Investor presentation September 2018 - PowerPoint PPT Presentation

Investor presentation September 2018

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Forward looking statements Forward-Looking Statements INCLUDED IN THIS PRESENTATION ARE FORWARD-LOOKING MANAGEMENT COMMENTS AND OTHER STATEMENTS THAT REFLECT MANAGEMENT’S CURRENT OUTLOOK FOR FUTURE PERIODS These expectations are based on currently available competitive, financial, and economic data along with our current operating plans and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. The forward-looking statements in this presentation should be read in conjunction with the risks and uncertainties discussed in the Pets At Home Annual Report and Accounts. 2

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Market 3

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx The UK pet market is broadly divided between product and services provision Grooming, £0.25bn Food, £2.5bn Veterinary, £2.3bn Online market is 12% of total products market Accessories, £0.85bn Source: Pets at Home and UK pet market reports, OC&C, calendar year 2017 Note: Food and accessories market data includes online spend. Food market contains Advanced Nutrition segment, which is estimated at c£350m in value. Veterinary market includes First Opinion and Specialist Referral. 4

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Pet market growth remains supportive and we are once again growing our share across all categories Pets at Home market share and share gains Market sector growth in CY 2017 c9% 8.7% Growing Growing share online share online and from and from stores stores c5% 5.1% 39% c2.5% 2.4% c2% 1.9% 16% 13% 11% Food Accessories Veterinary Grooming Food Accessories Veterinary Grooming +0.5% +1.6% +1.0% Source: Pets at Home and UK pet market reports, OC&C calendar year 2017 +0.2% Note: Food and accessories market data includes online spend. Veterinary market includes First Opinion and Specialist Referrals 5

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Strategic overview 6

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Realising our true potential as a pet care business We are here to make sure pets and their owners get the very best advice, care and products We have the benefit of a growing and resilient market FY19 is the second of our three year transition back to sustainable Group profit growth: we are targeting LFL in Retail and our Vet Group ahead of the market and low single digit Group profit growth In the vet business – focus will shift towards strategies to accelerate existing practice growth and providing funding support when appropriate Medium and longer term, we will evolve our strategic plan with a bigger focus on digital, data, more services and the store of tomorrow – strategy update with Interim financial results FY19 in November 2018 7

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Our pet care business: a unique combination of product, services and expertise 8

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Having an integrated product and services offering drives overall customer spend and frequency Vet Group VIP loyalty card data: average yearly spend of product and services customers Services £- £490 £- £76 £339 spend Store £125 £396 £195 £295 £245 spend Spend per annum (£) Store Only Store and Web Store & Web & Store & Vet & Web Store & Vet & Web & Groomer Groomer Customer type Store Vet Online Groom Customer Transactions 6 34 11 19 22 per annum 9

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Retail business 10

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Retail trade has been strong for a consistent and ongoing period Pricing has been a core driver, but doesn ’ t tell the full story Retail LFL: a result of price changes, strong product innovation & omnichannel initiatives 6.9% 6.4% 5.3% 4.5% 1.4% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 11

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Growing the Advanced Nutrition category and private label participation is a key priority for us Advanced Nutrition category FY18 growth Recent range extensions in private label 6-33% cheaper than the 6-33% cheaper than the branded equivalent, Royal branded equivalent, Royal Revenues +6.0% Canin Breed Health Canin Breed Health Nutrition 2 Nutrition 2 Volumes 1 +12.7% Private label participation +4% Total AN Revenue Total AN Revenue £99.0m £94.6m 1. Definition of volume is tonnes 2. Compares AVA Breed Health private label by Pets at Home, to Royal Canin Breed Health Nutrition prices available from both Pets at Home and other online retailers 12

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Our pricing position is now far stronger vs key online competitors, but there will always ongoing adjustments to make Pricing differential vs Amazon on products Pricing differential vs Amazon on all comparable products where we have taken price action 14.0% 25.0% Price investment has Price investment has been targeted to key 20.0% 12.0% been targeted to key areas, not all products areas, not all products 10.0% 15.0% 10.0% 8.0% 5.0% 6.0% 0.0% 4.0% -5.0% 2.0% Last 12 months Last 12 months 13

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Price investment in Advanced Nutrition (AN) has driven customer behaviours such as increased frequency and overall spend Increased overall Increased VIP Increase in VIP customer number of VIPs customer spend frequency who shop product and services 14

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Omnichannel revenue is growing at c50% and is driven by a number of strategic initiatives Customers order online for delivery c60% of omnichannel to home, or collect in-store Core online business revenues involve either a Delivery options competitive with colleague assisted sale or are online peers collected in-store Colleagues have access to the extended range through their PetPads, for products not normally stocked in-store Order in-store Customer orders completed in <2 minutes, with the option to collect the product back in-store, or be delivered to home Standard option for pet owners is to buy a multipack and remember to treat monthly Subscription for flea treatments Subscribe & Save allows a single treatment to be delivered to your home, as a monthly reminder Easy Repeat delivery across c350 products, and growing Easy Repeat Automatic, repeat delivery to home, or collect in-store, at prices lower than online competitors 15

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Our VIP Puppy Club is designed to maximise the benefits of our integrated product and services offer, creating long term loyalty 10% off your first puppy shop Free bag of Advanced Nutrition food First month free on subscription to flea prevention products 50% off your puppy’s first groom Best Start In Life healthcare plan at our vet practices only £49 (usually £85) 16

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Veterinary business 17

nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Our First Opinion Joint Venture business model is unique in the UK veterinary market Recently adjusted so Recently adjusted so Commercial Bank that new practices that new practices receive c£450k receive c£450k Small business loan: c£320k JV Practice Corporate loan: c£30-60k Personal loan: c£30k Working capital support JV Partner (JVP) PAH Vet Group Full salary paid from day 1 Receive recurring fees equal to 17-18% of practice turnover (includes variable and fixed Right to dividends after repayment of loans fees) Capital gains on practice value at exit Provide all back office functions & specialist business support (these are our operating costs) 18