3%
Q1/13Q2/13Q3/13Q4/13Q1/14Q2/14Q3/14Q4/14
60.6mEUR
60.6mEUR
75.1mEUR
57.1mEUR
57.0mEUR
48.8mEUR
Revenue
68.0mEUR
86.6mEUR
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Verkkokauppa.com’s sales margin and fixed costs
Verk.com 2013
(sales +6%)
Verk.com 2014/Q1
(sales +6%)
30
25
20
15
10
5
0
15.7%
12.6%
16.7%
12.9%
Verk.com 2014/Q2
(sales+24%)
15.5%
13.6%
EBITDA 3.2%
EBITDA 2.0%
EBITDA 3.9%
Verk.com 2014/Q3
(sales+19%)
14.6%
11.8%
EBITDA 2.8%
Verk.com 2014/Q4
(sales +15%)
15.2%
11.8%
EBITDA 3.4%
Verk.com 2014
(sales +16%)
15.4%
12.4%
EBITDA 3.1%
”Long term low prices enabledbylowfixedcosts”
Sales margin% Fixed costs% of sales
Sources: Statistics Finland, Soliditet and D&B. Numbers are presented as percentages of the total revenue (including sales and other revenue). Sales margin includes changes in the inventory and outside services.
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Verkkokauppa.com’s sales margin and fixed costs
Retail in Finland(w/o cars) 2013(39B€)
29.1%
25.7%
Sales margin% Fixed costs% of sales30
25
20
15
10
5
0Verk.com 2014
(sales +16%)
15.4%
12.4%
EBITDA 3.1%
EBITDA 3.5%
Stockmann (FIN), 2014
46.6% 47.2%
Amazon (USA) etailer,2014
29.5% 29.3%
Qliro Group (SWE),etailer,2014
14.2% 14.3%
33.5%47.3%
Anttila (FIN), 2013
”we see additional opportunities particularly in consumer electronics retail as department stores are discontinuing
their sales of consumer electronics in Finland”
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Verkkokauppa.com’s Q4/2014 fixed costs development
• Longtermlowpricesenabledbylowfixedcostsisoneofthekey growth elements for any e-commerce, including Verkkokauppa.com.
• Verkkokauppa.com’sfixedcosts%(otheroperatingcosts+personnel costs)increased+20.9%inQ4being11.8%ofrevenue(11.2%).
• Increases in personal costs, because of new personnel for planning of newproductcategories,consumerfinancingservicesandincreasesin personnelatIT-department.Q4personnelcosts+22.7%.
• Brand marketing and premises costs increased.
• Full2014fixedcosts%was12.4%compared 12.6%in2013-stilllowfixedcosts%compared to other etailer or retailers.
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Verkkokauppa.com Q4 balance sheet• Inventory30.9(23.2)millioneuroson31.12.2014.• Cashflow1-12/2014was+19.1(-2.2)millioneuros.• Capex1-12/2014was0.7(0.3)millioneuros.
• Cash35.3(22.7)millioneuroson31.12.2014.• Interestbearingdebt2.0(7.2)millioneuroson31.12.2014.• Banklimits7.25millioneuros(notbeingutilizedon31.12.14).
The board of directors proposes dividend of 0.85 euro (0.04) per share to annual general meeting.
• Total7510855shares*0.85euro=6.4millioneurosindividends.• Distributablefunds(31.12.14)were36.5millioneuros.• Earningspersharewere0.85(0.91)eurosin2014, excludingnon-recurringitems(mainlyIPO).
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Finnish e-commerce visit comparison
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Largest 2015 (public) projects• CompanyiscurrentlyrecruitingmanagerforC2C(consumer-to- consumer)marketplace.C2Cisallaboutattractingmoretraffic, increasing add-on and sales of new products and improving customerloyaltyandexperience.
• Current logistics development is mainly focusing in adding possibility to add more (leased) warehouses or direct shipments from suppliers. Flexibilityisthekey.Firstdirectshipmenttrialsarebeingdone.
• Ownconsumerfinancingandcreditscoringservicesarestillbeing developed. First focus is in credit scoring and fraud detection services.
• Development of better sales, inventory and availability forecasting engines,bothforinternal(purchasing)andexternaluse. Newend-useravailabilityforecastingenginelaunchedinJanuary 2015.
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New categories in 2015• ”Probablyalwayscheaperprices”,efficientslogisticsandleading lowfixedcostsbasearethefoundationforourplansfor introducingnewproductcategoriesduring2015.
• LaunchedthreenewmaincategoriesinJanuary2015- babies and family, tools (diy) and luggage and travel. GPS/Sports -category has been renamed as Sports and Nutrition.
• Nowtotal25maincategoriesandover50000articles.
• Newcategorieswillnothavesignificantshorttermimpactonsales orprofitability.
• Looking also for stronger sales growth in our own brands and products (private labels) -typicallyofferingbettersalesmargin.
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Industry average product margins Fixed costs% of sales
Sales margin%• MobilePhone5%• Tablet Computer 10%• Television20%• WashingMachine25%• HammersandDrills25%• SportingEquipment/Watches25%• Protein Bars 30%• BabyStrollersandSafetySeats40%• Private Label Cable 50%• Clothing 50%
->Changeinourproductsalesmixhasaneffectinsalesmargin%.-> Financing Services typically increase sales margin% by 3-6%-> Verkkokauppa.com has its own ”positive payment behavior” database
->Vendorssupportlargeofflineormultichannelretailerswithestim.2-10%kickbackcomparedpureonlineplayers.
Retail in Finland(w/o cars) 2013(39B€)
29.1%
25.7%
30
25
20
15
10
5
0Verk.com 2014
(sales +16%)
15.4%
12.4%
EBITDA 3.1%
EBITDA 3.5%
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Medium-term targetsThecompanyretainsitsexistingtargets:
• The company strives to grow faster than its operating market and targets an annual revenue growth of over 10 per cent in the medium-term.
• The company’s objective is to improve its EBITDA margininthemedium-termcomparedtothelevelin2013.
•Thecompanystrivestosecureasufficientequityratiotofinancegrowthofitsbusinessandtargetstomaintainanequityratioofover25percenttakinginto consideration the nature and seasonality of the company’s business.
Business outlookTheCompanyexpectsnetsalesandoperatingprofittogrowduring2015comparedtopreviousyear.
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Largest owners on 31.1.2015 Shares %1SeppäläSipiSamuli 3747916 49,9002RiteVenturesFinlandAb 769596 10,2463KeskinäinenEläkevakuutusyhtiöIlmarinen 384788 5,1234KeskinäinenTyöeläkevakuutusyhtiöVarma 344322 4,5845Op-Delta-Sijoitusrahasto 235278 3,1336Keva 168000 2,2377SkogbergVilleJohannes 105711 1,4078HartwallCapitalOyAb 82710 1,1019SijoitusrahastoDanskeInvestSuomenPieny. 82000 1,09210Op-SuomiPienyhtiöt 76000 1,01211SijoitusrahastoEvliSuomiPienyhtiöt 70829 0,94312SrDanskeInvestSuomiYhteisöosake 60000 0,79913FonditaEquitySpicePlaceringsfond 45000 0,59914KeskinäinenVakuutusyhtiöKaleva 44000 0,58615ThominvestOy 39000 0,519
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Share development (8.2.2015)
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Q&AUpcoming events:• AGM,Wednesday18thofMarch2015• Q1/2015,Friday24April2015• Q2/2015,Friday7August2015• Q3/2015,October232015
Quick links:• Investors English Summary - www.verkinvest.com• Company Releases mailing list in English - www.joinverk.com• Company Investor Webcasts - www.verklive.com
Contacts:• Samuli Seppälä, CEO, [email protected]• Jussi Tallgren, CFO, [email protected]• [email protected]
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TODAY’SSTORE FRONT
RETAIL IS GOING ONLINE. COME ALONG.
Thank you!