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20231026_LPPF_Laporan Informasi dan Fakta Material_31482088_lamp1.pdf
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LPPF.IJ / LPPF.JK 9M/3Q 2023 Earnings Call 26 October 2023
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Agenda
No Topic Page Presenter
1 Executive Summary 3 Terry O’Connor
2 Macroeconomic & Commercial Updates 4–6 Terry O’Connor
3 9M 2023 Financial Performance Updates 7–9 Niraj Jain
4 Strategy Updates 10 – 19 Terry O’Connor
5 Capital Allocation Updates 20 – 21 Niraj Jain
6 Closing Remarks 22 – 23 Terry O’Connor
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Executive Summary
Quiet 3Q23 performance prior to coming quarters stimulants
o Sales for 9M23 reached IDR 9.6Trn, or grew by 1.4 %. However SSSG was -2.3% driven by the lack of Lebaran stimulation and slowness in economy
thereafter.
o The third quarter was particularly challenging given the absence of the pent-up demand from back-to-school last year, coupled with the higher cost of
living crunch.
Stock Code:
o As such, in an effort to stimulate sales, optimize market share, and ensure healthy inventories ahead of 2024, the company did pass on savings to
customers, which had an impact on margin. Also, to this end, inventory intake was substantially reduced. LPPF
o Gross Margin in 9M23 was 34.9%, vs. 9M22 of 35.7%.
o EBITDA for 9M23 was IDR 1.1Trn vs IDR 1.5Trn LY. Net Profit was IDR 631Bn. Equity was positive at IDR 3.5Bn
o Intakes will start to flow again in more healthy levels in the fourth quarter. This will provide some positive momentum. But we should expect to continue to Shares outstanding*
see some flushing out of slow-moving inventories in the fourth quarter. EBITDA for the year is likely to be at IDR 1.4Trn.
2,259 Mn
As such, the company has also doubled down on its strategic transformation initiatives.
o Store expansion to focus on quality store openings rather than quantity. Targeting 4 Matahari and 2 MU&KU stores for 2024.
o Accelerate rebranding and focus our capex investment in selected A+ and A stores. Major Shareholder*
o MU&KU, our new upper middle multibrand concept, is being presented to target developers and is receiving positive feedback. Target Launch in H1 2024. Auric Digital Retail 42.5%
o Suko roll out to 14 additional stores (total 34) progressing well. Category Extension and further stores roll out to continue in 2024 and beyond.
o Anyday, new private label just launched in Oct as entry level fighter brand to offset inflationary pressures.
o ETP, POS solution rolled out across all 156 stores. More than 95% of the CV items are now sold using product bar code instead of Pink Slips.
#Stores at the end of 9M23
Next Phase (H1 2024) to provide visibility of CV Inventory inside Matahari stores enabling Fulfill from stores for CV business.
156
o Inventory Innovation increase focus on inventory full price sell through and accelerate reduction of aged inventory.
o In the short-run, Company is preparing an extensive Christmas marketing campaign, as well as putting in place plans to leverage the very favorable
conditions in the 1Q24, boosted by the timing of Chinese New Year, the election season, and Lebaran.
Maximizing shareholder value
o Dividend policy maintained at a minimum 50% payout. *latest position by 30 Sep’23
excluding treasury shares
o Capex spend forecasted to be under IDR 300Bn vs budget of IDR 500Bn.
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Macroeconomic &
Commercial Updates
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Macroeconomic Factors
Consumer confidence is slowing in the recent Cotton price stabilizes in line with
quarters. However, subsiding inflation builds moderated inflation will support landed
business optimism for 2024 and beyond. cost of goods from Q4 intakes.
Consumer Confidence Index & Inflation Cotton Price
% YoY USD/lbs
7 130.0
128.0
6
126.0
5
0.8715
124.0
121.7
122.0
4
120.0
3
118.0
2
2.28116.0
114.0
Inflation CCI
1
112.0
0 110.0
Sep- Dec- Jun- Sep- Dec-21 Sep-22 Dec-22 Sep-23
22 22 23 23
Source: Nasdaq
Source: Bank Indonesia
Historical data shows sales accelerated in past election seasons. 5
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Commercial Updates
Back to School Independence Day Jumbo Sale
(Merdeka) Campaign
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9M/3Q 2023
Financial Performance
Updates
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YTD Sep 2023 Financial Highlights
Sales at IDR 9.6Trn, SSSG -2.3% and EBITDA at IDR 1.1Trn
YTD Sep Comparable YTD Sep Q3
(in IDR Bn)
2023 2022 Var Var % 2022 Var Var % 2023 2022 Var Var %
Gross Sales 9,615 9,484 132 1.4% 9,484 132 1.4% 2,223 2,324 (101) -4.3%
SSSG% -2.3% -8.0%
Gross Profit 3,356 3,390 (34) -1.0% 3,308 48 1.4% 750 815 (65) -8.0%
GM% 34.9% 35.7% 34.9% 33.7% 35.1%
OPEX (2,220) (1,846) (374) 20.3% (2,094) (126) 6.0% (688) (574) (114) 19.9%
EBITDA 1,136 1,544 (408) -26.4% 1,214 (78) -6.5% 61 241 (179) -74.5%
EBITDA Margin% 11.8% 16.3% 12.8% 2.8% 10.4%
Net (Loss) Income 631 1,054 (424) -40.2% 713 (82) -11.5% (53) 136 (189) -139.3%
Net Income Margin% 6.6% 11.1% 7.5% -2.4% 5.8%
Comparable : excluding Covid rental concessions and participations/discounts.
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Balance Sheet
Equity at IDR 4Bn positive vs IDR 160Bn negative last quarter
ASSETS LIABILITIES & EQUITY
Sep Dec Sep Dec
(in IDR Bn) (in IDR Bn)
2023 2022 2023 2022
Cash and Bank Balance 194 354 Bank Loan 1,000 (0)
Trade Receivables 42 64 CV Trade Payables 420 664
Inventories 876 896 DP Trade Payables 315 546
Right-of-Use Assets 2,290 2,527 Lease Liabilities 2,755 2,933
Other Assets 1,355 1,223 Other Liabilities 1,026 1,026
Fixed Assets 762 686 Equity 4 580
TOTAL ASSETS 5,519 5,750 TOTAL LIAB. & EQUITY 5,519 5,750
Remarks:
•
•
Bank loan utilization reduces from IDR 1,150Bn to IDR 1,000Bn
•
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Strategy Updates
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Merchandising Full Potential
Improved range of Mens, Womens & Childrenswear, to refocus Private Label Brands’ DNA
Nevada Nevada Kids Cole Connexion
Global Streetstyle New! Modernwear New! Workwear
(Varsity & Tokyo Inspo) expansion
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Merchandising Full Potential
New Private Label Brands to fill the merchandising architecture gap
SUKO Anyday A new active brand
34 stores within 2023 Entry of Anyday to 50 stores Exciting 2024 developments
Existing 20 stores to be complemented New entry label to tap into cost of An affordable, moderate and
with expansion to additional 14, living concerns and offer comfortable walking and sport-
providing capacity for marketing and price sensitive customer segments style range that fits contemporary
branding ramp-up simplicity and best prices needs
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Store Network Optimization
Identified stores with room for improvement
29 Stores under watchlist and identification Room for improvement and actions in progress
Working with landlords to come up with
better lease terms, as well as other
practical and optimal support solutions
< 5% EBITDA 21
Exploring space rationalization for
higher productivity
< -10% SSSG 23
Accelerating rebranding / rejuvenation
options to boost the store appeal
Several stores faced challenges due to Re-aligning merchandising offering to meet
post-COVID scarring effect, pressured surrounding current and future customer demands
market purchasing power, and low mall occupancy
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Store Network Optimization
Rebranded stores in attractive catchments & opened new ones in high-potential catchment areas
Opened 8 new stores in high potential Rebranding and rejuvenation now focusing on higher
catchments, with latest store at Kediri Mall impact stores based on new store grading criteria
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Before
New Store at Kediri Mall
3,980 sqm 2022 Action Stores YTD 2023 Refurbishment After
6 new stores for 2024; Average size of 5,500 sqm Focus on brand impact, customer experience
and floor and linear productivity
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Store Network Optimization
New concept is being presented to target developers
New concept MU&KU,
a curated multi-brand store
targeting Millennials, Young Professionals and Families across
an age range of 28 – 45 years within the Middle-Income Segment
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Omnichannel Expansion
Focus on scaling business by delivering better customer experience
Tech Momentum DP Fulfil from Stores New & Upgraded App
ETP Rollout completed; Expanded fulfill from stores to Achieved 332,600 app
New OMS implementation, 37 Stores, 30 cities, resulting in downloaded in 3Q, accounts
CV fulfil from stores more than 50% contribution for 21% of total customer base
enablement H1 2024
Marketplace Growth Better NPS
After relaunching Tokopedia, Record NPS score achieved in
presence on 4 marketplaces Q3, up double digits from last
business has resulted 4x growth year, reflects an enhanced
customer experience
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Loyalty & Personalization
Active members contribution bodes well for future revenue
NPS Active Members Sales contribution
77 8.0 77.8%
Dec'21 Dec'22 Current
Sep'23 2021 2022 Current
Current 2021 2022 Current
9M23
Positive feedback generated through Active members are actively rewarded Revamped acquisition drive
personalization and optimized through events engaging stores and digital channels
benefits for accelerated sign up.
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Operational Excellence
Improved layout, visual merchandising, & customer experience in stores, with out-of-store expansion
Improved layout and visual Leveraging creative store installations Out-of-store expansion extends
merchandising for better navigation for promotional cut-through Matahari customer touchpoints and
and higher customer experience brand awareness
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ESG: MILKS*
More actions on environmental contribution and creating social impact
Further expansion of Providing Commendation of
recycling initiatives with clothing and Matahari efforts to uphold
higher customer footwear best governance practice
enthusiasm to support for for the best overall
participate students in category, the best women
need empowerment company,
as well as for the best
employee commitment &
satisfaction
*Environmental, Social & Governance: Materials, Inclusion & diversity, Labour best practice, Kids, Sustainable acts 19
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Capital Allocation Updates
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Capital Allocation Updates
Financial prudence and optimism for 2024
Financial Prudence Optimism for 2024
Gaining maximum output out of Dividend policy remains the same
less investment in technology at minimum 50% payout
Rigorous cost management Likely return to
at all lines Share Buyback Activity
Capex plan reduced by 40%, Capex Focus on A+ and A stores
focusing in quality store opening vs. quantity Investment in new & exciting growth stores
Dissolving stock for Expecting higher ROI by focusing on dollars
healthier inventory position spent on highest impact stores or brands
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Closing
Remarks
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Closing Remarks
The Game Plan
Current State Immediate Actions Medium-term Actions (2024)
o Sales for 9M23 reached o Campaign for exciting o Store expansion focuses on
IDR 9.6Trn; grew by 1.4%. seasons of Christmas, quality store openings,
SSSG was -2.3%, due to Chinese New Year, and aiming 4 Matahari and
the high base and Lebaran are in place to tap 2 MU&KU stores in 2024.
higher cost of living. into expected higher o MU&KU, our new upper-
o Gross Margin in 9M23 was purchasing power. middle multi-brand
34.9%, vs. 9M22 of 35.7% o SUKO rollout in next 14 concept, is favored by
as Matahari passed on stores is progressing well for target developers;
savings to customers. upper-middle customers. expected to open in 1H24.
o EBITDA for 9M23 was o Anyday, new entry label o Grow 6 power DP brands
IDR 1.1Trn vs IDR 1.5Trn LY. has been launched Oct’23 with SIS and bring
Net Profit was IDR 631Bn. to help offset inflationary 20 new brands and
pressures. 19 Supercharge CV brands
o ETP, POS solution rolled
out across all stores. o Inventory innovation, o ETP phase 2 to provide
95%+ CV items are sold Increase focus on inventory visibility of CV Inventory
using product bar code full price sell-through and inside Matahari stores
instead of Pink Slip. accelerate aged inventory enabling Fulfill from stores
rationalization. for CV business.
Goals
o EBITDA Guidance of IDR 1.4Trn for FY23.
o Dividend policy remains the same at minimum 50%.
o Capex spend forecasted to be under IDR 300Bn for 2023.
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Contact us
PT Matahari Department Store Tbk
Menara Matahari 12th Floor,
Jl Bulevar Palem Raya No. 7
Karawaci, Tangerang 15811, Indonesia
Phone: +6221 547 5228 | +62811 9610 1111
Email: ir@matahari.com
www.matahari.com
DISCLAIMER: This presentation has been prepared by PT Matahari Department Store Tbk (“LPPF” or “Company”) for
informational purposes. Neither this presentation nor any of its content may be reproduced, disclosed or used
without the prior written consent of the Company.
This presentation may contain forward looking statements which represent the Company’s present views on the
probable future events and financial plans. These views are based on current assumptions, are exposed to various
risks, and are subject to considerable changes at any time. The Company warrants no assurance that such outlook
will, in part or as a whole, eventually be materialized. Actual results may differ materially from those projected.
The information is current only as of its date and shall not, under any circumstances, create any implication that the
information contained therein is correct as of any time subsequent to the date thereof or that there has been no
change in the financial condition or affairs of LPPF since such date. This presentation may be updated from time to
time and there is no undertaking by LPPF to post any such amendments or supplements on this presentation.
The Company will not be responsible for any consequences resulting from the use of this presentation as well as the
reliance upon any opinion or statement contained herein or for any omission.
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Thank you
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