Thank you. Good morning, everyone, and thanks for taking the time to dial in. On the call today, you have myself, Shane Foltzier, Managing Director and Chris Lauder, our CFO. As you're aware, we published our half year results to the ASX this morning,
so we would like
to talk you through those results. I'll now do a Page turn through the presentation, and we're happy to take any questions at the end. If we turn to Page four, we will talk through some of the details of the '1. After a challenging start to the financial year with markets going through various stages of closure due to the impact of COVID, we saw an improvement in sales through the second quarter to deliver comparable store sales for the half year of 4.5% in minus, with total sales down 9.8 for the half. Our cost of doing business was well managed, finishing at 50% for the half, delivering a half year EBIT, which was down 24% on the year prior to $30,900,000 This is excluding the impact of the new lease accounting standards.
And for the sake of clarity, all of the numbers we will talk to today and included in our presentation are after removing the effect of the new accounting standards so that they are more easily comparable with prior years. Our global rollout remains a key focus with a net 25 new stores opening for the half year. And in The U. S, we now trade from 62 stores across 15 states. Our European expansion has been fast tracked with the acquisition of Beeline's European retail business, and we are ready to start to take on these stores commencing the March 1 with the first market being Luxembourg.
Cash flow from operations was $52,000,000 and cash conversion at 131%, reflecting tight cash flow management and inventory control as well as the impact of rent deferral. At half year end, we held $42,000,000 of cash and no debt. As a result, the Board have announced the resumption of dividend payments after no final dividend was paid for FY 'twenty, we and are pleased to be paying an interim dividend of $0.20 to be paid in April. If we turn to the financial overview on Page five. As I noted earlier, revenue for the period was down 9.8%, with comparable store sales also down 4.5% for the half.
Gross margins were lower, with CODB well managed to come in flat on last year at 50% sales, and this resulted in our EBITDA being down 15% to $39,600,000 Depreciation was higher as a result of the CapEx spend in prior years on new store openings. And as a result, EBIT finished the half down 24% to $30,900,000 Pleasingly, despite the continued disruption to our business throughout the period, we were able to finish the year with a very strong balance sheet position. Turning to Page six. We have tried to make the impact of COVID on our store network clearer for you. As you can see, our store network was impacted by a number of temporary closures throughout the period, with the Victorian market closed for approximately three months from August to October, followed by closure periods in The U.
K. And France in November and December. If we turn to Page seven, we've spoken to the sales impact from COVID. And whilst our sales for the half were down overall, we did see an improvement in our sales trends through the second quarter, delivering positive comparable store sales for the quarter off the back of a strong Christmas trading period. As we've said previously, the store closures we have had to deal with over the past year have given us a strong impetus to drive online, and the investment made in our digital platform has helped us to offset some of the lost sales from our physical stores, with total online sales up 335% on last year for the half.
On Page eight, you will see our sales by region. Our sales are still down on last year as a result of COVID, the Australian and New Zealand markets have been our strongest performers in the period, with a faster recovery than other markets as a result of less restrictions in place. This allowed these two markets combined to deliver strong positive comps for the half. Now Asian markets were the first to face disruption from COVID and have had continued to be the slowest to recover at tourism levels and the overall restrictions on retail trading impact heavily on mall foot traffic. Europe has again impacted been impacted by COVID, with the bulk of The U.
K. Stores closing again in December, impacting our Christmas trading period. And in The U. S, our stores continue to be disrupted. However, total sales are continuing to grow as a result of continued new store openings.
Turning to Page nine. Gross profit was $113,400,000 at 77.2% gross margin. If we looked at our margin on a constant currency basis, it would be tracking at 77.8%, and this reflects the impact from a lower USD hedge rate in this period. The remaining decrease in margin is a result of our decision to maintain high levels of inventory provisioning at the end of the half as a result of the lockdowns experienced across a number of markets late in the half, and these lockdowns are continuing. Gross margin was also negatively impacted by an increase in freight costs due to COVID and the general shortages in freight availability.
If we turn to Page 10, we'll talk to our cost of doing business. A strong focus on store wages during the half enabled us to deliver a lower store wage percentage than prior year, which was pleasing a pleasing outcome, especially given the lower sales over the period. A refocus on our support cost structures implemented in FY 'twenty to combat COVID also helped to keep our cost of doing business under control helped offset some of the one off costs associated with the Beeline acquisition. Additional to this, we have been able to negotiate improved rent terms as well as abatements across a number of stores during this period that also contributed to our strong cost of drilling business management. I'll now hand you over to Chris Lauder, our CFO, to talk through cash flow and the balance sheet.
Thanks, Shane. Turning to Page eleven. You'll see that despite the ongoing disruption to our business and associated lower profits during the period, cash flow was again strong with cash from operations before interest and tax of $52,000,000 for the half and operating cash conversion of 131%. We were able to again keep tight control over our working capital with inventory well managed and continued rent payment deferrals also assisted in delivering this position arising from situations where we have agreed such deferrals with our landlords as well as where rent has been withheld pending finalization of abatements, both of which we expect to reverse in the second half. Inventory continued to be well managed through the first half with lower closing stock levels than prior year, even with a net 21 more stores trading than the same time last year.
Capital expenditure for the period was $6,800,000 predominantly from new store fit outs and refurbishments upon existing stores upon lease renewal. This represents a reduction on prior year CapEx spend with 29 new stores built for the period compared to 55 stores built in the first half last year as well as a reduction in the number of store refurbishments undertaken as we temporarily pulled back in this area to conserve cash and focus our energy on trading our stores through the period of disruption. Whilst CapEx for the half was lower than prior years, we still saw a large increase in depreciation expense as the impact of prior year CapEx spend flowed through. These items combined helped to deliver closing net cash of $42,500,000 a net $22,000,000 increase on the position of June 2020 with no debt at the end of the period. Turning to the balance sheet on Page 12.
You can see that it remains strong, which has allowed the Board to announce an interim dividend of $0.20 per share payable in April, franked at 50%. You will recall that in the prior year, the Board elected to defer the payment of the interim dividend, which was ultimately paid in September, no final dividend paid in relation to FY 'twenty. So it's pleasing that our strong balance sheet position has allowed us to return to the payment of dividends, with the interim dividend representing a $05 increase on the interim dividend from the prior year. As we've said previously, the Board will continue to assess dividend levels each half year and determine the appropriate level of dividend based on profitability, cash flows and future growth CapEx requirements in the context of prevailing economic conditions. The Board do not currently have a specific dividend payout ratio and will continue to base dividends on the cash flow needs of the company and the structure of the balance sheet.
I'll now hand back to Shane.
Thanks, Chris. If we turn to Page 13, a quick update on store numbers. The key driver of future growth for La Vista continues to be our international store rollout, with 66% of our store network now trading outside of Australia. We finished the period with four sixty stores trading with a net 25 new stores opening during the half year, which comprised of 29 new stores opening and four stores closing as we continually optimize our store network. The rollouts in The U.
S. And France continued through the first half. And whilst this slowed as a result of the COVID disruption, we now have 25 stores trading in France and 62 in The U. S. Across 15 different states.
Our negotiations for new sites have been slowed both by having to negotiate rent abatements and reductions due to COVID across numerous markets and the landlords' reluctance to agree new long term deals that both parties would be comfortable for with new locations. That said, we remain confident in our expansion plans, and we continue our diligent approach in the selection of new store locations and appropriate rent economics. Turning to Page 14. I will talk to the progress we have made in recent times in the relation to digital. Our focus on our digital capabilities accelerated during the initial COVID lockdown period in FY 'twenty, and this has continued with the sales growth of 335% for the first half.
The digital channel remains an important part of our global strategy, critical to providing our customers with the full range of shopping options that they were looking for. We continue to invest in support structures to drive ongoing growth in this area and remain focused on maintaining the profitability levels of our online sales. We will continue to enhance our digital capabilities with current initiatives, including a new dedicated European warehouse and increasing our digital storefront to six new European markets aligned to our acquisition of the retail stores in those markets. Turning to Page fifteen. I will now talk in more detail around the Beeline acquisition we announced in November.
As previously discussed in November, we signed a deal to acquire the European retail business of German accessories and fashion jewelry wholesaler Beeline, consisting of retail stores across seven European countries, six of them new to La Vista as well as adding additional stores to our existing French footprint. Under this deal, we will convert the existing Beeline retail stores currently branded as either six or I'm to La Vista and trade them in line with our LaVisa stores globally. Whilst there were 114 stores in the Beeline retail network, after rationalizing the portfolio of stores, we currently anticipate trading from around 90 of these stores, with the remaining stores either having a lease expiry or lease break having already taken place or to come in the near future. We have also added to our leasing capability in the European market with a new leasing executive joining us in Germany to complement our leasing team in France in order to continue to source new locations. We will initially focus on the markets that we are soon to have stores operating in and hope to add to our portfolio of stores in these markets in the near future.
We take possession of all of the Bee Life stores from March to May, with the Luxembourg stores being refitted at the March. As previously announced, the purchase price for this business is EUR 70 for the shares. And we wanted to clarify this as there seemed to be some confusion when we announced this deal. Further to this, it was negotiated that at the time of takeover of the stores that there is a requirement that the business contains €11,800,000 of cash at handover and no debt, resulting in Beeline effectively paying us €11,800,000 to take on their store network. We expect to incur approximately €6,000,000 in cash outflow to fit out and stock out these stores, with the transaction, therefore, cash flow positively positive immediately.
As a result of the much larger European business following completion of this transaction, we are also investing in additional support team in both our global support office in Melbourne as well as in Cologne, Germany, which will provide the platform to drive continued growth in these important markets for us, with this transaction giving us the opportunity to drive a number of new markets at pace. On Page 17, I will talk to the trading update and outlook for the coming financial year. Trading for the first seven weeks of the second half half has seen continued strong performance from the Southern Hemisphere market and challenging trading conditions in the Northern Hemisphere, with comparable store sales for this period of positive 12% like for like overall. A continuation of the improvement in the comparable store sales in Q2 with AustraliaNew Zealand leading the way with strong comp sales. The acquisition of the Beeline retail business is expected to be completed as planned from March to May year, and we continue to focus on opportunities for expanding our store network.
However, aside from the addition of the circa 90 Beeline stores, our store opening progress is expected to be slower in the short term, as discussed previously. The store network is currently at four sixty stores globally, excluding the Beeline stores that are about to come into the portfolio. Our balance sheet remains strong with available cash and debt facilities supporting continued investment in growth. We currently have 42 stores in The UK and 23 stores in France closed temporarily due to the continued government lockdowns, with stores in Malaysia now back open after being closed for a period of four weeks. We've also experienced the impact of short lockdowns in Australia and New Zealand over the past seven weeks.
However, all stores are now currently back trading in those markets. As a result of the current uncertainty in the global economic environment, we are not in a position to provide any further information in relation to outlook our outlook of the business. So in summary, on Page 18. Our sales levels have shown a solid recovery through Q2 after the challenges faced through the first quarter. However, some markets continue to remain heavily impacted by COVID.
We are pleased with the progress we've made in digital with increasing our contribution from online sales. And we're also able to control our CADB well during the period, which has enabled us to continue to invest in building the platform for future growth. Our international expansion continued through the period with 25 net new stores opened and the opportunity to accelerate our European expansion with the Beeline acquisition, bringing us six new markets all at once. Our continuing strong balance sheet position has allowed for the announcement of an interim dividend of $0.20 per share and leaves us in a strong position to again move forward with our global growth plan. So with that, I want to thank you for your time today, and we're happy to open that up to any questions.
Thank you.
But your first question today comes from Jo Little from Morgan. So please ask your question, Jo.
Morning, Shane and Chris. Thanks for your time. Just firstly, you mentioned that inventory provisioning, so it sounds like you went pretty hard there, particularly in the Northern Hemisphere, I suspect, as we went into further lockdowns. I guess how much did that contribute to the GM step down in the period? And how hard do you think you've gone on that?
Thanks, Joe. Chris here. I think from memory, the constant currency margin was down around 100 basis points. So probably around half of that was the provisioning impact. So as you said, with those markets closing just after the end of the half, we thought it was prudent to provide a little bit extra to make sure that we covered for that stock that's sitting there and aging, unable to be sold at the moment.
Okay. That's great. And I'm assuming you accrued full rent in the Northern Hemisphere where you haven't kind of finalized any abatements. And therefore, should we assume we get some reprieve this half or into FY 'twenty two as those deals have included? Should you execute on them?
Joe, Shane here. Yes. Look, we if we haven't finalized deals with landlords, then we've accrued the full rent. Obviously, working towards locking down those negotiations. We're fortunate enough to get with our strength in Australia and good relationships with landlords, we managed to get those down locked down in prior periods.
But we're sort of working through The U. S. And The U. K. In particular.
So any discounts or abatements we achieve in those markets would then see a reversal of the difference back onto the P and L in the next six months.
Yes, great. And just Shane, look, you've said that store rollout will slow and understandable over the balance of the calendar year. I guess you did 25% in the first half, 90 in Beeline and maybe we get another few in this half, so maybe say 120 new stores including Beeline in 2022. How far should we I know you're not giving guidance, but how much we assume that kind of slows down from an organic perspective? I mean would you be happy if you got kind of half that number in FY 'twenty two?
Or is it just too early to say?
Yes, it's probably too early to say because the lag time on new stores in the normal hemisphere is probably longer than we're used to in previous reporting periods with Asia and Australia. But we're I mean, where we sit today is the landlords are probably more distracted than the retailers or in our case, can only talk for ourselves at sorting out abatements, rental discounts, lease expiries because, of course, any retailers that got lease expiries at the moment are sort of renegotiating their rents. But we do believe that as sort of the sun comes out, so to speak, that everyone has to start looking further down the road at vacancies in centers, and we're a willing negotiator of new location, all being that we need to be prudent at the moment with what we're negotiating because we're in a bit of a bubble in Australia, of course, with the challenges that the rest of the world are facing. So as the weeks go by, months definitely, but as the weeks go by and there's a bit more clarity about what everything is going to look like and hopefully that COVID is in decline in the Northern Hemisphere, then it really turns our mind to getting more deals done.
As we discussed earlier, we've got leasing execs about to start on the ground in Germany, on the ground in France, on the ground in America, and the landlords are aware that we want to get deals done. But we do think it's probably going to take another three months for us to have a clear view on what how fast we can get back into our rhythm. We know we'll get back into our rhythm, but it's the willingness of landlords to come to the tables and acknowledge there's some short term issues to getting deals done that's preventing us moving faster.
Okay. And just lastly, I'll hand over to somebody else. Just on Beeline, incredible terms to that acquisition, I guess, Chance, Shane. Any further insights or thoughts on the quality of the deal you've done a few months down the track? How many Yes. For
this business for
Look, I mean, we'll know soon enough because we step into these stores in the next few weeks. The positive is these stores were already trading with 60% of their offer was fashion jewelry and 40% was other products. So the benefit we have is we're taking over stores that don't need full refits because, of course, the raw cost of building 100 stores from scratch is a huge number in itself. So we're budgeting not to have to spend that much money on each store to get them transformed into a La Vista store that will take us from the short to the midterm. And then as we find our feet, we'll go back to landlords and renegotiate new terms and do full printouts in their stores.
But the for those of you that have followed our stock for a period of time, the hard part for us has been to get that foothold of the first three to five stores in each market, and that can take years. So to fast track the sort of footstep into these markets with a considerable number of stores, I think, is going to prove to be a big benefit in the long run. And again, we're already talking to landlords about filling in the gaps in those markets. So yes, it's in front of us to get this done now because we now have to transform 90 stores in two months into La Visser and get them up and trading. And we've got aggressive targets internal targets on how quick we can turn those stores around to LaVisa stores.
So yes, the next few months are going to be interesting for us. But the pleasing thing is we've got a very capable team in Europe. Obviously, in normal times, we'd half of our crew would be up there to help, but we're pleased with the quality of crew we've got on the ground in Europe to get this transformation as still it's done.
Thanks very much for your time.
Thanks, Jason.
Okay. Your next question comes from Callum Sinclair from Macquarie. Please ask your question, Callum.
Hi, guys. Just one or two for me. Just on the gross margin side of things, just the hedge rates when they roll off in the full year, can you just provide some clarity on that?
Sorry, can you say that last bit again? So when they roll off, you say in the full year?
Yes. So when obviously, hedge rate in the first half was obviously lower than spot. So just when those hedges roll off and you start to get a bit of a benefit from the high Australian dollar?
Yes. So we won't I mean the current spot is up in the 77 range, and it's only really just pushed up there. So obviously, we take hedging over time, and that gradually increases as we average up. So for the remainder of the second half, our average hedge rate will be a little bit higher than what it was in the first half, but it won't be up at those sort of 77 levels. So we won't see that until F 2022
start to come through. Obviously, it has
to stay there for a little
bit of time to average out up to that sort of level.
Yes. So it's only a small benefit in the second half, small FY 'twenty two if we stay there?
That's right. Yes.
And then just on the tight cost control during the period. Just wondering how much of the support cost side of things is permanent or whether you add some of the savings back as things recover in the Northern Hemisphere?
Yes. I think that's probably a good way to look at it, Kalyn. Obviously, we took a lot of action through FY twenty twenty to reduce the cost base when COVID really hit. But we have reinvested a fair bit of that in support structures to run the much larger European business. I mentioned earlier, that we've put a lot
of heads on here in Melbourne as
well as in Cologne in Germany to make sure that we fed that down effectively. I guess we're running the business to try and hold that cost of doing business percentage consistent with where it was pre COVID. And then obviously, let's start to get that down. And if we can, there's obviously a lot of investment we have to make deliver this sort of thing. You there, Keller?
Sorry, I was on mute. Just I know Joe already asked on the store rollout, but just with the flow rollout ex the Beeline acquisition, if landlords do sort of come to terms and reduce their rents down to what you see is appropriate, would you be happy to sort of step into that and sort of grow stores or roll out stores faster than what you're indicating?
Yes. I think I mean to give clarity there, the landlords are acutely aware of what we're looking for, as any retailer would be looking for to open in this environment. In simple terms, what LaVisa is looking for is some understanding that we're not out of the woods in the Northern Hemisphere, especially and there needs to be some protections around entering and opening stores in the middle of COVID. And then that's sort of like a new that's a new thing for everyone to come to terms with. So the landlords are aware of what we want.
We're ready to go.
I think over time, the landlords will come to terms with what we're looking for. Probably not what we're looking for, but what most retailers, especially in the non agency, would be looking for to expand in this market. So I don't think it will take years, but I don't think it will take weeks. So it's somewhere in between there where the meeting and the mines will take place because if there's vacancies in shopping centers, it's no good for anyone. But it's just probably obviously doing deals outside of the norm have an effect on valuations of shopping centers and so on.
So sometimes bigger than getting a deal done that works for Luisa and works for the landlord. So I think that's just going take a bit of time to wash through.
Your next question comes from Mark Wade from CLFA. Just
starting with the second half to date figure you've put out of 12% like for likes. I mean, that's an outstanding number. What would it be, Chris, if you unfortunately, if you included the stores that are closed in there, so the so called unadjusted number? Would it be more like zero?
Look, we don't call out those numbers specifically. We can probably work backwards and work it out using some averages of average store sales. So down.
Okay. And moving on and maybe one for Shane. When you're thinking about the brand's longevity, what are some of the real critical factors in there given I mean the brand's now, what, ten years old or so? And just what's going through your mind as you think about the next ten years?
Look, I mean, it's an interesting question because this there was a similar question that we got asked when we actually went to market, became a public company. We are I mean, we're fixated on our brand. We only do fashion jewelry, and we're that's all we do, that's all we worry about. So it's all about quality of product, quality of offer to our customers and not letting them down. So every experience they have in La Vista store, be it a physical store online, being a good one.
So we our simple belief is if we can stay true to our product offering and be first in market with great pricing to our customers, that we'll continually grow our customer base. And we really just try and keep it as simple as that, keep the store economics in each store tight. And we expand where we see appropriate opportunities, and we don't expand we sort of probably don't build the pressure that sometimes comes upon us from the market or others to expand at a rapid pace or any pace that anyone else wants, that every deal has to stand up for itself. So we've got tight disciplines in our leasing and then tight disciplines in our buying and product selection. And those two things combined with strong operational discipline in the field has allowed us to achieve what we've achieved to date.
So if we stick to those basics, we should continue to achieve a good outcome in the future.
Fantastic. Thanks so much.
Okay. Your next question comes from Sam Tieger from Citi. Please ask your question, Sam.
Hi, guys. Good morning. Can you talk about your ability to get product out of China now given some of the freight delays going on? And I guess, how many weeks at the moment is it from design to getting the product on a shelf in store to sell?
Yes, Sam. It's probably we had some challenges between more recent challenges around the Chinese New Year and just getting freight out. At one stage, there was a massive shortage of shipping containers ex China. But really, what we've seen over the last six months in particular is freight costs going up, supply and demand issues of getting freight out of China. So it's probably not the timing as much as the cost of getting it uplifted out of China and getting it around the world.
In simple terms, because we airfreight the bulk of our products, because there's so few passenger flights going around the world, then the cargo haulers are basically in a good position or basically monopolizing the market of freight around the world. So from that point of view, had seen our freight costs increase, and we assume they'll come back down as the supply and demand of getting freight around the world sorts itself out. As far as from design to shop floor, we're probably still in that six- to eight week turnaround from getting stock ordered to getting it into our stores. And then as we expand into Europe, those time lines, depending whether we air freight or sea freight, may change slightly. So the timing hasn't changed much.
It's the cost of getting it around has probably is where we've seen the impact.
All right. Cool. And then what would be the key lessons that LabVICE has taken from Spain to ensure some of these new beeline markets will be successful that don't follow the same path as Spain?
Yes. I mean Spain, we were making progress in Spain. However, landlords took a sort of hard response. If you go back to sort of March, April, when those stores were closed, and again, don't quote me on the exact date, but early last year, calendar year, the response or the support from landlords was poor, so we closed those stores. So that's probably one of the main drivers of exiting that market.
The ranging across each individual European market, we've got the team structure in place to manage I mean, the moment, we manage three or four main buckets of product, Asia, Australia, America and Europe. So we'll have to adapt to the market changes and the nuances that we see in those European markets. But ultimately, we've got to get up and trading and start selling product and start taking a read of what the customers are buying for us to react to that. So I think we're in a slightly better position with a bigger structure to if there are nuances that we need to adapt to, that we will. One of the main drivers we've got from Spain was just a lack of support from landlords at the start of COVID.
Got it. Okay. So there's nothing structurally wrong with Spain. So if the landlords came back and said we want to be more supportive, you could go back there again?
Yes. We're probably not going to hurry back to Spain. Our sales were at the lower end of the spectrum from other markets, which is why we haven't expanded at pace. But yes, the catalyst was COVID, not performance.
Okay, cool. And then just in terms of Beeline, the '24 closures, which countries are these concentrated in? And what's the risk of more closures in 2024 if you kind of look out in the next six to twelve months?
I'll talk to the macro, and then Chris can sort of work through the numbers or talk to the numbers. So basically, we've taken over a portfolio of stores. And the average lease tenure with lease breaks is somewhere between three to five years. So at any one time, you've got roughly 20 or 25 leases in each year, giving us the option to either break a lease, end a lease, etcetera. And some of the bottom dwellers in those markets we've looked at, either duplication in France, which is already there, or some bottom dwellers in other markets that we took a view that to sort of cut the tail off somewhat to ensure the rest of the stores perform strongly.
So the stores that we're moving into have are the ones that we believe have got a strong future for us. So we'll get in and trade those stores. And again, once we get a trading pattern on those stores, we'll have a better view of what the long term future will look like for each of those stores.
Sam, think if you have a look at the table we put in the presentation, if you compare that back to what we put out when we announced the deal, you can see where the changes are, mostly in Germany and France from memory. The bigger markets, obviously, Germany has a lot of stores there and lower trading ones where the leases are up, so we decided to not go ahead.
Okay, cool. And then last question. I appreciate that you guys have indicated it's really the landlords which are delaying the speed of the underlying rollout. But given this year is going to be a big year of BLM integration, are you comfortable you could roll out a lot of stores excluding Beeline if the landlords came to the party and executed on that and the Beeline execution and the Beloan integration, sorry.
Yes. Look, I mean, the Beloan integration, we've been working on it since last year, calendar year. And the sort of the pressure points on the business get closer to handover and then handover. So theoretically, our store leasing team, our store build out team, once the stores actually get transformed to La Vista, theoretically, their job is done. And then the operational team at store level, their function starts, which is, in my mind, the most important one to take we're taking on a lot of the Beeline team in the stores.
So their job then becomes the reeducation of how we do things around here at La Vista and so on. So the capacity with our build out teams and our stores build out teams and selling around the world is there to take on more stores. But as I said earlier, I think it's going to take a bit of time for retailers and landlords to find the new norm in getting deals done, especially in the Northern Hemisphere as hopefully COVID starts winding back. Your
next question comes from Wilson Wong from Jarden. Shane
and Chris, can you just clarify how much of the decline in employee expenses in the first half was due to temporary store closures?
So broke up a bit there. What was the question again?
So the decline in the employee expenses in the first half, how much of that was due to temporary store closures?
Yes. I mean, we couldn't call out a specific number on that. Obviously, there was a component of that because we still came down and weren't paying them while they were furloughed Yes, we've called out, we managed store wages well during the half in holding that percentage to sales in spite of lower turnover. So yes, I'm not sure exactly how to answer that question for you, because we don't generally break out that level of detail.
I mean, our focus is on managing the store wage costs relative to what's happening in sales and that's what we were able to achieve.
Sure, sure. Thanks for that. Just on can you talk through the expected payback period of the range of Beeline stores upon conversion?
The structure of that deal, such as they paid us to take on that store network. So obviously, in doing that, some of the rents are higher than what we would normally pay. So in their own right, before that amount of money, that payback period is longer. But as that basically releases back against the P and L over the lease term, we would expect to see the same sort of metrics that we see in our other more similar markets, so The U. S, U.
K, France. So you're really talking in a normal store a normal store fit out trust should be in that sort of two to three year range at most. But in this case, we're not really fitting paying much to fit out the stores,
a bit shorter than that.
Sure. Just in terms of how it compares to the rest of the group, what would you sort of be expecting in a normal state less than twelve months?
Sorry, can you say that again? Yes,
sure. So how it compares to the rest of the store base? Would you expect these stores to essentially have a payback period of less than twelve months as well?
Payback periods vary around the world. So it's not less than twelve months everywhere that we operate. So some of the markets that are lower cost obviously pay back a lot quicker or where we've got lower cost of goods stores. So the Beeline stores are more likely to be in line with what we've been saying about the other Northern Hemisphere market, so longer than that one year, so probably more around the two years, two to three years.
Sure. And just my last question is around the online sales mix. So are you able to just provide just a sense of what percentage of sales were conducted online in the first half and where you sort of see it over the medium to longer term?
We don't call out the contribution of online sales.
Sure. Thanks a lot.
We have a question in queue from Julian from EAP. Just
a couple of questions from me. Firstly, on that wages bill, I see that you received JobKeeper payments of $10,000,000 Would it be fair to assume probably $3,000,000 in
the current half to come through?
That's the number for the current half,
No,
no, for the second half, would you expect another three, given it ends in March?
We stopped getting junkheads in September.
Right. Okay. Great. Cool.
And second question, with the clearly, delays in getting some new stores because of the rent negotiations or whatever, can you just confirm that hasn't changed at all your enthusiasm for The U. S. Market and even
The U. K. As well?
No. I mean we're watching closely with what's happening with COVID. So we're going to be diligent in what we do. Obviously, The UK has been closed since December and still is closed. So but we're also confident that this will sooner or later move behind us and the world will resume to some sort of normality.
So at the moment for us to do a deal today, there has to be a lot of protections around trade and what happens if the stores go through a closure and what level of trade is going be running through the malls in the short to midterm, which is why it's been hard for us to achieve deals because there's a lot of things that we want that the landlord probably has to come to terms with, and that's just going to take a bit of time to flush through. So we do believe that these big powerhouse economies are going to continue to be powerhouse economies in the future. But at the moment, in the middle of COVID, it's just hard for us to find a way through and commit to a deal without a lot of protections. And the landlords they understand the protections we're looking for, but it's everyone's busy at the moment, again, working through the sort of crisis management, so to speak. So it's probably hard to get a good audience to get some new deals done.
And we think that as the sort of crisis management slows down, then things will start finding their feet again and get back to normal.
Right. But in terms of like in The U. S, like where the less restricted stores have been, just the resonance with the customers, it's at least as good
as you were hoping for?
Look, from my this is not a political statement, but they're quite resilient over there because they've just most stores have stayed open right through COVID. And they're still I've lost track of the infection rates, probably most of us still have slowed down from looking at exactly what's happening in each market as much as we stay close to it for obvious reasons with our business over there. But yes, we think it's just going to take a bit of time to come good, but there's not many pockets of America that haven't been severely affected. Therefore, it's hard to say, well, if every can't sit here today and say, well, if every store continues to trade like they do in Florida, we'll be fine because America has just been affected across the board. But yes, so hence, our position today is trade the stores we have and continue to talk to landlords about what we need to open in the short to midterm.
And then we'll see our sales resume back to normal.
Cool. Thanks, guys.
Okay. Your next question comes from Sam Hadad from Bell Potter Securities. Please ask your question, Sam.
Hi, Shane and Chris. Just I want to get some around the 14 stores that were opened in the second half sorry, in the first half in The U. S, were they on previous deals done? Or were there any new deals?
Yes, they were basically, the bulk of those were on deals agreed prior to COVID that we delayed through the openings. There was a couple of deals done with the sort of terms I've just spoken to, but they're probably harder to get through. So the bulk of those deals were deals that were already in play prior to COVID.
So it sounds like the immediate future in The U. S, there won't be much at all opening in this current half, given that negotiations across the four major landlords are still ongoing?
Yes. Our focus in the next in the half that we're sitting in today, our focus is getting Beeline executed well, and there'll be small numbers of other stores.
And those other stores will be mostly in other territories outside The U. S. And The U. K. By the sounds of it?
Yes. There's just been a scattering of stores across the world with 1s and 2s. Yes.
And just my last question is just on the acquisition opportunities and competitive environment that you're seeing. Would you happen to execute on acquisition even though you're in the midst of integrating Beeline?
Yes, we would, but we're not actively looking. I mean and I've said that consistently, Beeline, however that deal got done, it's sort of yesterday's news now, I suppose. But if anything rolls around, yes, we look at it. And again, for the people that have followed our stock for a period of time, in previous results, I've talked to sort of six I'm Group in Germany being one of the larger European operators in our space. So this deal worked for us because we could step into their stores.
And as much as we had to invest a certain amount of money per store, it's not far from a new store build out. So that's what made this deal workable for all parties. And again, the founders and the owners of Beeline were keen to see the continuation of the employment of 100 teams worth 100 stores worth of team that are excited and pleased to come over to LaVisa and sort of continue their career in the industry. So that's been one of the main drivers of getting that deal done. So the short answer is yes, when deals present themselves, we have a look at them, but that's not in our equation in the near future.
Yes. And just briefly on the competitive environment, are you seeing your close peers continuing to look for new store openings? Or what's the dynamics across different markets there?
Look, I mean, it's probably the same with everyone else. There's lot activity not going on because everyone's in the same boat. So yes, so we haven't seen a lot of aggressive activity anywhere largely because everyone's sitting in exactly the same position.
Okay. Thank you.
Thank you.
It appears we have no further questions at this stage. So I'll hand back to your presenters for any concluding remarks.
Great. Thank you. So thanks, everyone, for your time this morning. Know it's a busy time of year, and look forward to talking with some of you individually over the next few days. So thanks again.
Bye bye.
Ladies and gentlemen, that does conclude our conference today. Again, thank
you all for
participating today, but you may now all