Europris September 2018 Norway’s leading discount variety retailer
Europris at a glance Norway’s leading discount variety retailer Europris total revenue development 1 (NOKm) Undisputed market leadership 6 000 in Norway 5 000 Nationwide presence 4 000 Wide assortment at very low prices 3 000 Efficient sourcing with direct 2 000 access to end producers 1 000 25 years of continuous growth since start in 1992 - 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1. Based on chain sales 2017 (including franchise stores). Source: Europris 2
Wide assortment that taps into a large addressable market Europris has a truly mixed assortment 2 General Groceries Laundry & merchandise Pets Cleaning 3% 3% Personal Care Home & Kitchen 9% 15% Candy & Chocolate 5% Hobby & Office 7% Groceries 12% Handyman Total addressable 7% market 1 : ~NOK 280bn Clothes & Shoes House & Garden 8% 11% Electronics Travel, Sports & 9% Leisure 11% Large market Speciality Competitive flexibility retail Resilience 1. Total addressable market for packaged food, home & garden, clothing & shoes, leisure & office, health & beauty, and electronics & appliances. 2. Active SKUs year end 2014 • Source: Euromonitor, Europris 3
Europris is #1 in Norwegian discount variety retail with NO 1:1 competitor Sales in Norway 2017 (NOKm) 7 000 6 000 5 000 4 000 3 000 2 000 1 000 Entered in 2014 - 1 Tools, home, electrical, Offering Tools, car supplies, leisure Hardware, home, leisure, Discount variety non-food Clothing, textiles, Home, DIY, tools, garden, Discount variety retail DYI, garden, leisure, car products electrical, multimedia retail cosmetics, tools, home leisure, electrical supplies, clothing # of stores 253 64 89 33 360 24 24 May 2018 Assortment overlap to Europris 2 • Source: Euromonitor, Ravninfo, Europris • 1. Chain sales – including franchise stores. 2. Management estimates. 4
Discount variety retail experiences solid growth across all Western geographies 18% 22% 10% Average ‘12 - ’17 Average ‘12 - ’17 Average ‘12 - ’17 Sales CAGR Sales CAGR Sales CAGR • Source: 3i Capital Markets Day presentation 2018, 9th March 2018; OC&C research; company information; and Europris estimates • Note: Sales CAGRs for each region denotes the straight average of the respective companies highlighted for the relevant years 5
Clear long term white space opportunity and a solid near term pipeline Total: Seven new stores opened in 2018 • 257 5 Robust pipeline of new stores • 7 – Two planned for the rest of 2018 – Nine stores in pipeline for 2019 and beyond Ørnes (six stores subject to zoning process) 14 • Long-term potential of 320-330 stores defined in 2015 7 Digernes 14 19 Lillehammer 18 9 16 Rykkinn 14 25 21 9 Stokke 22 16 Lura Kjørbekk 12 More than 25k inhabitants per store 10 9 10 Between 15k and 25k inhabitants per store 15k or fewer inhabitants per store • Note: # of stores updated as per August 2018 6
Preparing the group for future growth… New warehouse: capacity 34% up; rental space 13% down Værste Øra Kampenveien Automatic high 65,000 pallets bay storage Traditional 35,700 pallets warehousing Hjalmar Bjørges vei Havnelageret 7
…while also contributing to significant gains in efficiency • Significant efficiency gains long term • OPEX in % of group revenue Expected reduction in the ratio of opex/group revenue of between 0.5-1.0 p.p 30,8 % • Several drivers of increased efficiency Lower lease expenses Reduction Reduction in transportation costs of between 30,3 % 0.5-1.0 p.p General savings from more efficient operations 29,8 % Period of transition 2017 2023 … … • Note: assuming normal course of business, and no other efficiency gains or losses affecting the ratio of operational expenses to group revenue 8
A leader in concept development – clear shop-in-shop layout and spacing • Improved “shop -in- shop” categorisation • The best of all… – Same investment as previous version Brands more prominently displayed – Limited cost for roll-out of main • elements to existing stores • “Value for money” visualisation one step up 9
Clear category strategy with specific focus on seven destination categories 7 focus “Destination” product article groups Personal Care Laundry & Cleaning 12 main categories – 7 specific • “Destination” areas to drive traffic Candy & Chocolate Petfood & Accessories • Prominent positions in stores 40% of • Proven category management sales models • Low ticket items Home Storage Socks & Underwear • Seasonal offerings across all categories underpin category strategy Candles & Napkins Seasonal 10
Significant initiatives in category development – coffee, tea and accessories 11
Significant initiatives in category development – pet food and accessories 12
Significant initiatives in category development – small textiles Building credibility in small textiles 13
Focusing on digital capabilities with E-CRM as a first step towards a full online offering TOTAL # OF INCREASED POTENTIAL SOPHISTICATION CUSTOMERS IN DECISION • MER customer loyalty MAKING programme – customer specific communication and information • Analyses of general customer behavior and shopping patterns DIGITAL MARKETING + DM LEAFLET / • Better decision making for RECEIPT / TRADITIONAL marketing, campaigns and CUSTOMER MARKETING BEHAVIOUR other customer facing activities ANALYSES 14
Launch of e-commerce in June 15
Smart sourcing is part of the Europris DNA The Competitive edge More than 25 years sourcing experience from low cost The Europris DNA countries Longstanding relationships with high quality producers Opportunistic spirit Innovative approach Unique Nordic sourcing cooperation together with Tokmanni and ÖoB Bargain hunters Relationship driven Direct access to the local end producer Highest ethical standards Strong product and production knowledge High value chain flexibility and fast execution Source: Europris 16
Achieving international competitiveness with a solid Nordic footprint “Bringing the segment’s two strong players in Norway and Sweden together, leveraging a significantly overlapping assortment, deep retail know-how and a common strategic agenda to create a robust Nordic constellation in discount variety retail” # of stores 257 # of stores 94 Retail sales 2017A NOK 5.9bn Retail sales 2017A NOK 3.6bn • Note: Numbers for Runsvengruppen converted to NOK using SEK / NOK rate as of Friday, 8 th June 2018 17
Partners with strategic potential on a European scale… The Europris & ÖoB partnership emerges among the top three major European structures in the fast growing discount variety retail sector Not PF for Hong Kong Estimated combined partnership numbers • Chain sales: • Chain sales: • Chain sales: • Chain sales: NOK 9.5bn NOK 33bn NOK 33bn NOK 4bn • EBITDA: NOK 720m • EBITDA: NOK 3.7bn • EBITDA: NOK 3.0bn • EBITDA: NOK 271m • Stores: 351 • Stores: 1,095 • Stores: 927 • Stores: 101 • 2 countries: Norway • 7 countries: Benelux, • 2 countries: United • 4 countries: Norway, and Sweden Germany, France, Kingdom and Sweden, Finland, Austria, Poland Germany Germany • Note: Combined 2017 revenue for Europris / ÖoB. Actual 2017 Adj. EBITDA for Europris and ÖoB (excluding non-recurring items). Rusta figures not adjusted for acquisition of Hong Kong in Finland 18
A low-risk synergistic partnership today – potential for true European scale tomorrow 2018 2019 2020 2021 2022 Strategic Initiatives Turnaround of Potential ÖoB exercise of option to Store initiatives acquire (incl. ÖoB 2.0) remaining 80% stake Best practice sharing Purchasing cooperation Continued store Nordic discount roll-out in Norway variety retail champion and Implementation platform established new warehouse EPR – true European acquisition scale within reach Best practice of 20% sharing ownership stake in Strategic Initiatives ÖoB 19
Creating a pan-Nordic platform in discount variety retail …with sourcing power to reflect an even larger grouping (through Shanghai JV with Tokmanni) Representing sales of NOK 17.1bn NOK 3.6bn NOK 5.9bn NOK 7.6bn 351 stores across Norway & Sweden • Note: Numbers based on each company’s 2017A revenue numbers, converted to NOK as of Friday, 8 th June 2018 20
Key investment highlights 1 Unchallenged market leader in a fast growing retail segment 2 Unique discount variety retail model 3 Impressive track record of growth, high profitability and solid cash generation 4 Strong future growth potential 21
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