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1 H I G H L I G H T S Group revenue of 69.2m, down 8.7% with five - PowerPoint PPT Presentation

Sep 26, 2023 •143 likes •265 views

H A L F Y E A R R E S U L T T O 3 1 S T J U L Y 2 0 1 6 1 H I G H L I G H T S Group revenue of 69.2m, down 8.7% with five non-contributing stores closed during the period Strong LFL performance with UK/Europe stores up 6.5%.

  1. H A L F Y E A R R E S U L T T O 3 1 S T J U L Y 2 0 1 6 1

  2. H I G H L I G H T S • Group revenue of £69.2m, down 8.7% with five non-contributing stores closed during the period • Strong LFL performance with UK/Europe stores up 6.5%. Overall retail revenue down 2.3% on a square footage reduction of 15.8% • Composite gross margin of 46.0% (2015: 45.5%) reflecting the higher proportion of retail sales within Group revenue • Loss before taxation of £7.9m, flat on last year with an improved retail performance offset by tougher trading in wholesale and licensing • Closing net cash of £7.7m (2015: £15.0m) and no debt • Continued strong performance in the first six weeks of the second half with improvement in wholesale being seen 2 2

  3. R E S U L T S S U M M A R Y Constant 6 months to 6 months to Variance currency 31 July 2016 31 July 2015 variance £69.2m £75.8m Revenue (8.7)% (10.7)% Gross margin 46.0% 45.5% Operating expenses £41.8m £45.3m (7.7)% (9.2)% £2.4m £3.0m Other operating income (20.0)% (20.9)% Loss before tax £(7.9)m £(7.9)m 0.0% +1.1% Closing net cash £7.7m £15.0m 3 3

  4. R E T A I L 16/17 15/16 Retail £m £m Revenue (2.3)% ↓ 41.6 42.6 Revenue • Gross Margin 56.3% 56.3% UK/Europe LFL up 6.5% following a strong reaction to the Spring 16 collection (H1 2015 -10.7%) Operating Loss (8.2) (11.1) • Concessions LFL up 13.9% as a result of improved merchandising mix • Overall revenue 2.3% lower due to store closures offset by a positive LFL O P E R A T I N G L O S S V A R I A N C E • Closure of five non-contributing stores during the period (four UK/EU, one NAM) Gross margin • Margin rate flat overall with Spring 16 margin up as we reduced in-season discounting and pushed sale back by three days, but impacted by higher stock clearance through outlets Selling and distribution expenses • Trading overheads reduced due to store closures. LFL overheads down 0.9% due to continued focus on cost management offset by pressure of ongoing rent and rates rises and the impact of the living wage increases 4 4

  5. R E T A I L T R A D I N G • Positive UK/EU Retail LFL of 6.5% in H1 with indicators* showing a tough High Street environment • Positive reaction to the Spring 16 collection from consumers • Ecommerce as a percentage of retail revenue increased by 420bps on the year to 26.5% as a result of targeting our customers better with an improved CRM system and increased social media activity • Mobile and tablet sales constitute 50% of UK/EU ecommerce revenue (2015: 47%) • Margin rate maintained flat on the year even though liquidating old season stock in the outlets 5 * W E E K L Y B D O H I G H S T R E E T S A L E S T R A C K E R R E P O R T 5

  6. R E T A I L S T O R E E S T A T E • Five non-contributing stores closed in the period as the store estate continues to be rationalised • Four stores in UK/EU and one store in North America • Two net concession closures in the period • Average lease length remaining of the UK/EU retail estate 3.5 years (Full Year: 4.0 years ) • Around five stores are targeted for closure in the second half • Plan to have approximately 40 French Connection stores/outlets by January 2020 in UK/Europe 31 July 2016 Change on Jan 16 Change on Jul 15 Locations sq ft Locations sq ft Locations sq ft UK/Europe Stores 55 146,868 (4) (13,701) (7) (27,292) Outlets 14 23,046 0 (215) 2 2,530 Concessions 52 34,308 (2) (1,183) (4) (2,000) Total UK/Europe 121 204,222 (6) (15,099) (9) (26,762) North America Stores 5 15,247 (1) (3,424) (5) (14,425) Total North America 5 15,247 (1) (3,424) (5) (14,425) Total Operated Locations 126 219,469 (7) (18,523) (14) (41,187) 6 6

  7. W H O L E S A L E 16/17 15/16 Wholesale £m £m Revenue Revenue 27.6 33.2 (16.9) % • Revenue overall down 16.9%, reflecting the Gross Margin 30.4% 31.6% difficult retail market conditions in both major territories throughout the period Operating Profit 3.0 5.5 • Some revenue pushed into the second half of the year due to phasing of deliveries Gross margin • Full Price reorders lower than planned, R E V E N U E V A R I A N C E additional discounting was required to clear excess stock, with gross margins impacted Selling and distribution expenses • Costs tightly controlled with LFL overheads down 2.8% 7 7

  8. L I C E N C E I N C O M E • Net income received from global licensing was 16/17 15/16 down £0.6m to £2.4m, a decline of 20.0% £m £m • Furniture licence with DFS continues to perform (20.0) % Other Operating Income 2.4 3.0 particularly well. Range has been extended as of September, driving further growth • Global fragrance licence has moved to Inter Parfums, causing a short term shortfall in income but long term benefit • US based shoe licensee filed for bankruptcy, requiring us to be conservative in our income recognition in the period 8 8

  9. O P E R A T I N G E X P E N S E R E V I E W 16/17 15/16 £m £m • Continued focus on reducing overheads across the Group Operating Expenses 41.8 45.3 7.7% • Total Group operating expenses were reduced by 7.7% in the first six months on a reported basis (9.2% at constant currency) O P E R A T I N G E X P E N S E V A R I A N C E • After adjusting for currency and store closures, underlying reduction of 1.3% • Overheads under review to ensure our cost base is right for the size of business 9 9

  10. F I N A N C I A L P O S I T I O N C A S H F L O W S U M M A R Y • 16/17 15/16 Positive cash position throughout the period £m £m • Group remains debt free and ended the half Underlying Operating Loss (7.9) (7.9) with a cash position of £7.7m (2015: £15.0m) Depreciation & store disposals 0.6 0.8 Share of JV loss 0.3 0.1 Operating Result before changes in working capital (7.0) (7.0) • Available undrawn working capital facilities amounting to circa £5.5m (Increase) in inventory (1.0) (2.0) Decrease/(increase) in trade and other receivables 1.1 (0.6) (Decrease)/increase in trade and other payables (0.7) 1.7 • Capital expenditure mainly on IT investment, Movement in working capital (0.6) (0.9) with two new store openings planned for end of year Cash flows from operations (7.6) (7.9) Capital expenditure (0.3) (0.4) Store disposal net proceeds 1.7 0.2 Income tax paid (0.1) (0.1) Other 0.0 0.0 Movement in Cash (6.3) (8.2) Opening net cash 14.0 23.2 Closing net cash 7.7 15.0 16/17 15/16 £m £m Cash High 7.7 15.0 Cash Low 4.7 10.4 Average 6.3 12.7 10 10

  11. O U T L O O K • The performance of the Spring 16 collections is clear evidence that the focus on design led product is working to move the business in the right direction • The trend in retail has continued at the beginning of the second half of the year but more importantly the wholesale business has returned to a positive position with sell through and orders improving • Still much work to do in the rest of the year to move the business forward significantly and the overall result will be dependent on the Christmas trading period but the second half of the year has started well • Continued investment in ecommerce initiatives on the back of the growth we have seen following the implementation of CRM and enhanced social media activity in the first half • Targeted retail investment – 5 stores planned for closure but new store openings planned in Manchester and London Liverpool Street for the beginning of 2017 • Continued strong performance expected from DFS together with an increase in income from the new fragrance licensee 11 11

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