Super Retail Group Presentation

Macquarie Securities

2014 Australian Conference

David Burns

Chief Financial Officer

9 May 2014

Group Structure

Retail OperationsMerchandising

Marketing

21 stores

LeisureAuto and Commercial

290 stores 113 stores 57 stores

Group Logistics

Group Operations

Sports

13 stores 50 stores92 stores

Retail OperationsMerchandising

Marketing

Retail OperationsMerchandising

Marketing

To provide solutions and engaging experiences that enable our customers

to make the most of their leisure time

2

Our Vision

Our Mission

Our Goals

INSPIRING YOU TO LIVE YOUR PASSION

TO PROVIDE SOLUTIONS AND ENGAGING EXPERIENCES THAT ENABLE

OUR CUSTOMERS TO MAKE THE MOST OF THEIR LEISURE TIME

To be one of the 5

largest Australasian

retail companies

To achieve the

highest Team

Member

engagement across

the retail industry

To achieve higher

customer

engagement

ratings than our

competitors

To provide returns

to our shareholders

that exceed the

ASX 200 by 5%

3

Group Vision, Mission and Goals

Auto LFL sales up by 2.7% in the 44 weeks to 2 May (3.4% in the 18 weeks to 2 May)

Full year gross margin tracking above PCP

Full year EBIT margin is tracking towards circa 11.8%

Leisure LFL sales up by 0.7% in the 44 weeks to 2 May(negative 0.7% in the 18 weeks to 2 May)

Full year gross margin tracking below PCP

Full year EBIT margin is tracking towards circa 6.2%

Sports LFL sales up by 4.4% in the 44 weeks to 2 May (2.9% in the 18 weeks to 2 May)

Full year gross margin tracking below PCP

Full year EBIT margin is tracking towards circa 9.3%

Group Group development & unallocated distribution centre costs are expected to be circa

$10 million for FY14. Other Group costs are expected to be consistent with PCP

The Group is expected to recognise a $2.2m net after tax benefit from a tax review

FY14 capital expenditure expected to be circa $105 million, reducing to $90 million in

FY15 due to the delay of the Brisbane distribution center and increased investment in

stores in Auto

Net debt for June 2014 is expected to be circa $335m

4

Trading Update

Global competition International retailers setting up stores, acquiring domestic businesses and

targeting their on-line offer to Australia/New Zealand

Multi-channel Customers increasingly researching and transacting on-line. Consumers have

the power. Development of more agile low cost internet specialist retailers

Marketing effectiveness Proliferation of media channels leading to fragmentation of audience.

Customers increasingly using search and social media. Declining benefit from

traditional marketing and catalogues – increasing focus on direct marketing

Evolving business models Suppliers/brand owners becoming retailers, retailers developing their own

brands. Retailers competing with their suppliers

Workforce demographics Fewer young people coming into the workforce – retailers need to look at the

structure and cost of their workforce

Supply chain complexity Increased volume and shorter lead times of multi-channel retailing and

international sourcing increase cost and complexity of supply chain

Increased regulation Cost and complexity arising from increased regulation of business

5

Challenges impacting the Retail Industry

Historical levers of differentiation

will no longer succeed

Increasingly difficult to differentiate through product and price when

customers can access product from many retailers across the globe

Building a stronger emotional

connection with customers is a

must

The Retail brands need to have clear identities which must be

presented consistently across all customer touch points

Engaging and inspiring customers around their passions can be a

sustainable lever of differentiation

This will require significantly enhanced CRM capabilities

Organisational capabilities have

to be ‘World class’ not

‘Australasian class’

Capabilities need to be benchmarked against global competitors

An agile, low cost, responsive supply chain will be a pre-requisite to

compete with best in class global peers and to support global

sourcing of both branded and private brand product

Private and exclusive brands

represent a strong opportunity

Private brands to be developed and managed as true brands – not

just taking a low price lower quality position – there needs to be

investment in design and brand management capabilities

Aligning team member behaviour

and culture with customer offer

will be a sustainable advantage

Building a culture in which our team are focused on inspiring and

engaging our customers around their passions

Building a culture in which our team members can share our

customers passions

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Implications for Super Retail Group

Change Agenda One Group wide aligned and focussed strategic agenda

Developing the required multi channel capabilities quickly enough and at a

reasonable cost and managing change effectively

Immature multi channel management systems

Business Performance Driving improvement in performance of Rays Outdoors and FCO.

Sales per square metre across the Leisure division

Stock turns across all divisions

Gross margin maintenance in Leisure and Sports divisions

Supply Chain Effective sales and operational planning

Effective inventory management

Implementation of new logistics network and methods

Transparency of cost drivers across channels

Team Members Maintaining our culture as we grow

Attracting, engaging and retaining the team we need to deliver our plans

7

Key Internal Challenges

Understanding our

Customers

Developing a clear understanding of our customer’s leisure passions, their

search patterns, their buying behaviour and their opinion of our offer

Customer relationship management increasingly driving our store and

website design, ranging, pricing, promotions and marketing

Engaging Customers across

all Channels

Providing a consistent engaging and inspiring experience that reflects our

brand personality for our customers across all channels and interactions

Innovative and Relevant

Ranging

Consistent new product introduction. Tailoring the range at a store level

Extended ranging available on line through working with trade partners

Leading Private and

Exclusive Brands

Designing, developing and marketing a strong portfolio of private and

exclusive brands that can compete with international branded product on

features and benefits but provide protection against direct price competition

Optimising our Supply

Chain

Agile, cost efficient supply chain supporting growth in international sourcing

of 3rd party and private branded product and growth in on-line business

Optimised inventory management across the Group

Engaging and Developing

our Team

Developing and maintaining a culture that is consistent with our brand

values, facilitates a solutions focus and attracts and engages motivated team

members who share our customer’s leisure passions

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How are we going to win?

Group Strategic Initiatives

CULTURE AND

TEAMTeam Engagement and

Development

SUPPLY CHAIN

MANAGEMENTSupply Chain Management

Inventory Management

FUTURE

ORGANISATIONManagement Systems

Business Analysis

DIVISIONAL

INITIATIVESCustomer Relationship

Management

Multi Channel Development

Category Management

Private Brand Management

CUSTOMER

ANALYTICS

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Auto – Brand, Range and Service Development

NETWORKEXPANSION(325 STORES)

LFL SALESGROWTH(> 3% PA)

EBITMARGIN(11%)

PRE TAXROC (> 40%)

Multi Format New Store Program: circa 5 - 10 stores pa

Refurbishment Program increased to 50 stores paStore of the Future andSuperstore conversions

Range DevelopmentFocus on growth categoriesNew product introduction

Private Brand Development up to 50% of sales

Multi ChannelDevelopment

Inventory Optimisation- Stock turn > 3

Trade Partner Collaboration- Data Sharing - Forecasting - Inventory Funding - Performance Management - Supply chain efficiencies

Leveraging Group Programs

SCA Club +

(5 year goal)

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Leisure – Brand, Range and Service Development

NETWORKEXPANSION(225 STORES)

LFL SALESGROWTH(> 3% PA)

EBITMARGIN(11%)

PRE TAXROC (> 30%)

Multi Format New Store Program :Circa 5 - 10 stores pa

Refurbishment ProgramStore of the Future trial

Range Development- Camping, Caravanning - & apparel

Private Brand Development up to 25% of sales

Multi Channel Development

Inventory Optimisation- Stock turn > 3

Trade Partner Collaboration- Data Sharing - Forecasting - Inventory Funding - Performance Management- Supply Chain efficiencies

Leveraging Group Programs

Retail space optimisation

BCF and Rays Outdoors clubs leveraged

Rays Outdoors repositioning

FCO business improvement

(5 year goal)

11

Sports – Brand, Range and Service Development

NETWORKEXPANSION(250 STORES)

LFL SALESGROWTH(> 4% PA)

EBITMARGIN(11%)

PRE TAXROC (> 21%)

Multi Format New Store Program :Circa 10 stores pa

Refurbishment ProgramCirca 10 stores pa

Range Development- Rollout of ranging strategy- Exclusive brands

Private Brand & Exclusive Development up to 25% of sales

Multi ChannelDevelopment – Target 10% of sales

Trade Partner Collaboration- Data Sharing - Forecasting - Performance Management- Supply Chain efficiencies - Inventory Allocation

Leveraging Group Programs & Platforms

Testing new formats -Trialling Rebel Fit and Amart Sports local

Rebel and Amart clubs relaunch SRG Supply Chain Integration

(5 year goal)

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Commercial

B2B INTERFACE SALES TARGET$50M

PRE TAXROC (> 21%)

Rewards & Incentives- Interface to Corporates for Group

brands

Wholesale- centered around thegroup’s private label products- existing channels

Insurance- $15m opportunity- Strong solutions offer to

major insurers Aust/NZ

Petrol & Convenience- $100m accessible market- Targeting 25% share- BP pilot

Auto Trade Direct- $2.7bn accessible market- New Zealand pilot learning's for

direct trade and retail trade- Opportunity confirmed- Still determining the right

business model

Leveraging Group Programs & Platforms

(5 year goal)

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Customer Analytics

Objectives:

•Seamless and integrated delivery of

products, information and services across all

channels to the customer on a 24x7 basis

•Effective loyalty programs across all

businesses underpinned by an efficient CRM

• Increased understanding of customers at a

micro level

• Increased use of targeted marketing and

promotion leading to a reduction in mass

media advertising as a % of sales

Key Projects:

• Establishment of Customer Charter that

clarifies ownership and service levels for all

customer interactions

• Development and rollout of new loyalty clubs

for Rebel and Amart Sports

• Continued development of CRM analytics

and direct marketing capability, including

automation of e-mail campaigns

• Implementation of content development

framework and content management tool

• Roll-out of common technology platform to

support brand store initiatives

• Common web platform across the Group

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Supply Chain and Inventory Management

Objectives:

•Support the brands inventory optimisation

initiatives

•Clarity of supply chain cost drivers and ability

to select appropriate supply method

• Efficient flow of inventory to reduce logistics

costs as a % of sales by 1%

• Enhanced integration between promotion

planning, forecasting and replenishment

processes to increase promotional

effectiveness

• Improved Sales & Operations Planning

process

• Implementation of multi-channel fulfilment

capability to enable the required customer

service levels to be met

Key Projects:

• Roll-out of JDA forecasting & allocations

• Implementation of common replenishment

system to facilitate multi-user DC’s

•DC network strategy implementation – full

multi-user DC network

•Supply methods including integrated offshore

logistics hubs

•Clear, time-phased inventory reduction

targets as part of enhanced S&OP planning

process

• Enhanced management systems for

inventory and supply chain to provide greater

visibility of performance in these areas

•Group multi-channel fulfilment model – trial of

dark stores for all divisions during FY15

•Enhanced promotions planning process

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Supply Chain and Inventory Management

FY14 FY15 FY16 FY17

Logistics Investment Sydney DC

developed

Brisbane DC

developed

New network

implemented

Network

optimised

Systems Development Sports SAP

implemented

WMS developed

Sports SAP

optimised

WMS rollout

Trade Partner

engagement

Leisure DTS New

Zealand

Leisure DTS

Sydney

Leisure DTS

Australia

Primary Freight

Sports 3PL

migration

Freight

optimisation

Sports exclusive &

private label

Inventory Planning

JDA

F&R rollout

Leisure & pilot in

Auto

F&R rollout in

Auto & allocation

in Sports

JDA all modules

implemented all

brands

JDA fully

supporting S&OP

P&L cost (Deve.

Program & excess DC )

$10m $11m $8m $8m

Inventory $ per store

reduction

Leisure 10% Leisure 10%

Auto 10%

Leisure 10%

Auto 5%

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Future Organisation

Objectives:

•Reduce cost of doing business by $40 million

(including supply chain and inventory

carrying costs that result from the supply

chain program)

•Ensure the group continues to act with pace

•More flexible and efficient reporting and

analytics

•Development of management systems to

support the delivery of key business

functions and objectives

Key Projects:

• Store productivity

• Process improvement initiatives including

Shared Service review

• Procurement framework deployment

• Business Analysis and Reporting

development

• Management Systems Development

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Culture and Team

Objectives:

•Sustain team member retention at 75%

•70% of management positions filled internally

•Team Member engagement above 70%

•Time to fill retail vacancies below 4 weeks

•LTIFR – 30% improvement

•40% of Board and senior management

positions to be held by females

•The Group to be widely recognised as a

preferred place to start and develop a career

in the retail industry

•To build talent pools for the position of store

manager and above

Key Projects:

• Attraction: Group wide opportunities,

remuneration structures, social media, cultural

• Engagement: Engagement survey actions,

reward and recognition, communication

• Safety: Active leadership, risk management,

reporting, education, wellbeing program

•Capability and Succession: learning and

development programs, performance

management and succession planning

systems, learning management system

• Diversity: Gender initiatives, extending to

other areas of diversity, reporting, workplace

practices – recruitment, flexibility, internal

development

• Aligned Culture: Aligning team culture to

brand culture, customer engagement

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New Areas of Growth

Areas being evaluated

• Development of organic opportunities – e.g., Auto Trade Direct, SRG Commercial

• Traditional or multi-channel retail (e.g., VBM Retail)

• Acquisition of businesses within existing product categories

• Acquisition of businesses in other leisure product categories

Acquisition Criteria in Other Leisure Categories

• Bolt-on or new market that is fragmented and greater than $2.5bn

• Cultural Fit – providing solutions to help customers get more out of their leisure time

• Opportunity to leverage supply chain and sourcing to drive synergies

• Non premium – non perishable

• Market leading potential

• Deliver a post tax ROC > 15% existing category, > 20% new category

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