Rip Curl Is a Leading Global Surf Brand Born in Bells Beach, Australia in 1969
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INVESTOR DAY 2020 Chairman David Kirk Iconic Brands • A global outdoor and action sports company, consisting of three iconic brands: • Kathmandu specialises in quality clothing and equipment for travel and adventure. • Oboz designs ‘True to the Trail®’ outdoor footwear to help people explore the wilderness. • Rip Curl is a leading global surf brand born in Bells Beach, Australia in 1969. With a shared focus on expertly designed, technical and sustainable products, our brands are distributed through wholesale, retail and digital channels. INVESTOR DAY INVESTOR DAY 2020 Evolution of Kathmandu Holdings’ growth Phase 1: Implemented a new management team ~5 years ago - Focus was on optimising the performance of Kathmandu’s assets, improving Australasian sales and market penetration, optimising profitability and elevating the Kathmandu brand. Phase 2: Acquired Oboz in March 2018 to increase product and geographic diversification - Advanced transformation from an Australasian retailer to a global outdoor apparel and equipment brand - Consistent with international growth strategy to pursue lower risk wholesale model - Successful integration demonstrated that Kathmandu is capable of integrating complementary businesses, while preserving brand and cultural identity INVESTOR DAY INVESTOR DAY 2020 Evolution of Kathmandu Holdings’ growth 23.1% CAGR since 29 June 2015, 29.5% CAGR with dividends re-invested 2015-2019 performance evolution prior to Rip Curl acquisition Volume Price ('000) - 7.4% sales CAGR over the last 4 years $3.50 10000 - EBIT has increased by $51m to $84.3m and NPAT has nearly $3.00 8000 trebled to $57.6m $2.50 6000 - Dividend has doubled and share price has increased at 23% CAGR $2.00 4000 $1.50 2000 $1.00 0 29-Jun-15 1-Apr-16 3-Jan-17 7-Oct-17 11-Jul-18 14-Apr-19 16-Jan-20 Volume KMD XDJ Rebased Average Volume Phase 3: acceleration of diversification strategy with Rip Curl acquisition: today’s investor day is about bringing the Rip Curl story to life and articulating why we believe Rip Curl is a great asset in our portfolio. INVESTOR DAY INVESTOR DAY 2020 Agenda 11:00am: Welcome 12:20pm - Brand marketing David Kirk, (Chairman) Michael Daly (Rip Curl CEO) 11:10am: Group strategy update Xavier Simonet (Group CEO) 12:45pm - Finance and integration Chris Kinraid (Group CFO) 11:25am - Rip Curl brand, business and strategy Michael Daly (Rip Curl CEO) 1:00pm - Lunch 1:45pm – Office tour 11:55am - Product innovation and distinctiveness 2:30pm – Flagship store visit Nichol Wylie (General Manager Product) INVESTOR DAY INVESTOR DAY 2020 Group Chief Executive Officer Xavier Simonet Vision for the Group Maintain brand affinity and cultural alignment while leveraging capabilities and delivering synergies. Kathmandu, Oboz and Kathmandu, Oboz and Kathmandu, Oboz and Rip Curl to leverage Rip Curl to retain Rip Curl to retain their respective strengths operational ownership strong brand identities and build on each of their respective and cultural values others’ competitive businesses advantages over time INVESTOR DAY INVESTOR DAY 2020 Benefit 1 – Diversification of Kathmandu Product and geographic diversification reduces seasonality of earnings and reliance on Australasia INVESTOR DAY INVESTOR DAY 2020 Benefit 2 – Growth enabler by leveraging capabilities INVESTOR DAY INVESTOR DAY 2020 Benefit 3 – Synergies expected over the medium term • Sourcing: capitalising on the combined scale of Kathmandu and Rip Curl to improve gross margin, quality, costs and diversification • Systems and IT: - benefit over time from system integration between our three brands. - benefit from Kathmandu’s online experience and capabilities to support Rip Curl’s online growth • Supply Chain: leveraging the strengths of both Kathmandu and Rip Curl in Australasia as well as internationally to accelerate growth and drive efficiencies • International launch of Kathmandu: existing wholesale networks provide a platform for us to launch our Kathmandu brand in overseas markets We expect most synergies to be achieved over the medium term. INVESTOR DAY INVESTOR DAY 2020 Why Rip Curl? Creating a global outdoor and action sports company • Rip Curl is an iconic global brand with a strong loyal customer base focused on designing and bringing to market technical products • Combined group meets the year round needs of customers globally • Rip Curl complements Kathmandu: • Global presence with established distribution network in the US, Europe and Asia • Expertise in summer outdoor and beach apparel • Expertise in the wholesale channel internationally • A number of shared capabilities that will be leveraged over time: • Technical products • Seasonal specialists • Outdoor adventure ethos • Commitment to core customers • Brand building and inspirational content INVESTOR DAY INVESTOR DAY 2020 Chief Executive Officer - Rip Curl Michael Daly a RIP CURL: BUSINES OVERVIEW RIP CURL AT A GLANCE » Rip Curl is a leading global action sports brand with a long-standing history in marketing, designing, manufacturing, wholesaling and retailing surfing apparel and equipment Overview Geographic mix(1) Distribution mix(1) Product mix(1,3) (Total revenue by region) (Total revenue by channel) (Total revenue by product) » Offers surf-related products, from highly technical wetsuits, boardshorts, swimwear and 2% 8% 15% watches to beach lifestyle 22% apparel, equipment and 25% 1% 9% accessories » Core technical innovations 6% support the premium nature of 41% 41% Rip Curl’s brand and drive sales across broader offering 4% » Technical product(1,2,3) sales 19% represent approximately 40% of 16% revenue and are critical to 11% retaining support from Rip Curl’s core surfing customers 22% » Operates a multi-channel distribution model 16% 21% 22% » Design and development capabilities across hubs in Torquay in Australia, Costa Mesa in the US and Hossegor in France 1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 5 (1) Represents revenue for the financial year ending 30 June 2019 from management accounts. (2) Technical products comprise wetsuits, equipment, watches, boardshorts and other products. (3) Product mix excludes revenue from third party brands (which are predominantly sold from multi-brand stores), which are not tracked by product categories. (4) Ozmosis is included in Rest of the World for the geographic mix. While it is located in Australia, it is considered separate to the underlying Rip Curl business. GLOBAL FOOTPRINT WITH STRONG REPRESENTATION IN MAJOR SURF DESTINATIONS » Rip Curl has a direct presence across 6 key regions through stores, design and manufacturing facilities Rip Curl Group » Direct presence in 6 key regions » c.6,000 wholesale doorways » 173 owned retail stores, 254 licensed / JV » 6 E-commerce websites Asia » c.570 wholesale doorways North America » 3 owned retail stores, 85 » c.1,250 wholesale doorways Europe licensed / JV » » 30 owned retail stores, 10 licensed c.2,350 wholesale doorways » E-commerce website » » E-commerce website 19 owned retail stores, 23 licensed » Owned wetsuit » Global product hub located in » E-commerce website manufacturing facility in Costa Mesa, California » Regional product hub located in Thailand (OnSmooth) Hossegor, France Brazil » c.910 wholesale doorways » 3 owned retail stores, 79 licensed Australia and New Zealand » E-commerce website » c.920 wholesale doorways » 118 owned retail stores, 18 licensed / JV » 2 E-commerce websites Owned regions » Global head office and product hub in Licensed regions Torquay, Victoria Note: Rip Curl metrics as at 30 June 2019. Rip Curl also has an additional 39 licensed and JV stores in other regions including the Middle East, Africa and South Pacific. WELL ESTABLISHED AND DIVERSIFIED COMMERCIAL CHANNELS » Rip Curl's controlled distribution has traditionally focused on the wholesale channel and has progressively evolved towards direct to customer retail Wholesale Retail Online » Wholesale distribution to external retail customers » Broad retail footprint of owned retail distribution » E-commerce is a relatively new channel of the Rip covering 173 owned physical locations worldwide Curl business » Primary contributor to overall company revenue − 90 flagship stores (stores located in prime tourist − Australia / New Zealand launched in 2010, North » Australia, North America and Europe are the largest destinations and iconic surf locations) America in 2011, Europe in 2014, Brazil in 2015, contributors from a region perspective Overview − 26 owned outlet stores (stores distributing old Japan in 2016 and Indonesia in 2018 season stock) » Comprises 6 E-commerce websites delivering − 57 Ozmosis stores which offer multi-brand products to Rip Curl’s 6 key regions products (operates independently to Rip Curl business primarily in shopping centres) Key customers Direct to consumer Direct to consumer Note: Rip Curl metrics as at 30 June 2019. Michael Daly CEO EXPERIENCED Rip Curl since 2002 LEADERSHIP Senior Management Rip Curl’s management team is a strong combination of long term internally Lori Showell Lachlan Farran Tony Roberts Neil Ridgway Brooke Farris Bec Christian Nichol Wylie Michael Ray developed talent and CFO GM Retail & Ops Legal Counsel CMO GM Digital GM Crew GM Product GM Wholesale Rip Curl since 2005 Rip Curl since 2004 Rip Curl since 1998 Rip Curl since 2003 Rip Curl since 2010 Rip Curl since) 2006 Rip Curl since 2002 Rip Curl since 1994 externally hired professionals. Regional Heads Dylan Slater Mathieu Lefin President Nth America GM Europe Rip Curl since 2004 Rip Curl since 2009 Appointed Oct 2018 Appointed March 2019