El Puerto de Liverpool, SAB de CV

El Puerto de Liverpool, S.A.B. de C.V.
July, 2016
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Note to Recipient
This presentation has been prepared by El Puerto de Liverpool, S.A.B. de C.V. (together with its subsidiaries, “Liverpool”), is strictly confidential, is not intended for
general distribution and may only be used for informational purposes. This presentation may contain proprietary, trade-secret, and commercially sensitive information
and neither this presentation nor the information contained herein may be copied, disclosed or provided, in whole or in part, to third parties for any purpose. By receiving
this presentation, you become bound by the above referred confidentiality obligation and agree that you will, and will cause your representatives and advisors to, use
the information contained herein only to evaluate a credit rating for Liverpool and for no other purpose. Failure to comply with such confidentiality obligation may result
in civil, administrative or criminal liabilities. The distribution of this presentation in other jurisdictions may also be restricted by law and persons into whose possession
this presentation comes should inform themselves about and observe any such restrictions.
Although the information presented in this document has been obtained from sources that Liverpool believes to be reliable, Liverpool does not make any representation
as to its accuracy, validity, timeliness or completeness for any purpose. The information set forth herein does not purport to be complete and Liverpool is not responsible
for errors and/or omissions with respect to the information contained herein. Certain of the information contained in this presentation represents or is based upon
forward-looking statements or information. These forward-looking statements may relate to Liverpool’s financial condition, results of operations, plans, objectives, future
performance and business, including, but not limited to, statements with respect to outlooks and growth prospects, liquidity, capital resources and capital expenditure,
growth in demand for our products, economic outlook and industry trends, development of our markets, competition in areas of our business; and plans to launch new
products and services, and the effect of legal proceedings and new laws, rules and regulations and accounting standards on Liverpool’s financial condition and results
of operations. All statements contained in this presentation that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “continues,”
“expect,” “estimate,” “intend,” “project” and similar expressions and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar
expressions are generally intended to identify forward-looking statements. The information in this presentation, including but not limited to forward-looking statements,
applies only as of the date of this presentation and is not intended to give any assurance as to future results. Liverpool and its advisors expressly disclaim any obligation
or undertaking to update or revise the information, including any financial data and forward-looking statements, and will not publicly release any revisions they may
make to this presentation that may result from events or circumstances arising after the date of this presentation.
Any projections included herein have been prepared based on Liverpool’s views as of the date of this presentation of future events and financial performance and
various estimations and assumptions, including estimations and assumptions about future events, may prove to be incorrect or may change over time. The projections
have been prepared and are set out for illustrative purposes only, and do not constitute a forecast. While the projections are based on assumptions that Liverpool
believes are reasonable under the circumstances, they are subject to uncertainties, changes (including changes in economic, operational, political, legal, and other
circumstances) and other risks, all of which are beyond Liverpool’s control and any of which may cause the relevant actual, financial and other results to be materially
different from the results expressed or implied by such projections. No assurance, representation or warranty is made by any person that any of the projections will be
achieved and no recipient should rely on the projections. None of Liverpool, its affiliates, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated or any of their respective directors, officers, employees, partners, shareholders, advisers and agents makes any assurance, representation or warranty as
to the accuracy of the projections. Nothing contained in this presentation may be relied upon as a guarantee, promise or forecast or a representation as to the future.
Liverpool undertakes no obligation to update the projections or any of the information contained in this presentation.
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ECONOMIC OUTLOOK
RETAIL SALES
ANTAD figures recorded a growth in SSS of 6.8% YTD. Specifically department stores grew 8.3%
INEGI Total goods and services
income (var %) Adjusted series
Source : INEGI
ANTAD & Wal-Mart sales (TS)
(var% 3m moving average)
Source : ANTAD and WALMEX
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ECONOMIC OUTLOOK
JOB CREATION AND WAGES
644.4K formal jobs were added during 2015, in 2016 cumulative to June +3.7% growth.
Wages continue growing in real terms.
Job creation. Number of workers affiliated to the IMSS (thousands)
Source : INEGI
Salaries (Growth vs YA)
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ECONOMIC OUTLOOK
Remittances to Mexico
US Dollar remittances continue to show significant growth, in USD and Pesos terms
Source : INEGI
*Quarterly change as (%)
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ECONOMIC OUTLOOK
CONSUMER PRICE INDEX (INFLATION)
Inflation continue showing historical minimums, annualized rate for 2016 is projected in the
range of 2.5%
Source : INEGI
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ECONOMIC OUTLOOK
CONSUMER CONFIDENCE INDEX
Consumer confidence reflects a moderate
decline in comparison with previous data
CCI
Key drivers:
•
•
•
Expectations on economic outlook
Security
Low inflation
Durable Goods Purchase Intention
Source : INEGI
12M Consumer Perception Index
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ECONOMIC OUTLOOK
CONSUMER FINANCE
Banks financing (var %)
Consumer credit (var %)
Source : INEGI and Bloomberg
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COMPANY HIGHLIGHTS
CUMULATIVE 2016 (JAN-JUN)
Total Stores VAR %
Same Stores VAR %
Source: ANTAD and Walmart
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COMPANY HIGHLIGHTS
2Q16 RELEASE (MILLION PESOS)
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COMPANY HIGHLIGHTS
2Q16 Release
• Cumulative SSS growth of 9.1%
• Increase in average ticket explains +80% of SSS growth
• Plans for opening new stores during the year: 4 Liverpool (La Fe Monterrey opened on March 5)
and 5 Fabricas de Francia
SSS Growth%
Non-performing loans % / YoY Growth %
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MEXICO’S DEMOGRAPHIC OUTLOOK
• Current average age is 27 years, younger than China and Brazil
• In the next fifteen years it is expected that population grows 15.2% to reach 130 million
inhabitants
• Work force will grow by 19 million in the next two decades
• It is also expected some social mobility as a trend. McKinsey estimates indicate that by 2030
Globally, middle-class spending will almost triple by 2030 and ~3 out of 4 people will own a
connected mobile device
Source : McKinsey, “The consumer sector in 2030: Trends and questions to consider “, page 3
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MEXICO’S DEMOGRAPHIC OUTLOOK
POPULATION AGING PYRAMID
Age
Group
65+
2030
20 - 64
2010
0 - 19
10
5
5
Male
Female
Percentage of Population
Source : Economist Intelligence Unit, World Bank, Mexico’s Populations Council (CONAPO), BCG Analysis
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COMPANY HIGHLIGHTS
Unique and Successful Business Model
Strong Presence Across Multiple
Socioeconomic Sectors
Full line department
store
Over 180,000 SKU’s
Source : Company´s filings.
32% of sales directly
imported from China,
Europe and USA
Private labels to
target specific
economic sectors
109 fashion specialty
boutiques
Sales mix with no
product category
above 25% of total
sales
Omni-Channel sales
strategy
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COMPANY HIGHLIGHTS
Unique and Successful Business Model
Highly Competitive and Fragmented Landscape
Supermarkets Info
Stores
Presence %
2,354
100%
682
100%
54
75%
224
78%
Source : Company´s filings, investor presentation and websites.
*Number beside each Company refers to: Number of Stores 15
LIVERPOOL AT A GLANCE
Undisputed Leader in Mexico
Sales Breakdown by Area
DF and Metropolitan area
Center
West
South-East
North
Bajio
Pacific
Fábricas de Francia
113 Stores in 59 cities
25 Malls in 16 cities
+
80 stores
+
29 stores
97% of our retail space is fully owned
4 stores
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Private Label Brands
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STRATEGY GOING FORWARD
Omnichannel
strategy
Fabricas de Francia
Service
SUSTAINED
GROWHT
Differentiation
People
Efficiency
Infrastructure
Fortress
Balance Sheet
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STRATEGY GOING FORWARD
• Revisiting growth
• Targeting emerging classes
• Cost efficient
• Flexible layout
• Abundant offering of potential malls that fit the model (over 550 by 2022)
• Down payments and installments
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STRATEGY GOING FORWARD
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STRATEGY GOING FORWARD
Omni-Channel Strategy
• Increasing payment options
Brick & Mortar
Internet
Phone
• Growing number of SKU’s online,
65% of our total stores catalog
• Unique SKU’s offered in our site
• Extended catalog for smaller stores
via tablets and Sales Associates App
• Click & Collect
Mobile devices
Social Networks
• Mobility
• Leverage store network
Kiosk
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STRATEGY GOING FORWARD
Service
• Better way to measure customer service with Net Promotor
Score (NPS)
• New training plans
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STRATEGY GOING FORWARD




Personalized Promotions
New / Exclusive Brands
Private Labels
Loyalty
Differentiation
 Strict control over SG&A
and NPL’s
 Disciplined Working Capital
 Credit portfolio productivity
Efficiency
People
 Succession Planning
 Merchant, planners & Store
Managers’ development
Infrastructure
Fortress Balance
Sheet
 Low Indebtedness
 Risk Management




Business Intelligence
Allocation & Assortment
Mobility & CRM
Central Warehouse
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THANK YOU!
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