Investor Presentation May 2018 1 FRL Overview 03
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Investor Presentation May 2018 1 FRL Overview 03 2 Our Large Stores 09 3 Loyalty 16 4 Small Stores Business 19 5 Financial Update 24 6 Consistent Customer Centricity 32 FRL | Investor Presentation | May 2018 2 FRL OVERVIEW FRL | Investor Presentation | May 2018 3 India’ Consumption Opportunity is Well Distributed Per Capita Income Below $1,300 $1,300 -$2,000 $2,000 – $2,500 More than $2,500 No of States / UT 8 7 8 8 Assam, Bihar, Arunachal Pradesh, Goa, Haryana, Kerala, AP, Chattisgarh, J&K, Jharkhand, MP, Gujarat, HP, Karnataka, Maharashtra, Sikkim, States Nagaland, Rajasthan, Manipur, Meghalaya, Mizoram, Punjab, TN, Uttarakhand, Delhi, Tripura, WB Odisha, UP Telangana Chandigarh State GDP: FY17($bn) 500 460 752 674 Contribution to National GDP 21% 19% 32% 28% Growth rate (5Y Historical) 12.0% 13.2% 12.7% 12.0% India represents a well dispersed opportunity No. of Districts 278 135 192 107 Urban Population (mn) 97 74 108 98 FRL points of connect 153 117 436 329 Deeper presence in high-income states with an incumbency advantage in rest of India 100+ new airports, 15 new metros and over 100 smart cities indicating better living Source: Based on published government data States in orange represent FRL presence *GDP: Gross Domestic Product Exchange rate: $1=Rs 65 FRL | Investor Presentation | May 2018 4 FRL: A Quick Glance 1,035 14.5 mn sq.ft. >US$ 2.8 bn SCALE FY18 Revenue Retail stores Retail Space (* Exchange rate $1=₹65) >67% 9.9% 25.6% EFFICIENCY Revenue from Same store Gross Margins non-food Sales Growth categories >340 mn 26 DEPTH Customer 321 States footfalls in FY17 Cities 4.3% ₹ 12.5 20.3% VALUE CREATION EBIT% EPS (before one time ROCE exceptional item) FRL | Investor Presentation | May 2018 5 Performance Benchmarking What we set out for Addition of Big Bazaar Small Stores to About 800 small Strong case of “More out of the 20 - 25 large target SSG: achieve stores by margin Same” stores 12 - 15% breakeven Mar ‘18 improvement 50* new stores 13.4% Big On track to 756 small EBITDA margin Big Bazaar added during Bazaar SSG for deliver stores as on improved by sales per sqft What we the year FY18 breakeven at a 31 March 2018 100 basis points has increased delivered (*including much larger (including 90 WH on a y-o-y basis by 11.5% to Hypercity) scale in FY19 Smith stores ~₹14,500* w.e.f. 11 May 2018) * For stores that were operational for the full year FRL | Investor Presentation | May 2018 6 FRL’s Retail Network As on 1 April 2017 As on 31 March 2018 Formats Store additions Area Area Stores Cities Stores Cities (mn sqft) (mn sqft) 235 124 10.2 50 2851 135 12.1 Large fbb 54 32 0.6 7 61 36 0.6 Stores 7 4 0.1 3 10 5 0.1 Small 538 11# 1.4 128* 6662 133 1.5 Stores Others 30 11 0.3 (17) 13 8 0.1 Cumulative 864 240 12.5 188 1,035 321 14.5 1. Including Hypercity stores 2. Excluding the acquisition of 90 stores of WH Smith. The transaction was closed on 11 May 2018 3. Clusters Total Retail Area (mn sq.ft) 14.5 12.5 11.6 19 stores. Demerged. ‘Marquee 10.0 ‘Focus on core Locations‘ 9.1 large & small stores’ FY14* FY15* FY16* FY17* FY18 *Excluding HomeTown (Like for Like) FRL | Investor Presentation | May 2018 7 Long-term Aspiration (No. of Stores) (No. of Stores) 300 375 285 235 228 61 51 54 FY 16 FY 17 FY 18 2-4 years FY 16 FY 17 FY 18 Long term potential Small Stores (No. of Stores) 10,000 538 666 320 FY 16 FY 17 FY 18 Long term potential FRL | Investor Presentation | May 2018 8 OUR LARGE STORES FRL | Investor Presentation | May 2018 9 Most Customer Centric & Operationally Efficient Integrated Business Model Largest Consumption database Strong technology framework Truly Pan India Top Quality own brands The Widest Assortment High Margin Model Customer Leader in several Celebrating every Indian festival Categories No loss making stores Industry leading loyalty base FRL | Investor Presentation | May 2018 10 Big Bazaar: The National Retail Chain One of the most loved brands North: 25% Synonym of India’s Consumption Well distributed East: 24% across ‘many Indias’ West: 26% South: 25% Note: % indicates FRL revenue share from the regions FRL | Investor Presentation | May 2018 11 Structurally High Margin Model of Large Stores Fashion Non-Food Food (General Merchandise + HPC) Revenue share 34% - 36% 30% - 32% 32% - 35% Gross Margin 40% - 42% 22% - 24% 15% - 17% Own Brands share 94% - 96% 8% - 10% 18% - 20% Blended Gross Margin: ~26 - 27% FRL | Investor Presentation | May 2018 12 Prominent Market Share across select Fast Growing Categories Note: Illustrative categories Fashion General Merchandise Men's Tableware Casualwear 19% 15% 26% 16% Kidswear 11% 30% Luggage 18% 17% Women Ethnic 10% 12% Cookware 11% 21% Food & Beverages FMCG 1 Colour Beverages 12% 15% cosmetics 17% 19% Packaged Personal food 8% 18% Care 14% 15% Staples 7% 10% Homecare 13% 19% Estimated FRL Market share in Organised Retail Expected Category Growth rates for next 3 years Source: Various Industry Reports & Internal Estimates Note: 1. Beverages refer to non alcoholic beverages excluding milk FRL | Investor Presentation | May 2018 13 Many of our Private Brands & Segments are Category Leaders… Women’s Wear 950 1,100 Men’s Wear (₹ cr.) 900 (₹ cr.) 950 440 500 375 250 220 300 Brand 2 Brand 3 Shyla Brand 5 DJ&C Brand 2 Brand 3 Brand 5 Cookware 750 Kids’ Wear (₹ cr.) (₹ cr.) 270 600 500 121 100 Brand 1* Brand 2* WB FBB Retailer 2 Retailer 3 *Estimated Revenue through Modern Retail Note: Estimated revenue of other brands and retailers from publicly available sources. Kidswear category is compared with other retailers’ FRL | Investor Presentation | May 2018 14 … While new are being created and many extended. Illustrative new categories & extensions’ Illustrations Only FRL | Investor Presentation | May 2018 15 FRL | Investor Presentation | May 2018 15 One of the largest database of India’s consumption And we know their consumption choices in Our Customers Their evolving income levels (est) great depth Age Customers Customer base mix (2018) (Years) Share Women’s Apparel >6.5mn customers 12% 48% Under 25 11% Babycare ~5mn customers 40% 26 to 35 29% Health products ~4.5 mn customers Customer base mix (2024) 36 to 45 30% Travel related products ~0.9mn customers 26% 46% 46 to 60 22% Instant Noodles ~3.5mn customers 28% Above 60 8% Annual income (in ₹) : Soaps ~3mn customers 0.3 - 0.5 mn 0.5 - 1 mn >1 mn *Estimates based on internal data FRL | Investor Presentation | May 2018 17 Future Pay: Creating a unique platform with strong ecosystem synergies Future Pay Users (in mn) 5.0 ~ 5 million users 1.2 ~ 3 million price match transactions Average spend per user has doubled in the last 12 months Average top-up amount has increased by >50% FRL | Investor Presentation | May 2018 18 SMALL STORES BUSINESS FRL | Investor Presentation | May 2018 19 Member-Centric Model with Robust Enablers Platform Strategy Data-led & O2O ready platform Low cost operations blended with own brands’ strategy o Data: Key enabler for our new stores and operations’ alike o Scale-up within clusters to bring o Capabilities in-place for last mile the costs down delivery o Own brands’ implicitly have superior terms & faster execution Firm Demand Execution Membership model that Focused clusters & assortment captures high wallet share (4,000 SKUs in defined clusters) o Est 40 - 60% wallet share of over o Regional & local teams driving the 0.5mn members at present execution o Assortment predictability bringing o Model with limited SKUs, clusters in higher efficiencies & targeted customers FRL | Investor Presentation | May 2018 20 Margin Model of Small Stores Food Non - Food Revenue share 73% - 75% 25% - 27% Gross Margin 15% - 17% 18% - 20% Own Brands share 25% - 28% 6% - 8% Blended Gross Margin: ~16 - 17% FRL | Investor Presentation | May 2018 21 Gateway to Our Small Stores: EasyDay Savings Club Average Members visit Total Members ~910 over members ~3 times 5,00,000 enrolled per a month active store Membership Annualized active in spend per member ~544 ~₹ 35,000 stores Easyday Club Members (in mn) 10 0.5 0.1 Jun '17 Mar '18 Mar'21 E FRL | Investor Presentation | May 2018 22 Going Deeper in Chosen Clusters 175 149 143 Increasing prominence in 118 large clusters 74 68 53 37 34 34 31 32 31 30 30 24 27 23 20 20 15 9 7 6 0 0 Ludhiana NCR Hyderabad Lucknow Chennai Bangalore Ahmedabad Jaipur Haryana Mumbai Haridwar Jammu Kolkata FY17 FY18 FRL | Investor Presentation | May 2018 23 FINANCIAL UPDATE 2 FRL | Investor Presentation | May 2018 24 4 FY18 Performance Overview Big Bazaar Sales per sq ft# (₹) Gross Margin (%) Income from Operations (₹ cr.) 25.6% 18,478 14,514 24.8% 17,075 13,018 4,737 4,241 FY17 FY18 FY17 FY18 FY17 FY18 #Sales per sqft for stores that were operational for the full year Same Store Sales Growth (%) EBIT (₹ cr.) 791 14.0% 13.4% 12.0% 9.9% 573 4.4% 3.4% FY17 FY18 FY17 FY18 *Underlying Y-o-Y growth adjusting for eZone rationalization, HomeTown demerger and GST impact FRL | Investor Presentation | May 2018 25 Returns and Working Capital ROCE ROE 21.2% 20.9% 21.2% 20.3% 17.5% 15.5% 14.5% 13.7% 13.4% 9.1% Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 Debt/EBIT Inventory Days (Revenue) 3.3 85 81 2.3 80 80 * 79 1.6 1.2 1.3 Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 * Based on annualized revenue from Hypercity stores Note: The ratios pertaining to FY16 have been derived on a comparable basis • Net Debt / EBIT = (Borrowings – Cash & Bank Balances) / EBIT • ROCE = EBIT / Average (Equity + Optionally convertible debentures + Borrowings – Cash & Bank