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SPORTS DIRECT INTERNATIONAL PLC Capital Markets Day Wednesday 9 September 2015
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Page 1: SPORTS DIRECT INTERNATIONAL PLC Capital Markets Day/media/Files/S... · SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 3 Aintree Glasgow Aintree

SPORTS DIRECT INTERNATIONAL PLC

Capital Markets DayWednesday 9 September 2015

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Dave ForseyCHIEF EXECUTIVE

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3SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015

Aintree

Glasgow

Aintree

Agenda

Welcome and Strategic review Dave Forsey, CEO 12:45 pm

Baltics Market Joint Venture Are Altraja and Anti Kalle, Sportland founders 1:00 pm

Premium Lifestyle Division Dave Forsey, CEO 1:45 pm

Outlook and Q & A Senior Management 2:00 pm

Refreshments 2:15 pm

Shirebrook Warehouse and Retail tour 2:30 pm

Coaches depart for Chesterfield 4:00 pm

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Group Strategy: Review

4

• Unrivalled depth and breadth of product choice at

the best available prices

• Continuing roll-out of large format city centre stores

• Targeting c. 60 store openings across Sports Retail

this year

• Continued enhancement and investment in the

existing store portfolio

Aintree

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015

Glasgow

Under Armour area: Glasgow

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Group Strategy: Review

5

• Leading European partner with third party brands

including Nike, Adidas, Under Armour and Puma

• Phase 3 of development of our Shirebrook

National Distribution Centre nearing completionAintree

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015

• Further combined gym and retail opportunities

in the UK

• Successful UK launch of Click and Collect

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6SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015

Sports Direct Campus, Shirebrook

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Brands: Wholesale

7

• Expected A&P spend FY16 between £10 and £20m

• Focus on heritage products within key Group brands

• Further develop business in the Americas and Asia

• Reduction in operating costs from the consolidation of back

office functionsAintree

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015

Brands: Licensing

• Licensing model still regarded as key driver of Brands Division

growth and profitability

• Focus on growth in the Americas, Middle East and Asia

• Sports Direct Retail licensing continues to grow with 14 stores

open in Malaysia and 13 open in the Middle East

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BALTICS PARTNERSHIP

SEPTEMBER 2015

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VIDEO

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AGENDA

1. Who we are2. Why we do it3. What is our market4. How we do it5. Innovative Demand Creation & Communication6. Vision for 2020

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1. Who we are?

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ANTI KALLE (45)Education: BBA Law, University of Tartu 2006

MBA International business, EBS 1995BBA Economics, Tallinn Technical University 1993

Member of Management Board - Sportland International GroupSportland Eesti ASAS Jalajälg, BC ViimsiMTU SÜKK

ARE ALTRAJA (44)

Education: MBA International business, EBS1995BBA Engineering, Estonian Agricultural Academy 1993

Member on Management Board - Sportland International GroupSportland Eesti AS AS JalajälgFC ELVAMTÜ SÜKKEstoninan Football Association

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2. Why we do it?

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MISSION

To make the lives of young peoplemore interesting, better and emotional

through our products and services.

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3. What is our market

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THEBALTICS

ESTONIA

LATVIA

LITHUANIA

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OVERVIEW – BALTICS

ESTONIA

ESTONIA• POPULATION: 1.25M (-10%)• CAPITAL: TALLINN (0.4M)• GDP/CAPITA: EUR 12.8K• AV. INCOME: 930 EUR• LANGUAGE: ESTONIAN

LATVIA• POPULATION: 2.0M (-10%)• CAPITAL: RIGA (0.8M)• GDP/CAPITA: EUR 10.7K• AV.INCOME: 700 EUR• LANGUAGE: LATVIAN

LITHUANIA• POPULATION: 3.0M (-15%)• CAPITAL: VILNIUS (0.5M)• GDP/CAPITA: EUR10.8K• AV. INCOME: 650 EUR• LANGUAGE: LITHUANIAN

LITHUANIA

LATVIA

RIGA

TALLINN

VILNIUS

POPUL. 430KSOB 60%

POPUL. 550KSOB 50%

POPUL. 800KSOB 80%

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MARKET OVERVIEW

MACRO CONSUMER MARKETPLACE BRANDS & CATEGORIES

▪ GROWTH IN BALTICS ISHOLDING UP FAIRLY WELL, GIVEN THE RUSSIAN TURMOIL

▪ EXPORTS AND INVESTMENTS ARE AFFECTED BY GEOPOLITICAL UNCERTAINTY, WHILE DOMESTIC DEMAND REMAINS STRONG.

▪ GDP FORECAST FOR 2015▪ ESTONIA – 2.1%▪ LATVIA – 1.9%▪ LITHUANIA – 2.3%

▪ YOUNG CONSUMER MORE AND MORE AS “WORLD CITIZENS” – ATTRACTED BY GLOBAL TRENDS, STUDYING & TRAVELLING ABROAD.

▪ CONSUMERS HIGLY DIGITIL IZED. OVER 50% OF PHONES ARE SMARTPHONES, INTERNET PENETRATION OVER 70%

▪ SPORTS GROWING BUT GENERAL ISSUE OF KIDS NOT PHYSICALLY ACTIVE

• SHOPPING IS HAPPENING IN MALLS. SPORTING GOODS & MONOBRAND ARE THE MAIN CHANNELS.

▪ DIGITAL GROWING, 15% OF CURRENT NIKE VOLUMES IN THE MARKET (MOSTLY CROSS-BORDER)

▪ SDI WITH FIRST STORES. IMPACT PRIMARILY MAINSTREAM SPORT STORES,

▪ POLISH SIZEER OPENED 2 STORES IN L IT, FURTHER EXPANSION UNKNOWN

▪ NIKE SHARE 30-35%▪ ADI 15-20%▪ THE REST OF BRANDS

BELOW 10%

▪ CATEGORY (E.G RUNNING)BRANDS (E .G. ASICS) , HIGH SEASONAL CHANGES (E .G. WINTER)

▪ SKIS IN WINTER & BIKES IN SUMMER

▪ GOLF, MOUNTAIN SPORT, RUGBY, ETC ARE VERY SMALL

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SDI & SPORTLANDTOUCH

YOUTH

SPORT

CULTURE

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4. How we do it?

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DIVERSE & VALUABLE EXPERIENCE

Introduction of Sportland brand &

concept

First Sportland retail store in Estonia

Introduction of Nike mono-brand store

concept

Introduction of NetoSport concept

Introduction of Franchise stores

Entry to Russia

First retail store in Latvia

First NIKE retail store in Lithuania

Expansion in Latvia via acquisition of 100%

Sports

Entry to Finland

Entry to Ukraine

Opening of Timberland stores

Expansion in Estonia via acquisition of WestSport

stores

Exit from Finland

Minority participation in Russia

1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Number of stores 6 10 12 19 29 32 64 90 101 120 152 148 106

First Sportland retail store in Lithuania

1996

Opening of O’NEILL stores

Exit from Ukraine

Exit from Russia

2010 2011 2012

97 88 66

Wholesalebusinessin Estonia

2013 20152014 2016

667684

SportsDirectshareholder

First SportsDirect

store

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SIG & GROWING THE MARKETSportland International Group (“SIG”) is the #1 & fastest growing Sports Retailer in the Baltics

Best locations in the 3 countries: 60 stores with total area ca 35 000 m2 (ca 379 000 sqft)

Importance of local relevance: 3 languages, engaged with local teams & athletes

Exclusive distributor for numerous leading sporting goods brands

Owners/co-CEOs founded the business in 1995, and have since obtained experience also from Finnish, Russian and Ukrainian market

Largest number of Facebook fans among Estonian & Latvian companies: on path for future growth through innovation, modern communication, emotional retail & with our two fascias (SPO & SDI)

SIG: Increasing Market Share & growing the Market with our two fasciasESTONIA LATVIA LITHUANIA

Market size in each country and SIG’s market shareSource: SIG

€87m

Number of stores per country as of September, 2015

€50m €43m

SIG 40% SIG 45% SIG 45%

29

15

16

6.28 Mpeople Market size €180m

(inlc. Web)Estonia

Latvia

Lithuania

Baltic’s market

Others 55%Others 55%Others 60%

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SIG Board Of DirectorsAnti Kalle & Are Altraja

09/2015

PURCHASEDIRECTOR

Marge KAARMA

REATIL SALES,STORES, CONCEPTS

Are ALTRAJA

FINANCIALDIRECTOR

Priit PIRKSAAR

CFO

MÄG

I

CO

NT

RO

LLER

KAN

GU

R

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ErikTAMBAUR

DE

VE

LOP

ERRai

t KIK

KAM

ÄG

I

SECURITY &MAINTENANCE

DIRECTORMarek KÕIV

LOGISTICSMANAGER

Margus METSALU

SPORTLAND ESTONIA CEO

Gerd KIILI

PURCHASEDIRECTORAlvin KUIMET

RETAIL OPERATIONS

Nelli NILSON

FINANCIALDIRECTOR

Anne KIUDSOO

PURCHASEDIRECTOR

Nauris DIDRIHSONS

CH

IEF

AC

CO

UN

TA

NT

Ieva

BET

A

IT DIRECTOR

Jevgemi HUDOROZKOV

CENTRAL WAREHOUSE

MariusBEKERIS

SPORTLAND LITHUANIA CEOVladas KORSAKOVAS

PURCHASEDIRECTOR

Rimantas RAVAITIS

RETAIL OPERATIONSSigitas DAUKAS

FINANCIALDIRECTOR

Kristina VAITIEKIENE

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Algirdas ZALAGAITIS

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BRAND POSITIONING CHARTHIGH

SPORTFASHION

LOW

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JV with SPORTSDIRECT.COM

• Accelerate growth of international operations

• Identify partners in new territories

• Best in class Logistics Support

• Promote Group Owned Brands

• Pioneering the Baltic Sports Market development

• Adopt Digital Technologies to attract consumers in-store & media

• Innovative Consumer engagement at the Sports Events & Clubs

1. Sports Direct Groupbrands to the Baltics

2. Big Box stores in the Baltics

3. Establish Sportland online operationsutilising Sports Direct infrastructure

GLOBAL SCALE LOCAL KNOWLEDGEFUTURE GROWTH

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SPORTS DIRECT - PARTNER FOR FUTURE MARKET GROWTH

New Brands from SportsDirect

Casual Sport

EMOTION

BRAND

PRODUCT

PRICE

DISCOUNT Casual Sport

.... -2013 2013-.....

???? ????

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STORES

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SPORTLAND KRISTIINE – TALLINN, ESTONIA

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SPORTLAND AKROPOLIS (digitalisation)– VILNIUS, LITHUANIA

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SPORTLAND ALFA (digitalisation)– RIGA, LATVIA

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SPORTLAND VIIMSI – TALLINN, ESTONIA

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SPORTS DIRECT OLYMPIA – RIGA, LATVIA

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SPORTS DIRECT AKROPOLIS – VILNIUS, LITHUANIA

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5. Innovative Demand Creation & Communication

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4. INNOVATIVE DEMAND CREATION & COMMUNICATION

1. Approach2. Events3. Digitalization in retail4. Digitalization off retail (magazine.com)5. Paype6. Feedback screens7. Social media 8. Marketing KPI-s, planning, monitoring

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> OWN THE MARKETPLACE MEANS:Map high traffic places of sports in key cities and „talk“

& inspire athlete's/people – be very close to them!

> BEST BRANDS> BEST LOCATIONS> BEST TEAM & RETAIL MANAGEMENT> BEST COMMUNICATION

> CREATE & LEAD & DEVELOP SPORTS CULTURE • best & biggest events (top 5)• biggest sports clubs (top 5)• drive biggest sport categories (top 5)

FIND & MAP

CREAT & LEAD

SUPPLYBe 1st!

PHILOSOPHY

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BRAND DRIVEN & CONSUMER DEMAND ORIENTED APPROACH TODAY

E-TAILER/ E-COMMERCE

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SPORTS: COMPETE & PARTICIPATE CULTURE: FREE TIME, SPORT SPECTATORS

Developer & Promoter of Sports & Active Lifestyle

FOOTBALL (participants 100,000)

Main sponsor: ESTONIAN FA (segment 1m)Partner of 10 clubs in the Baltics:FC FLORA, Nõmme Kalju, TAMMEKA, METTA

RUNNING (segment 1m) Organizer of Baltics largest running events:Tallinn Marathon & 10k: 20,000 participantsNike Run Riga: 6,000; Nike Run Vilnius: 5,000 Tallinn Women's Run: 12,000

EXTREME SPORTS & SKATEBOARDING Partner of Simpel Session – the world premier skateboard & BMX

competition (segment 50k)

MUSIC: Supporting numerous cultural events Metallica in Tallinn: 80,000 audience(Segment size in the Baltics: 3m)

MOTORSPORTS (segment 50k): Partner & Co-Developer of the Baltic largest

event: Rally Estonia

WINTER SPORTS (segment 200k): Developer of numerous

cross-country ski events

BASKETBALL (segment 3m)Main sponsor: Lithuanian BA (seg. 3m)

Partner & Sponsor of Top 5 Baltic clubs

NATIONAL COMBINED SPORTS EVENTS (segment 500k): Developer

FITNESS & GYM (segment 300 k)

Developer: #1 Fitness club chain in Estonia;

Partner of coaches & gymsOLYMPICS (segment 1m)

Main sponsor: Estonian Track & Field Fed. &Estonian Olympic Committee

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CONSUMER ENGAGEMENT

Target Audience

EE LV LT Total

Population(01.01.2012)

(milj. inhabitants)1.25 2.0 3.0 6.25

10-40y, active(35% from total)

(milj. inhabitants)180 250 350 780

SPORTLANDLoyal

Consumers(thousands)

242 124 52 418

FaceBook Fans(thousands) 81 24 50 155

Insta Fans(04.09.2015) 7,057 4,127 102 11,286

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A&A LIFETIME LIFESTYLE – FULFILL THE MISSION

OUTCOME:

forREINVEST

SKILLS MONEYENERGY

TIME SKILLS MONEYENERGY

MAXIMIZEAUDIENCEMAXIMIZE

RETURN

TIME TO REVIEW & DECISIONS

TIME FOR THOUGHTS, IDEAS & RISK

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EVENTS VIDEO

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SPORTLAND SPORT EVENTS FY 2016

Estonia - 130 Lithuania - 50Latvia - 86

Total- 266 events

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LOYAL CUSTOMERSESTONIA LATVIA LITHUANIA BALTICS

Mother tongue of a registerd customer Est 80% / Rus 20% Lat 60% / Rus 40% Lit 90% / Rus 10%Number of Registered LC cards in SPO database (TOTAL)

242 393 124 919 51 899 419 211

Number of LC cards used in last 2 years 125 203 34 650 8 505 168 358 Number of LC cards used in last March 2015

16 579 4 610 286 21 475

% of purchases which had LC card used in Aug 2014

24% 11% 0.31%

Number of cards which have email address tagged to it

53 546 37 746 8 699 99 991

Number of card which have mobile nr. taged to it

82 985 48 678 19 340 151 003

How many loyal customer emails are sent out as a newsletter 1-2 times per week 1 time per 2 weeks ~1 times per week

FORMAT OF LC CARD ESTONIA LATVIA LITHUANIA

Plastic VIRTUAL LOYALTY CARD - MOBILE ESTONIA LATVIA LITHUANIA

Launches in April in Est - Loyalty cards, gift cards directly to consumer mobile phone. Synced with current database. Transfering plastic card consumers to mobile users. Linking with ID number (unique for consumer and easy to idetntify)

Joined 2500 consumers planned launch by Q3 planned launch by Q4

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SPORTLAND MAGAZINE & .COMMOBILE LC CARD – PAYPECONSUMER FEEDBACK SCREENS

Paype – Est Launch, Roll out Lat / Lit 2015

Customers statisticsIdentification statisticsOffers statisticsEXTRA - stores they visit, offers they view, LC-cards they own, posts &pages they like (FB), vouchers they buy...

Launch: www.SportlandMagazine.comLaunch: #1 Sportland Magazine in LithuaniaLaunch: Consumer Feedback Panels

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DIGITAL SCREENS IN SPORTLAND STORES JUNE2015

Name Single Lite 22" Single Lite 32" Single 42" Single 48" Single 55" TvTower x2 TvTower x3 TvTower x4 Videowall x3 Videowall x4Construction

Example visual

Resolution 1280x1080px, 1920x1080px

1920x1080px 1920x1080px 1920x1080px 1920x1080px 1080x3840px (Video - 2X

1920x1080px)

1080x5760px (Video - 3X

1920x1080px)

1920x4320px (Video - 4X

10800x1920px)

5760x1080px (Video - 3X 1920x1080px)

7680x1080px (Video - 4X 1920x1080px)

File Formats JPG, GIF, PNG, PDF, DOC, XLS, PPT, WAV, AVI,

MOV, MP1

JPG, GIF, PNG, PDF, DOC, XLS,

PPT, WAV, AVI, MOV,

JPG, GIF, PNG, PDF, DOC, XLS,

PPT, WAV, AVI, MOV,

JPG, GIF, PNG, PDF, DOC, XLS,

PPT, WAV, AVI, MOV,

JPG, GIF, PNG, PDF, DOC, XLS, PPT, WAV, AVI,

MOV, MP4

JPG, GIF, BNG, MP4, AVI,

MOV

JPG, GIF, BNG, MP4, AVI,

MOV

JPG, GIF, BNG, MP4, AVI,

MOV

JPG, GIF, BNG, MP4, AVI, MOV

JPG, GIF, BNG, MP4, AVI, MOV

BALTICS TOTAL 134 13 55 95 52 23 1 2 19 2ESTONIA (new only) 55 7 55 1 42 14 1 1 5 2LITHUANIA 60 2 0 44 6 2 0 0 11 0LATVIA 19 4 0 50 4 7 0 1 3 0

55"

48"

55"

55"

48"22" 32"

55"

48"42"

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Under the same conditions (platform logic, administration, ads & campaign budget growth hand in hand with fanbase growth):

We have to consider, that we are already operating with 12%+ of all local Facebook users.

Games and active engagement is the key, everyones effort is important. Like & Share

SPORTLAND FACEBOOK

+14%

+13%

+33%

+27%+50%

+14%

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Under the same conditions (platform logic, administration, posts & games flow):

We expect booming growth of the Instagram users within next years and predict to grow fast on Sportland followers. Increasingly more businesses and people are moving to Instagram, so the target is to retain same engagement through the years and grow on the followers.

SPORTLAND INSTAGRAM

0

5000

10000

15000

20000

25000

30000

35000

2015y 2016y 2017y

Estonia

Latvia

Lithuania

+114%

+100%

+150%

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6. Vision for 2020

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SIG & GROWING THE MARKETSportland International Group (“SIG”) is the #1 & fastest growing Sports Retailer in the Baltics

Best locations in the 3 countries: 60 stores with total area ca 35 000 m2 (ca 379 000 sqft)

Importance of local relevance: 3 languages, engaged with local teams & athletes

Exclusive distributor for numerous leading sporting goods brands

Owners/co-CEOs founded the business in 1995, and have since obtained experience also from Finnish, Russian and Ukrainian market

Largest number of Facebook fans among Estonian & Latvian companies: on path for future growth through innovation, modern communication, emotional retail & with our two fascias (SPO & SDI)

SIG: Increasing Market Share & growing the Market with our two fasciasESTONIA LATVIA LITHUANIA

Market size in each country and SIG’s market shareSource: SIG

€87m

Number of stores per country as of September, 2015

€50m €43m

SIG 40% SIG 45% SIG 45%

29

15

16

6.28 Mpeople Market size €180m

(inlc. Web)Estonia

Latvia

Lithuania

Baltic’s market

Others 55%Others 55%Others 60%

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BALTIC SPORTING GOODS MARKET READY FOR GROWTH

Expenditure on Sporting goods, € per capita

Expenditure on sporting goods per capita is expected to grow significantly…

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RETAIL CONCEPTS – POSITIONING ESTONIA 2015

Retailing concept through shop brand positioning

-% salesCasual Sport

EMOTION

BRAND

PRODUCT

PRICE

DISCOUNT

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RETAIL CONCEPTS – POSITIONING LATVIA 2015

Casual Sport

EMOTION

BRAND

PRODUCT

PRICE

DISCOUNT

EMOTION

BRAND

PRODUCT

PRICE

DISCOUNT

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RETAIL CONCEPTS – POSITIONING LITHUANIA 2015

Casual Sport

EMOTION

BRAND

PRODUCT

PRICE

DISCOUNT

EMOTION

BRAND

PRODUCT

PRICE

DISCOUNT

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Premium Lifestyle Division

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 1

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Premium Lifestyle Division

“The pinnacle retail fascias within the SDI group,

featuring clothing, footwear and accessories from

the most premium, directional and exclusive

brands available from around the world”

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 2

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8 Stores 17 Stores 54 Stores

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 3

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Operational Improvements

The key benefits of a group approach:

• Shared stock – group buying

• Enhanced buying controls generating improved colour/size sell through

• Stabilising core product range to provide constant availability

• Improved automated allocation & replenishment system

• Automated web stock requirement

• Maintaining product availability both in-store & online

• Centralised group markdowns / promotional activity

• All enabling a cleaner stock package / improved sell-through / higher achieved margin and stronger

visual merchandising in store

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 4

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Strategy Improvements

• Enhancing existing retail space

• Investing in new flagship locations

• Offer our customers the best branded premium fashion range, across all categories and genders

• Deliver great customer service to our customers at all times through a multi-channel approach

• Website benefits from ongoing investment into the core group platform

• Working closely with our global brand partners to deliver best in class visual merchandising

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 5

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In store Concept

• The new FLANNELS.com concept takes inspiration from the

highest level of store design with the aim of enhancing our position

as the premium multi-brand retail destination

• The main features of the store design are high quality materials,

clean simple lines to accentuate and hero the product and detailed

atmospheric lighting

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 6

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In store Concept

• A contemporary colour palette mix of greys, whites and blue

highlights give an exceptional contrast and provide the overall tone

for the store environment

• Each floor will have its own subtle look and feel to be targeted at

the gender and relevant brand mix

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 7

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• Aim to be the leading multi-brand high street

fashion retailer in the UK

• Specialising in branded denim and footwear

• Key brands including G-Star, Lacoste, Emporio

Armani & Hilfiger

• Located in key macro market cities and shopping

centres

• In store environment aimed at a shop in shop

brand experience

• Key denim brands (G-Star, Replay, Levis, Hilfiger)

Lifestyle brands (Lacoste, Pretty Green, Luke,

Jack & Jones) and Footwear brands (Puma,

Converse, Adidas, Vans)

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015 8

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Outlook

Group’s success underpinned by delivering exceptional quality and unbeatable value to our

consumers

• Trading since the year end has been in line with management’s expectations, underpinning the revised FY16

target of £420m for the 2015 Bonus Share Scheme

• Performance continues to be driven by

• Investment in product range and availability

• Optimisation of in-store and web offer and introduction

of UK Click and Collect

• Growing proportion of ‘better’ and ‘best’ Group branded

products in key categories

• Investment in store portfolio

SPORTS DIRECT INTERNATIONAL PLC / Capital Markets Day / Wednesday 9 September 2015

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QUESTIONS?


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