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TODAY’SSTORE FRONT
RETAIL IS GOING ONLINE. COME ALONG.
Verkkokauppa.com Oyj Q1/2015, 24.4.2015, Samuli Seppälä, CEO
Questions during or after the presentation - [email protected]
Strong first quarter at Verkkokauppa.com, revenue grew 20% at stagnant retail market
Verkkokauppa.com’s Q1/2015
Retail is going online
E-commerce is natural development andevolution of retail business .
Why are consumers buying online?
• E-commerceoffersconsumerslower prices enabledbylowerfixedoperatingcosts.
• Wider selection, without need to keep everything in stock and needing less capital.
• Quicker and easier way of purchasing andfindinginformation.
• Notallretailbusinesscanbeprofitable - even online.
€>0?
”15€ avg. savings
per 100€”
Verkkokauppa.com concept
LOWER PRICES“Probably always cheaper”
Capital efficiency enabled by the leanest
operating model
Price according with slogan - regardless
of sales channel
WIDERSELECTION
BEST 24 HAVAILABILITY
TRANSPARENT AND CUSTOMER CENTRIC
Finland’s best source for product information,
including >150 000 reviews
Customer lifetime value maximisation - a happy
customer will return
• Revenue was 72.9 (60.6) million euros, +20%• Grossprofitwas11.7(10.1)millioneuros,+16%• Gross margin was 16.1% (16.7%) of revenue
• Personnelexpenses5.4(4.4)million,+24%• Depreciation and amortiz. 0.3 (0.2) million, +17%
• Otheroperatingexpenses7.6(3.4)million,+122%,• Otheropexw/oTeosto4.2(3.4)million,+23%
• Non-recurringitemsrelatingtotheTeostodispute was4.3millioneurosonprofitbeforetaxesand 3.4millioneurosonEBITDA. • EBITDAwas-1.3(2.4)millioneuros,-154%,• EBITDAw/oTeosto2.1(2.4)millioneuros,-8%
• Operatingprofitwas-1.5(2.1)millioneuros,-172%• Operatingprofitwas-2.1%ofnetsales(3.5%)• Netprofitwas-2.4(1.3)millioneuros,-279%
Verkkokauppa.com Q1/2015 P&L
Verkkokauppa.com Q1/2015 balance sheet• Inventory36.1(28.1)millioneuroson31.3.2015.• Cashflow1-3/2015was-19.5(-7.4)millioneuros.• Investments1-3/2015was0.4(0.1)millioneuros.
• Cash15.8(15.2)millioneuroson31.3.2015.• Interestbearingdebt1.8(2.6)millioneuroson31.3.2015.• Banklimits5.5millioneuros(notbeingutilizedon31.3.2015).
• Company currently utilizes almost all cash discounts provided by suppliers.
• Private label products typically have higher gross margin, but also higher stock turn around, which increases inventory value.
• Company has bought more inventory with better, older USD-rate.
Verkkokauppa.com Q1/2015main sales growth drivers
• Retail going online• Bolder,growthorientedpricing• Changes in department stores
• 23yearsofexperienceandvisibility• NASDAQFirstNorth-publicity• Brandmarketingincreased
We had sales increases and market sharegains in almost all categories.
”Thecompanybelievesthatretailwillcontinue going online and that Verkkokauppa.com’s sales will continue to grow during 2015 despite the weak economic environment.”
Q1 +20%
Q1/13Q2/13Q3/13Q4/13Q1/14Q2/14Q3/14Q4/14Q1/15
60.6mEUR
60.6mEUR
75.1mEUR
57.1mEUR
57.0mEUR
48.8mEUR
Revenue
68.0mEUR
86.6mEUR
72.9mEUR
Finnish e-commerce visit comparison
Source: Similarweb.com
Verkkokauppa.com’s gross margin and fixed costs
RetailinFinland(w/ocars)2013(total39B€)
29.1%
25.7%
Gross margin% Fixed costs% of sales30
25
20
15
10
5
0Verk.com 2014
(sales +16%)
15.4%
12.4%
EBITDA 3.1%
EBITDA 3.5%
Stockmann(FIN),2014
(sales -9.5%)
46.6% 47.2%
QliroGroup(SWE),etailer,2015Q1
(sales +6%)
13.1%16.1%
44.2%29.4%
Clas Ohlson (SWE)2014/2015Q3
(sales +6%)
”Additionalgrowthopportunitiesremainnotjustinnewcategories,butalsoinconsumerelectronicsproductsasFinnishdepartmentstoresare
lessening their focus on consumer electronics and some other categories”
Verk.com 2015/Q1
(sales +20%)
16.1%
13.2%
EBITDA 2.9%
Sources:StatisticsFinland,SoliditetandD&B.Grossmarginincludeschangesintheinventoryandoutsideservices.EBITDAiswithoutTeostoone-time-cost.
Verkkokauppa.com’s gross margin and fixed costs
Verk.com 2014/Q1
(sales +6%)
30
25
20
15
10
5
0
16.7%
12.9%
Verk.com 2014/Q2
(sales+24%)
15.5%
13.6%
EBITDA 2.0%
EBITDA 3.9%
Verk.com 2014/Q3
(sales +19%)
14.6%
11.8%
EBITDA 2.8%
Verk.com 2014/Q4
(sales +15%)
15.2%
11.8%
EBITDA 3.4%
Verk.com 2014
(sales +16%)
15.4%
12.4%
EBITDA 3.1%
”+1% gross margin increase =
+10% sales growth”
Gross margin% Fixed costs% of sales
Sources:StatisticsFinland,SoliditetandD&B.Grossmarginincludeschangesintheinventoryandoutsideservices.EBITDAiswithoutTeostoone-time-cost.
Verk.com 2015/Q1
(sales +20%)
16.1%
13.2%
EBITDA 2.9%
Verkkokauppa.com’s Q1/2015 fixed costs and margin development• Longtermlowpricesenabledbylowfixedcostsisoneofthekey growth elements for any e-commerce, including Verkkokauppa.com.
• New product categories typically have better gross margin compared oldercategories.Salesbyconsumerfinancingincreasesgrossmargin.
• Company has invested in several growth-initiatives, which required hiring new key personnel, carrying out more marketing activities, andlaunchinganumberofnewprojects.
• There’salwayssomevariationisthegrossmarginorfixedcosts per day, per month or per quarter.
• Even when launching new product categories or growthprojects,companyretainsitsmedium-term targetofimprovingEBITDA%from2013level.
Largest projects• Ownconsumerfinancingandcreditscoringservicesarestillbeing developed.Firstfirstfocusisincreditscoringandfrauddetection services.Currentconsumerfinancinghasincreased,whichhasresulted as more commissions paid to the company.
• Company is still developing own consumer-to-consumer-market place. C2Cisallaboutattractingmoretraffic,increasingadd-onsalesand salesofnewproductsandimprovingcustomerloyaltyandexperience.
• Current logistics development is mainly focusing in adding possibility to add more (leased) warehouses or direct shipments from suppliers. Flexibilityisthekey.Smallnumberdirectshipmentsaredonedaily.
• Development of better sales, inventory and availability forecasting engines,bothforinternal(purchasing)andexternaluse. Newend-useravailabilityforecastingenginelaunchedinJanuary 2015.
New categories• Now total 26 main categories and over 50 000 articles.
• ”Probablyalwayscheaperprices”,efficientslogisticsandleading lowfixedcostsbasearethefoundationforourplansfor introducing new product categories during 2015.
• Launch of three new main categories in January 2015 - babies and family, tools (diy) and luggage and travel. GPS/Sports-categoryhasbeenrenamedasSportsandNutrition.
• Latestlaunchofwatchesasnewmaincategoryon1.4.2015.
• Newcategorieswillnothavesignificantshortterm impactonsalesorprofitability.
• Looking also for stronger sales growth in our own brands and products (private labels).
Medium-term targetsThecompanyretainsitsexistingtargets:
•Thecompanystrivestogrowfasterthanitsoperatingmarketandtargetsan annual revenue growth of over 10 per cent in the medium-term.
•Thecompany’sobjectiveistoimproveitsEBITDAmargininthemedium-term compared to the level in 2013.
•Thecompanystrivestosecureasufficientequityratiotofinancegrowthofits business and targets to maintain an equity ratio of over 25 per cent taking into consideration the nature and seasonality of the company’s business.
Business outlookThecompanyexpectsnetsalesandoperatingprofit,excludingone-offexpenses,togrowduring2015comparedtopreviousyear.
Largest owners on 31.3.2015 Shares %1SeppäläSipiSamuli 3747916 49,9002RiteVenturesFinlandAb 769596 10,2463KeskinäinenEläkevakuutusyhtiöIlmarinen 384788 5,1234KeskinäinenTyöeläkevakuutusyhtiöVarma 344322 4,5845Op-Delta-Sijoitusrahasto 235278 3,1336Keva 198000 2,6367SijoitusrahastoEvliSuomiPienyhtiöt 109829 1,4628SkogbergVilleJohannes 105711 1,4079HartwallCapitalOyAb 82710 1,10110SijoitusrahastoDanskeInvestSuomenPien. 82000 1,09211 Op-Suomi Pienyhtiöt 76 000 1,012 12SrDanskeInvestSuomiYhteisöosake 60000 0,79913ThominvestOy 39000 0,51914FonditaEquitySpicePlaceringsfond 35000 0,46615KeskinäinenVakuutusyhtiöKaleva 24000 0,320
Share development (22.4.2015)
Q&AUpcoming events:• Q2/2015,Friday7August2015• Q3/2015,October232015
Quick links:• InvestorsEnglishSummary-www.verkinvest.com• CompanyReleasesmailinglistinEnglish-www.joinverk.com• CompanyInvestorWebcasts-www.verklive.com
Contacts:• Samuli Seppälä, CEO, [email protected]• JussiTallgren,CFO,[email protected]• [email protected]
Product highlight - GoZero
TODAY’SSTORE FRONT
RETAIL IS GOING ONLINE. COME ALONG.
Thank you!
