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  • LIQUOR STORES N.A. LTD.Investor Presentation March 2016

  • Investor Presentation

    Caution Concerning Forward-Looking StatementsThis document (and oral answers to questions arising from this document) may contain forward-looking information that reflects managementscurrent expectations related to matters such as future financial performance and operating results of Liquor Stores N.A. Ltd. (the Company).Forward-looking statements are presented for the purposes of providing information about managements current expectations and plans andallowing investors and others to get a better understanding of the Companys anticipated financial position, results of operations and operatingenvironment. Readers are cautioned that such information may not be appropriate for other purposes.All statements, other than statements of historical facts, included in this document may constitute forward-looking information, including but not limitedto, statements concerning management's expectations relating to possible or assumed future prospects and results, the Companys strategic goalsand priorities, the Companys actions and the results of those actions and the economic and business outlook for the Company. Often but not always,forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", intend, "believe", "estimate","plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similarterminology. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light ofits experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to berelevant and reasonable at the date that such statements are made.By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise tothe possibility that the Company's assumptions may not be correct and that the Company's expectations and plans will not be achieved. Although theCompany believes that the forward-looking information in this document is based on information and assumptions which are current, reasonable andcomplete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from managementsexpectations and plans as set forth in such forward-looking information for a variety of reasons. Some of the factors that could affect future results andcould cause results to differ materially from those expressed in the forward-looking statements contained herein include, but are not limited to: risksrelating to government regulation and changes thereto (whether by court decisions, citizen referenda, or otherwise); competition; the state of theeconomy; the unpredictability and volatility of the Companys common share price; restrictions on potential growth; restrictions on potential growth asa consequence of the payment of cash dividends by the Company representing a substantial amount of its operating cash flow; changes in commoditytax rates and government mark-ups; risks relating to future acquisitions and development of new stores; the Companys ability to locate and secureacceptable store sites and to adapt to changing market conditions; poor weather conditions; dependence on key personnel; labour costs, shortagesand labour relations including the Companys ability to hire and retain staff at current wage levels and the risk of possible future unionization; supplyinterruption or delays; reliance on information and control systems; income tax changes; leverage and restrictive covenants in agreements relating tocurrent and future indebtedness of the Company; credit risks arising from operations; dilution and future sales of the Companys common shares; andthe potential lack of an active trading market for the Companys common shares and convertible debentures. These factors should not be construedas exhaustive.For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations,please refer to the "Risk Factors" section of our Annual Information Form for the fiscal year 2015, our 2015 Management's Discussion and Analysis,and our Managements Discussion and Analysis for the three months and year ended December 31, 2015, as well as the Companys other publicfilings, available at www.sedar.com and at www.liquorstoresna.ca.Statements that include forward-looking information do not take into account the effect that transactions, or non-recurring or other special itemsannounced or occurring after the statements are made, have on the Companys business.The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Companydoes not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, toreflect new information, future events or otherwise, except as is required by applicable securities laws.

    2

  • Investor Presentation

    Agenda

    Value Proposition

    Our Opportunity

    Our Growth Plans

    3

  • Investor Presentation

    Compelling value proposition Largest publicly traded liquor retailer offers exposure to stable and growing industry with significant potential upside

    Attractive business today

    Strong management team, with robust Canadian and U.S. retail experience

    Quality asset base prime & strategic locations

    Solid balance sheet

    Leading brands in Alberta, British Columbia, Alaska and Kentucky

    Increasing overall profitability despite market challenges in Alberta

    Well positioned for future growth

    Hard to replicate competitive advantages locations, scale and vendor relationships

    Fragmented industry ripe for expansion

    Experiential new store concept industry game changer

    4

  • Investor Presentation

    Significant market opportunity

    * Canadian beer, liquor store and agency sales (year ended March 31, 2015, Stats Can)** U.S. retail sales of alcoholic beverages (2015, Beverage Information Group) 5

    Our total sales in 2015

    $746million

    ~21billion ~$220

    billion

    US Market Size

    **

    *

    Canadian Market Size

  • Investor Presentation

    Proven strategy our 7 Point Plan is working

    6

    Enhance the Senior Leadership Team

    Invest in Our People

    Implement an Industry Leading IT Platform

    Invest in Our Store Network

    Increase Brand Awareness and Loyalty

    Increase Operating Margins

    Pursue Expansion

    1 2 3

    4 5 76

  • Investor Presentation

    Our 7 point plan is working top line growth

    7

    2.0%

    6.5%4.9%

    5.5%

    7.1%

    24.5%

    25.0%

    25.5%

    26.0%

    26.5%

    $300,000

    $350,000

    $400,000

    $450,000

    $500,000

    $550,000

    $600,000

    $650,000

    $700,000

    $750,000

    $800,000

    2011 2012 2013 2014 2015

    Gro

    ss M

    argi

    n %

    Sale

    s

    Sales GM%

    Percentage sales growth

    over prior year

  • Investor Presentation

    Multiple growth avenues

    8

    Organic Acquisitions Greenfield New Markets

    1 2 3 4

    18.5% increase in sales

    50 bps growthin gross margin

    13% of stores remodeled

    50% of stores have been planogrammed/reset

    Successover last 3 years

    Plans

    2016 - 51% interest in Birchfield (2 NJstores)

    2015 Edmonton store, converted to Wine and Beyond

    22 new stores* mix of large format and convenience stores

    2016: Connecticut2016/17: Massachusetts

    Open 4 - 7 new stores over next 24 months Renovate 8 to 12 stores per year

    Ongoing evaluation of opportunities

    * Over same period, we also closed/consolidated underperforming stores resulting in net increase of 5 stores

  • Investor Presentation

    Investments in stores are paying off

    9

    BeforeDense merchandising and dated fixtures

    AfterModernized signage, lifestyle imagery and flooring enhance the shopping experience to build loyalty

    20%ROCE

    Average same store increase

  • Investor Presentation

    Investments in stores are paying off, continued

    10

    BeforeDated fixtures and decor

    AfterModernized and enhanced shopping experience to build loyalty

  • Investor Presentation

    Preferred label increasing margins and loyalty

    11

    Strategy Source, sell and promote exclusive private-

    label products Grow as percentage of respective product

    categories (wines, spirits & beer) to deliver higher margins

    Implementation Training staff, aligning incentives Customer sampling programs

    1 McGraths sold for every 4

    Baileys

    #1 selling Pinot Grigioin Alberta

    Top 10 Vodka in the Alberta

    chain

    90pt rating from International Wine Review

    95pt rating from James Suckling

    90pt and Best Buy

    rating

  • Investor Presentation

    Preferred label: innovation to drive sales

    12

  • Investor Presentation 13

    Convenience formats Highly visible and accessible stores Great selection Prime locations near grocery stores

    Destination shopping Large format offers unparalleled value 8000+ SKUs of wine, beer and spirits

    Combination of Destination and Convenience stores expand consumer reach

  • Investor Presentation

    Convenience formats easy in + out, with the right selection and value

    14