Super Retail Group

Results for the 52 weeks to 30 June 2012

Peter Birtles, Managing DirectorGary Carroll, Chief Financial Officer

22nd

August 2012

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Group Highlights 

• Results continue to demonstrate the strength of the Group’s resilient business model –

consistently 

delivering high earnings growth in both strong and weak retail markets

• Results driven by contribution from new stores, solid like for like sales growth and strong improvement in 

gross margins

• Results reflected continued strong performance of Supercheap Auto and BCF Boating Camping Fishing and 35 

weeks contribution from Rebel Sport/Amart All Sports

• Rebel/Amart initial performance ahead of expectation, integration and synergy benefit plan on track

• Strong operating cash flow performance driven by working capital

management

• $64 million invested in new and refurbished stores

• Continued improvement in Team Member retention

• Post tax return on capital at 18.8% continues to be significantly ahead of 15% target

• Group NPAT up by 50%

• Group EBIT up by 61%

• Group Sales up by 51%

Like for Like Sales Growth

SCA 12 consecutive halves greater than 3%BCF Average growth of over 6% over 12 consecutive halvesRebel Strong turnaround post acquisition

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Performance Trends

June06

June07

June08

June09

June10

June11

June12

526 625 715 829 9381092

1654

Sales ($m)

June06

June07

June08

June09

June10

June11

June12

28.9 38.1 45.7 55.1 65.887.5

140.7

EBIT ($m)

June06

June07

June08

June09

June10

June11

June12

15.520.9

24.229.9 34.0

40.646.1

EPS (cents) *

June06

June07

June08

June09

June10

June11

June12

11.7 13.9 14.1 15.6 16.8 17.5 18.8

Post Tax ROC (%)

* - historical EPS adjusted to take into account the bonus element in the 2011 entitlement offer

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Group Results

• Solid sales growth in both SCA and BCF 

through both new store and LFL growth

• 35 week contribution from Sports Retailing 

division

• 2011/12 Group NPAT impacted by:– $11.1m transaction costs and $0.4m post tax 

integration costs relating to the Rebel Group 

acquisition

– $1.7m post tax FCO start‐up costs

• PCP Group NPAT impacted by:– $1.3m Ray’s Outdoors integration costs– $0.6m one‐off corporate development costs

• Operating Cash Flow includes funding of 

$45m for business acquisition costs and new 

and refurbishment store working capital and 

opening costs

• Net Debt increased due to Rebel acquisition, 

however capital structure remains 

conservative

• Full Year Dividend increased to 32.0cps, 

representing underlying 65% payout ratio

2011/12$m

Change on pcp

Sales 1,654.1 51.4%

EBITDA 176.1 59.7%

EBIT 140.7 60.8%

NPAT 83.5 50.2%

Net External Debt

341.0m +267.5m

Dividend 32.0c +3.0c

Operating Cash Flow

135.2 +$64.3m

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Divisional Results

2011/12 2010/11

Sales$m

EBIT $m

Sales $m

EBIT $m

Auto & Cycle Retailing 755.8 72.2 708.2 63.6

Leisure Retailing 456.3 32.8 384.1 32.0

Sports Retailing 441.9 54.5

Group Costs* (18.8) (8.1)

Total Group 1,654.1 140.7 1,092.3 87.5

* ‐

Group Costs include:• $11.1m transaction costs relating to the Rebel Group acquisition,• $0.6m integration costs relating to the Rebel Group acquisition• $1.9m in unutilised DC, store and support office space costs retained at Group level,• $0.8m in multi‐channel development costs and • $4.4m public company costs

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Auto and Cycle Retailing

• Continued strong performance from Supercheap 

Auto business ‐

6th

successive year of > than 10% 

EBIT growth 

• SCA maintained momentum in LFL sales growth 

through the year building on 4.8% growth in PCP

• Growth driven by increase in customer numbers, 

average items per transaction and average item 

value

• Further improvements in gross margin driven by 

trading terms, overseas sourcing, private brand 

development, product quality, supply chain 

efficiencies and stronger A$

• 9 new stores, 2 closures, 41 stores refurbished 

including 3 as Superstores –

281 stores at 30 June

• Cycle performance continues to track below 

expectation driven by low sales per square metre 

• Strong growth in gross margin through own brand 

bicycles and supply chain initiatives

• 1 store closure – 19 stores at 30 June

• Cycle business to be transferred to Sports Retailing 

division and some larger stores converted to Amart 

All Sports stores

2011/12$m

change on pcp

Auto SalesCycle Sales

Auto LFL sales growthCycle LFL sales growth

732.3

23.5

6.8%

4.0%

3.9%

(3.2%)

Auto Gross margin % Cycle Gross Margin %

43.2%

41.2%

+0.3%pts

+6.4%pts

Auto EBITDAAuto EBITDA margin %

94.712.9%

9.5%+0.3%pts

Auto EBIT 78.1 10.0%

Auto EBIT margin %

Cycle EBIT

10.7%

(5.9)

+0.3%pts

+20%

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Leisure Retailing

• Overall result reflected strong sales and margin 

growth at BCF, offset by FCO start‐up investment 

and initial trading losses

• 13 new BCF stores, 7 new Ray’s Outdoors stores 

and 5 closures during the year to bring total stores 

to 91 and 52 respectively, with FCO launch 

culminating in 13 stores by 30 June

• Like for like sales growth in BCF in high single digits  

‐

with growth in customer numbers, units sold and 

average unit value driven by new product 

introduction and localised ranging 

• Like for like sales growth in Rays Outdoors in low 

single digits with growth in customer numbers and 

average item value partly offset by a decline in 

units per transaction –

pleasing performance of 

apparel  and increased 4WD ranging partly offset by 

decline in sales of outdoor furniture and BBQs

• Gross margin reduction due to increased mix of 

international branded products and aged stock 

clearance in Ray’s Outdoors partly offset by growth 

at BCF driven by ranging and exclusive products

• FCO performance tracking behind initial 

expectations with slower sales in Autumn and early 

Winter offsetting good initial launch –

conversion 

numbers and club membership ahead of 

expectation but offset by lower customer numbers

2011/12$m

change on pcp

Sales

LFL sales growth

456.3 18.8%

6.5%

Gross margin % 44.5% -1.2%pts

EBITDA (excl FCO)

EBITDA margin (excl FCO)

EBIT (excl FCO)

EBIT margin ( excl FCO)

EBIT

46.2

10.3%

37.0

8.3%

32.8

18.8%

+0.2%pts

15.6%

-%pts

2.5%

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Sports Retailing

• Results consolidated from 30 October 2011• Sales performance has been strong in both Rebel 

and Amart All Sports since acquisition with like for 

like sales growth of 5.8% compared to ‐3% in the 17 

weeks prior to acquisition

• Like for like growth achieved through growth in 

customer numbers and conversion partly offset by 

lower average transaction values ‐

driven by 

improved in‐stock position, team focus and 

clearance of aged stock

• Gross margin performance– Supply chain costs reflected in Gross margin to 

be consistent with rest of Super Retail Group

– Underlying gross margin in line with prior 

comparative period  despite the clearance of 

aged stock during the period

– Provisions against aged inventory in 

acquisition balance sheet to achieve standard 

margins on clearance

• Aged stock reduced from 18% at acquisition to 5% 

at the end of June

• $5m synergy target achieved in 11/12, primarily 

driven by scale benefits in freight and marketing 

and savings in executive costs – on track to deliver 

$10m annualised by end of 12/13.

2011/12$m

change on pcp

Sales

LFL sales growth

441.9

5.8%

Gross margin % 46.8%

EBITDA

EBITDA margin %

EBIT

EBIT margin %

62.9

14.2%

54.5

12.3%

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Group Cash Flow

• New and refurbished store investment of $64m 

being fully funded out of operating cash flows

• Operating Cash Flow ‐Store set up costs & 

inventory:

– Auto & Cycle : $7.7m– Leisure Retailing : $23.7m– Sports Retailing : $2.0m

• Investing Activities ‐

New Store fit‐out:  – $2.5m SCA new stores– $9.5m in SCA and Goldcross refurbs/relocations– $4.9m in BCF new and refurb stores– $3.5m in Ray’s Outdoors new and refurb stores– $6.0m in FCO new stores– $4.2m in new and refurbished Rebel stores

• Other Capex:– $13.1m in Multi‐channel projects– $1.3m in Rebel SAP Integration– IT ‐

$7.3m vs $6.7m last year– Supply Chain ‐

$2.4m vs $0.4m– General capital projects  – $5.5m (same as pcp)

Jun 12$m

Jun 11$m

Operating cash flow

(pre store set up investment)

179.7 95.3

Store set up investment

Business acquisition

(33.4)

(11.1)

(24.4)

-

Operating cash flow 135.2 70.9

Investing activities:

- Store fitout

- Other capex

- Business Acquisition

(30.6)

(29.6)

(621.7)

(23.9)

(12.6)

-

Financing activities:

- Dividends & interest

- Ext Debt repayt/proceeds

- Equity Issues

(48.4)

287.5

328.8

(30.7)

(10.1)

2.0

Net cash flow 21.3 (4.4)

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Group Balance Sheet

• SCA average inventory is 2% higher than 

PCP, with increased stock weight of 

higher value products being partially 

offset by supply chain efficiency savings

• Average inventory per store is 4% lower 

in BCF despite the increased kayak range, 

while implementation of full range and 

increased branded products has increased 

Ray’s Outdoors store inventory by 7% on 

PCP

• Increase in Plant & Equipment primarily 

as a result of Rebel acquisition and 

ongoing capital expenditure in new and 

refurbished stores

• Net Debt increased by $267.5m as a 

result of the debt funding associated with 

the Rebel acquisition

Jun 12$m

Jun 11$m

Inventory

- Auto & Cycle Retailing

- Leisure Retailing

- Sports Retailing

169.7

157.5

89.5

165.1

127.8

-

Total 416.7 292.9

(Trade creditors) (197.9) (122.4)

Net inventory investment 218.8 170.5

Plant and Equipment 170.9 109.3

Net External Debt 341.0 73.5For

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Returns & Capital Ratios

2012 2011

EPS – reported 46.1c 40.6c

Fixed charge cover

Average Net Debt

2.03x

$300m

2.03x

$110m

2012 2011

Net debt : capital

- Headline

- Adjusted

41.4%

65.9%

19.5%

67.2%

Annualised post tax ROC

- Headline

- Adjusted

18.8%

14.5%

17.5%

14.0%

• Improvement in EPS reflects the improved 

profit performance, while fixed charge coverage 

ratio remains strong

• All cover ratios are well within covenanted 

levels

• As a result of the Rebel acquisition, the club 

bank facility has been increased to $500m, split 

between 2, 3, 4 and 5 year tranches

• While headline debt to capital was impacted by 

timing of Rebel acquisition, underlying adjusted 

ratios improved. ROC remains above targeted 

level

• Effective FX rate for the period was 1.02, up 

from 1.00 in pcp. Based on existing hedge 

position, 2012/13 full year FX rate expected to 

be around 1.02

• EPS based on statutory accounts with all other ratios  

calculated on underlying results (pre Rebel Group acqn 

costs and FCO start‐up costs)

• Adjusted capital includes leases capitalised into debt at 

6x annual charge

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INTEGRATEDMULTI – CHANNEL

Strategic Themes

ATTRACTING AND 

ENGAGING OUR 

TEAM MEMBERS

SUPPLY CHAIN AND 

INVENTORY 

MANAGEMENT

EFFICIENT AND 

EFFECTIVE 

ORGANISATION

UNDERSTANDING 

AND ENGAGING 

OUR CUSTOMERS

RANGE, BRAND AND 

SERVICE 

DEVELOPMENT

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Range, Brand and Service Development

• New stores

• Auto – Grow to 320 stores (from 281)

• Leisure – Grow to 200 stores (from 156)

• Sports – Grow to 185 stores (from 126)

•Store refurbishments

•Store resizing/relocation

•Store of the future

•On line channel development

•Customer development

•Auto Trade Direct

•Group wide: Commercial and Wholesale

Channel and Customer Development Range Development

• New product introduction

• Circa 20 to 25% of product renewed annually

• Focus on growing categories

• Private brand development

• SCA up to 40%

• BCF and Rebel/Amart up to 20%

• Rays Outdoors up to 50%

• Overseas Sourcing

• Rebel/Amart sourcing integration

•Tailoring the range to local demand

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Integrated Multi Channel Capabilities

Capabilities developed in 11/12:

•Brand websites designed for mobile devices

•Click and collect service launched in Australia and New Zealand

•Integrated on line catalogue system to order products not available in store trialled in SCA

•Group wide customer interaction centre

• SCA Club Plus+ launched NZ

Key initiatives:

•CRM system development and implementation

•CRM analytics and direct marketing

•SCA loyalty program launch in Australia / Sports loyalty program relaunch

•Store of the future – customer engagement model

Understanding and Engaging Customers Supply Chain & Inventory Management

Capabilities developed in 11/12:

•Growth in on-line business underpinned with hub and spoke distribution model

•Specific on-line channel logistics arrangements – partnership with Temando

•Scan pack supply channel developed for flow of product from China to store

•Pan China QI

• WMS upgrade and NZ DC Relocation

Key initiatives:

•Multi channel logistics network to support future growth in stores and other channels

•Group wide forecasting and replenishment• JDA pilot• GAINS development

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Supporting Capabilities

Capabilities developed in 11/12:

• Store efficiencies in Auto and Leisure• Integration of Rebel support operations

Key initiatives:

• Store productivity drive

• Value Driver analysis

• Cross functional process re-engineering

• Group wide procurement savings

• Reporting development

• Supply chain efficiencies

• Integration of SAP into Sports Retailing

Efficient and Effective Organisation Attracting and Engaging Team Members

Current Performance:

•Attraction tracking ahead of internal targets•Retention in line with internal target•Engagement above retail industry average but below internal target•Safety above retail industry average but below internal target•Succession tracking in line with internal target

Key initiatives:

•On line performance management system•Volume recruitment tools•Team member value proposition development•Employer branding and communications•Succession planning system development•OHS strategy, focus and training•Diversity action plan•Learning and development content updateF

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Looking Forward

Auto Retailing• LFL sales growth in the first 7 weeks of 12/13 circa 5%• SCA store development : plan to open 8 to 10 new stores, close 2 stores, reconfigure 5 stores as

Superstores and refurbish 23 stores during 12/13• Full year gross and EBIT margins expected to show small improvement in 12/13

Leisure Retailing• LFL sales growth in the first 7 weeks of 12/13 circa 5%• Plan to open 10 stores across the division in 12/13• Commence refurbishment of Rays Outdoors stores• Full year gross and EBIT margins expected to show small improvement in 12/13

Sports Retailing• LFL sales growth in the first 7 weeks of 12/13 circa 7.5%• Plan to open 8 - 10 stores across the division in 12/13• Commence store refurbishment program• Full year EBIT margins in 12/13 will be lower than part year margins in 11/12 due to disproportionate

Christmas benefit in 11/12 resulting from timing of acquisition

Net Debt• Planned full year capital expenditure circa $85m• Net debt expected to be circa $325m at June 2013F

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