Thank you for standing by, and welcome to the Louisa Holdings Limited Fiscal twenty nineteen Full Year Results. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. I would now like to hand the conference over to Mr. Shane Faulshear, Managing Director.
Please go ahead.
Good morning, everyone, and thanks for taking the time to dial in. On the call today, you have myself, Shane Falshear, Managing Director and Chris Lauder, our CFO. As you're aware, we published our full year results for the ASX this morning, We would like to talk you through those results. I will now do a page turn through the presentation, and we're happy to take any questions at the end. If we now turn to Page four, we will talk through some of the detail.
We've had a solid result in a more difficult trading period than we have experienced in recent times, with EBIT up 2.8% to $52,500,000 Total sales were up 15.3% as a result of the continued new store rollout, with same store sales more challenging at 0.5 negative like for like. However, it was pleasing that we were able to return to positive comps in the second half to improve on the minus 1.8% like for like store sales within the first half. Our gross margin increased to 80.5% as a result of the benefits of the high USD hedge rates continuing through the period, combined with disciplined inventory management. We continued our global rollout strategy with a net 64 store openings, with U. S.
Rollout gaining momentum with 18 stores opened during the financial year and store trading in California, Texas and Florida during the financial year. We continue to invest in the structure of the business to support our global growth profile as we roll out new territories, including investment into our global operational structure as well as the upfront investment into e commerce, which we launched into the Australian and New Zealand markets in October 2018 and The UK in July 2019. Pleasingly, cash flow from operations was again strong, rising 10.1% to $66,700,000 for the year, with operating cash conversion of 107 percent. And with that, the Board has declared a fully franked final dividend of $0.15 being a lift of $01 on prior year and taking the full year dividend to $0.33 a $06 increase from the prior year. We
turn to
the financial overview on Page five. As I noted earlier, revenue for the year was up 15.3% with comparable store sales down 0.5%. Just to talk to that for a moment, whilst we are generally happy with our execution on meeting our customers' product needs, we have not seen the same major trends in the fashion jewelry sector as we have seen in recent years. That said, we are happy that we have been able to deliver strong growth from new stores and are well positioned to react and to deliver whatever trends prevail in the market. We were also pleased that we were able to deliver positive comparable store sales for the second half.
We've continued to make important investments in both people and process to drive the growth of the store network and to support what is an increasingly globalized business, which when combined with negative comp sales growth has resulted in CODB percentage being higher than the year prior. The new store rollout and significant increase in CapEx during the year resulted in a 38% increase in the depreciation, which impacted our earnings, with EBIT increasing 2.8 to $52,500,000 with earnings of $0.03 $51 per share. If we turn to Page six, we've spoken to the sales increase of 15.3% to $250,300,000 and the factors behind it. This chart shows the progression in the company's sales over the past five years. It's very pleasing to be able to present a sales growth chart showing such a consistent increase.
Importantly, we remain focused during the year on preserving our strong gross margins and have not chased sales at the expense of margins. On Page seven, you will see that we've had growth in total sales across most regions, with the exception of Asia, which was impacted by net four store closures in Singapore, offsetting another solid year from Malaysia. While still delivering top line growth in the Australian and New Zealand market, Australia in particular was impacted by generally softer trading conditions in the first half. And as this market has historically outperformed over number of years, it has led to a result of negative comps for the year. Pleasingly, we were able to deliver positive comparable store sales for this region in the second half.
The growth in the European and U. S. Markets accelerated in this period, with 14 new stores in The UK, nine stores now trading in Spain, 18 in France and 19 in The U. S. South Africa again performed well with sales up 9.6% for the period, aided by both comp sales growth and the benefit of additional stores opening that period.
Turning to Page eight. Gross profit of $201,400,000 was up 16% at an 80.5% margin, a 50 basis point improvement from last year as we continued to benefit from the tail end of high USD hedge rates in this period. We've maintained our focus on margins rather than chasing sales with continued focus on inventory management and promotional effectiveness, resulting in a small improvement in margins on a constant currency basis in spite of the more challenging trading conditions. Whilst we have been able to deliver strong gross margins, as you can see from the chart on the right hand side of the page, we are a fashion business, and therefore, our margins can experience some degree of volatility. If we turn to Page nine, we'll talk to our cost of doing business.
As we said previously, we've continued to reinvest into the growth trajectory of our business, which has put pressure on our CIBB percentage throughout the year. We've invested in our senior executive team to ensure we have capability to execute and grow in new markets, invested for the future in the relocation of our Asian logistics function from Hong Kong to China and have also had the impact of the launch of e commerce in Australia, New Zealand and The UK. The rollout of stores in new regions has also had an impact on CADD, with opening costs higher than normal store wages through the opening period have an impact of overall cost of operating in newer markets. We expect these newer markets to operate at a slightly higher CVB than our more mature markets, however, remain focused on delivering efficiencies in these markets to manage this. We continue to invest ahead of the growth curve to lay the foundations for future growth, while still remaining focused on keeping tight control of the underlying cost structure of the business.
I'll now hand you over to Chris Lora, our CFO, to talk through cash flow and the balance sheet.
Thanks, Shane. Turning to Page 10, you will see that the company's cash flow was again strong with cash from operations before interest and tax of $66,700,000 supported by operating cash conversion of 107% as we continue to manage our working capital well in the face of the ongoing investment into stocking out new stores. Capital expenditure for the year was $24,100,000 predominantly from new store fit outs and refurbishments on existing stores upon lease renewal. Overall, this represents an $8,900,000 increase from the prior year as we build scale and grow the store network in new markets. Cash dividends in the period were $12,000,000 higher than the prior year at $33,800,000 a result of the decision to distribute surplus cash to shareholders over the past eighteen months, leaving us with a net cash outflow for the period of $10,000,000 and closing cash on hand of $11,000,000 Turning to the balance sheet on Page 11.
You can see that our balance sheet remains strong and reflects a significant investment made during the year into the store rollout. Our inventories are up on the same time last year, growing in line with the new store rollout, increased franchise stores, e commerce and in preparation for coming store openings, with disciplined inventory management an important part of
our business model. As of
June 2018, we finished the period with net cash, significant headroom in our covenants and £25,000,000 of financing facilities available to fund the future growth of the business, which is all combined to allow us to maintain the increased final dividend level from the prior year and increase it slightly in line with
the growth in profit of $0.15
per share. As we continue the store rollout in our growth territories, we will continue to assess on an ongoing basis the cash flow requirements of the store opening schedule and make future decisions on both dividends and capital structure of the business as required, reminding everyone that we do not target a specific dividend payout ratio. I'll now hand back to Shane.
Thanks, Chris. If we turn to Page 12, a quick update on store numbers. Lavista finished the year with three ninety stores trading with a net 64 stores opening during the period, which compromises 17 new stores opened and six stores closed as well as 12 relocations as we continually optimize the store network. We now have 61% of the store network outside of Australia. The UK store rollout has continued with 14 new stores added in the region for the period to take the total to 38 stores, however, momentum slowed in the second half with only two new stores opening.
The rollouts in The U. And France continued with eight stores now trading in France and 19 in The U. S. Across California, Texas and Florida and a strong pipeline of new stores on the way. As we have said previously, sourcing quality sites is key, and we will take a measured and diligent approach to moving forward in any new market we enter.
As we enter larger new markets, a key learning has been to get leasing people on the ground in those markets right from the start to build a pipeline of sites as quickly as possible. We are pleased that now we have these resources in place, we have been able to drive more momentum in store rollout through this financial year. Turning to Page 13. I'll now talk in more detail in relation to The U. S.
Market. As I mentioned earlier, we were trading from 19 stores in The U. S. At the end of the financial year, with 12 stores in California, five in Texas and two in Florida. We have now opened a further nine stores in The U.
Since year end, including our first store in Chicago, Illinois. Results to date indicate that the LaVisa offer is resonating with our American customer. Whilst operating costs in this market have been higher than some of our other markets so far, in particular, new store build costs, we are happy with the progress and outcomes to date in The U. S, even though the expansion is putting some upward pressure on our overall CADD and depreciation. We obviously see The US as a significant opportunity and continue to invest in the structure to support this.
However, the eventual size and timing of the store rollout is dependent, as always, on being able to deliver quality stores that meet our internal criteria rather than hitting ambitious store number targets. Turning now to Page 14. I will talk to the European market. At financial year end, we were trading from 38 stores in The UK, eight in France and nine in Spain. Whilst we have managed to open 14 stores in The UK during the financial year, only two of these were in the second half.
In relation to Spain, we are currently trading from nine stores with one store opened in the second half as we focus on operational improvement in this market. As we discussed at the half year, our performance in this region has been inconsistent to date. And as a result, we have elected to slow any further store openings until we can deliver on the key metrics required to expand in this market. As a result, we will continue to take a cautious approach to taking on any new sites in Spain and will continue to focus on the stores we are already trading in. In relation to France, we continue to be pleased with the performance of the stores we have opened to date and are focused on sourcing appropriate sites to grow this market.
We have a leasing manager in place in France to support the growth of this market. And again, we will not sacrifice quality of stores for our operating metrics to deliver on the store number target. As with The U. S, our experience in this market to date has been that operating costs have been higher than our average and the store rollout is lower than we are used to. Turning to Page 15.
Operationally, we continue to focus on improving the structure of the business and the way each department operates best support our growth strategy. In key areas we've invested in during the period are supply chain and IT systems, including we have moved our third party logistics hub from Hong Kong to China to find economies in the picking and packing of orders and to be closer to our suppliers. We've changed our logistics provider in order to deliver a more efficient supply chain. We've upgraded our in store point of sale hardware and software to ensure we can cater for the global languages and integrated FPOC in all regions. We've changed our global store labor management and lock screen systems to ensure that we can effectively manage the growing workforce we have across our nine company owned territories, again, in three different languages.
We've replaced our finance system to ensure our back end processes are able to keep pace with our full rollout. In addition to the projects I've just noted, we launched the levita.com e commerce website in October 2018 in the Australian and New Zealand market and LOVISTA. UK into The UK in July 2019. And we continue to refine our omnichannel operating model before launching to other markets. We've also continued to invest in our operational structure with the appointment in November 2018 of a number of important senior roles, including Chief Operating Officer, leaders in The U.
S. And European and African businesses. Each of these appointments bring with them significant long term retail experience and quality global companies and already adding a lot of value. We also have made investments in regional store management and support functions in our growth market. On Page 16, we will talk to the trading outlook for the new financial year.
Trading since the end of the financial year has been a continuation of the improvement in the second half, with positive comparable store sales for the period back within our target comparable store sales range of 3% to 5%. As noted at the half year, currency headwinds have begun to have an impact and will continue to do so through FY 'twenty as our average USD hedge rate is expected to fall below $0.70 We continue our focus on expanding our store network and expect the increasing number of stores in FY 'twenty to be higher than FY 'nineteen, with 14 net new stores opened since the end of FY 'nineteen, taking the store network now to four zero four stores. To deliver this, we'll continue to invest in our support structures, in particular in The USA, to support store network growth and the larger business. So in summary, on Page 17, we've achieved an EBIT of 52,500,000 for the financial year and 80.5% gross margin, being a solid result given primarily from continued store net store rollout, offset by a decline in comparable store sales of 0.5% for year, with positive comparable store sales in the second half. We have again been able to deliver increased margins, benefiting from the high USD hedge rates during the period.
We have invested in resources to support our global expansion and our disciplined approach to working capital management has resulted in strong cash conversion of 107%. We've opened a net 64 stores and closed the financial year with three ninety stores trading across 15 countries, and 61% of our stores are now trading outside of Australia, with store rollout gaining momentum in France and The U. S. We are pleased to be able to again increase our dividend, taking the final dividend to a fully franked $0.15 per share. And with that, thank you for listening and happy to take any questions.
Your first question comes from Sam Tigger and Citigroup. Please go ahead.
Good day, Shane. Hi, Chris. Hey. Hi. Congrats on the good results given the tough trading conditions.
Look. I appreciate you guys need to invest in overheads to set the business up for growth. But if you can maintain comps in the 3% to 5% target range throughout the year, is it realistic that you guys can fund the investment you need to make, but also shareholders can get reasonable profit growth? And just conscious that, Shane, some of your incentives have some pretty big growth numbers as well.
Ultimately, your question is can we grow profit as well as grow the business for the future? Is that the question?
Yeah. I think if you look at if you look at this year, you know, given the comps were quite subdued, it was difficult to get significant profit growth. But I guess if you can maintain comps around the 3% to 5% range for the whole year, can you find whatever investment you need to make and also shareholders can get good profit growth?
So to answer your question, we I just want to be clear whether it's profit growth or dividend, and I'll get Chris to talk how we view dividend. But we're confident that we've dialed in the heads to continue to grow our business. Obviously, hopefully, pleasingly, people can see that the expansion in France and The US is probably ahead of where we thought we'd be. And with that comes the continuation of dialing in the structure behind the scenes to keep that growing. We've talked to we're hitting our internal metrics in The US and France.
However, we are finding that it's more expensive to operate in the mature markets as opposed to some of the more developing markets that we've enjoyed our growth in the last maybe ten years now. So we're focused on continuing to grow our business, dial in the infrastructure required to make sure that we have a stable platform of growth, reminding everyone that we've done this numerous times around the world. And then, of course, the plan effect will be driving our sales. As you touched on, when we're delivering flat comps and everything, you know, rents, etcetera, are going up, it's more challenging to provide the profit growth that we'd all be looking for. But we'd like to think if we're delivering in the range of like for like growth that we've talked to, that that's going to fall through to the bottom end.
Got it. Makes sense.
And in terms of Spain, do you feel better or worse about the prospects for this market compared now compared to how you felt at the half year result?
It's a good question. We're probably feeling a bit better. But at the same time, you know, we're still not where we need to be. We've always spoken to the market that there's no one lever to pull. Otherwise, we would have pulled it.
So we're focused on that market. Our European manager, James Shepherd, that used to run for us in Europe. He's now based in London, putting further focus. So we're seeing improvement from where we were. And, really, our next step is really get through Christmas, trade Christmas.
So European summer was good for us. But from our point of view, it's a case of get through Christmas and then have another look at where we're tracking in that market.
Got it. And last question. Is the company continuing to research new markets for potential entry? And what's the potential for LOVISIA to launch new pilots in new countries over the next couple of years?
Yes. Good question. So the answer is yes, we're always looking. The way I would look at it, you won't be surprised if you saw another pilot program in the short term. Short term definition being probably next six months, but I'd also be surprised if somewhere in the next somewhere between six months and twenty four months, I'd be very surprised if we weren't having other pilot programs in the market.
So at the moment, our key focus, as you can see with the store numbers, especially in America, even with the amount of stores we've opened since July 30, our focus really there at the moment. So the macro focus of the business is to deliver great outcomes in France and The US rather than sort of go and look at anything else. But at the same time, we're doing our research on other markets.
Your
next question comes from Sean Wake and Macquarie Group. So just the first one, probably to ask one of Sam's questions in bit of a different way. I mean, how should we be thinking about CODB leverage and incremental cost investment in FY 'twenty? Will costs be growing in line with revenue? Or would you expect to potentially see some leverage?
Hi, Sean. Chris here. I think the best way to look at it is don't assume any improvement in that cost doing business percentage through FY 'twenty. Still the reason Shane was just alluding to before that newer markets are running at a higher operating cost to to trade the stores and existing network. Also, we got all the the cost of actually rolling out the stores.
We're creating team before stores open and, actually getting the stores up and running. So it's making it quite hard to pull that percentage down in the short term as we're rolling out.
Okay. So I mean, if they're growing together with each other, like revenue and expenses, that's not a bad way to think about it? Yep. That's right. Yeah.
Okay. Cool. And just on gross margins, I mean, how should we be thinking about the FX headwind into next year? And I mean, what's the opportunity for price increases to provide some sort of offset there?
It's Shane here. I'll talk to the first part of that, and then I'll get Chris to talk to currency. Do we constantly review each market, each style, and how all of that interacts with each other? It's fair to say that we're constantly looking at and what we can what we can do to affect price and offset some of those currency things against it. There's probably some small wins for us as we mature in the Europe markets and US can get a bit more about the market.
There's probably some slight wins there. But at the moment, the way we're looking at is a business. And and our margins are strong product management and minimizing markdowns and digits. You might have take the ranges, finding following the business find ways to increase our our margin there, but we are foreseeing that there's gonna be a gap between our price increases and the current decline. I'll just give you quick talk today if that's okay.
So, mate, if the the currency decline, it's it's basically what we've been talking about for a while. I mean, it's probably a bit bigger decline than what we talked about at the half year because as everybody's seen, dollars dropped further than where it was. So it's now sitting in that zero six seven dollars range. So in the release, we've said that we expect our hedge rate for FY 'twenty to drop below that $0.70 level. So at the moment, we're sitting around that mark for that, but the exposure second half that we've unhedged under hedging policies.
So given where the spot rate is, we'll get that drop down below 70%. So obviously, that will have a reasonable impact on margin in the absence of any price impacts. So it's about if
you look at the numbers
that we've disclosed in the release today, zero five or $06 of currency decline that we've got to get back, which is about 35 basis points of margin for $08 So there's a reasonable impact there coming, which is consistent with what we have been talking about, probably a little bit more than what we said at the half.
Yes. That's helpful. Just final one for me. You've obviously called out expecting to grow store numbers ahead of FY 'nineteen. But how should we think about that in the context of the current run rate?
Like it looks quite strong, 14 stores in six weeks. And what's your expectations around, I guess, a one height versus two height skew in the rollout?
Yes. Look, I think history is the best way to look at first half, second half split, and I haven't got those numbers in front of me, to be honest. But I think, historically, if you look at the way the stores go through first half, second half, it's you know, it it may change. But before I was having to draw a line to anything, I'd probably point towards that as the best guide I could give you. Reminding everyone that, you know, Europe's just been on holidays for four to six weeks.
So they don't work too hard through all this. It's basically slowed down any opportunities we kinda already have in the pipeline. And then you get into the Christmas season, which again sort of delays our delivery to sort of activate new deals into January, February, March. So, again, the guidance we've given is that we'll open more stores than we did last year, and that's been consistent over the last three to four years. I think the percentage split first half, second half is the best thing I could point towards.
Your next question comes from Joe Little and Morgans.
Most of my questions have been answered, but perhaps a little bit more operationally in The U. S. Maybe just a bit more of a feel, Shane, on your experience dealing with the landlords to date, how many you're dealing with? Is it three to five store sizes? And just those store operating costs, are they still running at that, you know, almost double the, you know, mature markets at $2.50 to 300?
Yeah. Sure. So so just to recap, each market, the way the landlord structure works is differently. In in The US, it's really predominantly, like, give or take, four landlords that control a large percentage of the shopping centers that we're attracted to be in. So as always, there's been early adopters, being landlords that embrace our our brand before others.
So that's been a positive and probably set a standard. We're now getting some as you can see with the numbers that we're rolling through, we're getting some serious traction in getting stores open. And, again, the momentum sort of builds from there. So I think, Joe, maybe six months ago when we may have spoken, we said we're sort of getting some landlords debasing our concept, and I was sort of standing off. Then it's fair to say that, as you can see, the store numbers are rolling through it.
We're getting closer towards having most of major landlords embrace our concept. As far as store builds, yes, they're still expensive, And, you know, they are costing nearly twice as much as they're costing in other markets of the world in order to get those stores built. Put a whole lot of crew working on that and finding ways to find economies there, But the reality is that the cost of building stores in America is is higher than the average, hence why it's sort of affecting our depreciation. So the positive in all that is we're still hitting our internal triggers and numbers to to satisfy our internal business to expand that market. But, I mean, every market's got its idiosyncrasies, and and this one tends to be that, unfortunately, it's more expensive than we'd like to build stores.
Okay. Yes, makes sense. Just given the size potential size, sorry, of The U. S. Market, can you give us some kind of feel of how much has been invested in that market outside of stores?
Yeah. Just give us a bit of feel on
that overhead structure, support structure outside of stores. Yeah. We sort of I mean, the benefit of having company owned stores around the world, we we sort of probably don't carve out cost per market because there's no real need to. But to give you a guide, I mean, there's no doubt the support in Australia has layered up in order to support the market. And then in country, not in stores.
So if you throw a net over, people will see the running, what we call, regional managers that are running groups of stores. The territory managers that maybe sort of, you know at the moment, we've got one on the West Coast, one on the East Coast, one in the middle. So if you fill in that over all of those guys, plus the people in support center, and they're getting the shop builds and HR teams, we're probably running at about 15 heads above store management level. The the, you know, the store manager with the cost into the store, we probably got at least 15 heads with an average salary, you know, 100 and call it a 120 USD as an average. You'd see it's the best guide I could give you off the top of my head.
That's great. And perhaps just lastly, a further one from Sam's question about new territories without wanting to get ahead of ourselves given what's going on today. But I mean, imagine I imagine, sorry, Canada as a natural extension, you know, of the American market at some point.
It's an interesting one. We it it it comes up every now and then. To be totally honest, because it is a different landlord structure, we probably just haven't gone there yet. I would imagine somewhere in the next six months, we'll try to mess it at having a bit of a closer look at at Canada. So it's fair to say a bit like Australia, New Zealand, that may be a logical progression, but I wouldn't go out and make that assumption as much as logic would say we'll go and have a good look.
The
next question comes from Sam Hadad at Bell Potter Securities.
Congratulations My on the first question is for SUNS UK. Are you still comfortable with the 100 store target that you've previously published?
Yes. So we've published that we believe that the density of 100 stores or the capability in The UK is 100 stores. How long it takes to get there really comes down to which deals come through and how frequent. So yes, we still believe there's an opportunity in The UK for 100 stores.
Okay. And just in Malaysia, that seems to be trading very well. You're now at 25 stores versus your target of 20 to 25. Have you sort of reassessed that what that target potential could be in that market given the population size there is larger than Australia?
The short answer is on target. You may say that we've probably taken targets out of the presentation because we could take Malaysia as an example. Initially, we always thought that the Visa would trade and trend well in KLCC and the surrounding sort of suburbs. We're now pushing out into regional Malaysia, which is still big substantial shopping centers. So pleasingly, and again, for those of you that have followed our stuff, you know, from the start, think when we came to market South Africa, it was around 25 to 30 stores, and we thought the capacity was not far from there.
And, however, we keep pushing ahead. So Malaysia is a very strong character for us. I mean, we we sort of keep saying, alright, let's let's go to the next trenches stores, the next trenches stores. So whilst we still get strong returns, we'll keep pushing that out. I mean, Malaysia is not a 100 store market, Probably not over the 50 store market, but it's a case of keep going until we sort of keep the feeling that we're not getting a decent return.
But I definitely not there yet, please. Okay.
And just on fashion trends, you've starting a strong period of favorable fashion trends, and congratulations on the result notwithstanding that. What are you seeing looking forward in terms of your visibility?
Yes. Mean, look, these things can come from anywhere, but we've talked in the past when we've had some very strong news that we've had some tailwinds there from different categories, which we've talked about. I think the pleasing thing to correct that result for the year is 0.5% negative like for like. We're really off what we call a normalized period without any substantial tailwinds, and we're and we're still in that place. So really for us, from a product perspective, it's just about working with what we've got, getting creative internally.
But we're not foreseeing as much as we'd love them to come around the corner tomorrow. We're not foreseeing any any tailwinds to sort of give the business that extra kick when we get that kick we enjoy and that sort of profit fall through.
Your next question comes from Simon Lu, Private Investor. Just
a quick question here. Obviously, we're expanding in The U. S. Just a question around The U. S.
Trade war with China. I mean, any if there's any escalations in the trade war, you got any sort of plans around mitigants around tariffs or potential banning of imported materials in China?
Look. I mean, we keep an eye on that. Our simplistic view is that we'll deal with it if and when as the rest of the world will. It's fair to say there'll be a lot of people that have to react accordingly if something like that happens. But there's only so much you can prepare with the sort of mass media bouncing around with all different sort of connotations of where it's going to land.
So the short answer is Mhmm. If something's going to affect us, it's going to affect everyone, and then everyone on mass will have to react accordingly. And I'd like to think we're small enough and nimble enough to react faster and get the best outcome we can achieve versus some of the, you know, the bigger guys in town that probably a bigger base to move if they have to move. So we're relaxed insofar as we'll keep an eye on things if and when we'll react. We're small enough to react probably faster than most.
That's all I can probably say on that point.
Okay. Sure thing. And one other question. The same store sales, is the sort of overall sales, is that localized in any sort of particular area? Or are you seeing the trend sort of more on a global scale?
Yeah. Look, as I've talked to in the past, it's it's very rare for us to get any major outliers. So it's usually within a reasonably tight cluster of performance from the highest to the lowest, and that's reasonably consistent. Being, again, reminding everyone that we create and generate our own product, as much as we have differentiation in ranges around the world, the bulk of our ranges go out around the world at the same time. And because the world become very global in trends as well, that is a trend for the good or bad that washes around the world at the same time.
So so that the movement between markets on like for like, there there isn't a huge amount of variance between the highest and lowest.
Your next question comes from Julien Mocahy at Evans and Partners.
I'm showing you mentioned that in the The US, there's still some landlords that are sort of, you know, not quite embracing the system. And I recalled in The UK, it took a while for them to get it, and they got it. And then they'll throw
in stores at you. When do you
think that tipping point is reached in The US?
I'm sorry. That is your words, just to clarify. So, well, I I think I probably answered that question earlier with Joe. When you enter any new market, you've got probably the believers and you've got the nonbelievers, and then you've got the people that well, they're too small to worry about for now. And then as you gain momentum, produce your results, pay your rents on time, deliver great looking stores, all the way down to delivering great 10 behind the counter, but no adding value to the overall shopping center.
That is fair to say that that anyone that's sort of is sitting off usually comes to
the
table. I'd like to think with the numbers that we've shown you, after we opened another brick of stores in the last six weeks, fair to say that most of the starting to sort of come around, who we are, what we can deliver to the market. Ideally, our day to the market, our day to the customer base shopping in their mall. So we are we're probably seeing that now after a fair bit of heavy lifting, a lot of meetings, a lot of presentations on who we are and what we bring different to the market.
And and in the offerings they're putting up, are they still including a bunch
of dud sites, or are they,
you know, giving you a better mix?
Again, your words are not mine. So it's fair to say some of the standoff is about the the certain centers that we can't afford to go in in order to as much as we wanna expand across America. Just to recap for the other people that may be dialing in. There's a lot of shopping centers in America. We've we've highlighted the malls that we want to be in as the first round of expansion.
And, again, part of that discipline is that typically won't take stores in order to get the ones we want. We're not a fan of package deals. Again, what we're serving in The US since we can't afford to take on a thing to that that make much more in case it works for It just doesn't work because we can't afford to weigh ourselves down in place. The operating platform has been come to run those doors if they're not producers. And we believe we can sort of figure out growth.
So the long winded explanation study, they're not willing to take some of the smaller doors that the landlords may would like to see us in in order to get to the ones that we want to be in to settle this stuff for growth in the end.
Okay. And just finally, I mean, you look at across your markets, some of the, you know, fairly mixed economic conditions, you know, mainly sort of weaker, and you've had no, you know, tailwind of a fashion trend. So would it be fair to say that you're pretty much immune from sort of consumer spending because you're you're basically dealing with, you know, kids that probably not necessarily worried about the the overall environment?
Yeah. I think I think the macro trend is always going to affect the retailers on mass. But keeping in mind, our average transaction value, you know, hovers at around $20 AUD around the world? It's fair to say that, you know, going shopping in La Vista is probably the equivalent of maybe ticketing a lot of markets in the world. And, you know, our success across places like Malaysia and South Africa as opposed to France and the big developed markets.
I mean, it's fair to say that our average customer, whether it's a 15 year old girl or a 45 year old girl looking to buy some fashion jewelry, then it's fair to say that the the market we seem to have found that niche in, the disposable income and the willingness to spend around the amount of money that I just spoke to even probably significant in those markets. Now again, if you look at South Africa, we've got around 50 stores in a population of over 6,000,000. Within Australia, we've got a 150 stores in a population of less than half that. So it's probably shows you where our brand sits in the position of that and who it's going to.
Your
next question comes from Matthew Obera Enviroment Capital Management. Congratulations
on solid progress developing the brand. Just a question on the cash tax expense. Just noticed that that's ticked up a fair bit in relation to the same sort of metrics at FY 'eighteen. Just wondering, is that just timing issues? Can you just walk us through that?
Matt, it's Chris here. Yes, definitely timing issues, so just balancing payment from the previous year. So we had extra tax payments in relation to 2017 that that came through in 02/2018. I'm sorry. 02/2018 in relation to 02/2019, and we basically paid all the tax for 2019 within the financial year.
So you see the tax payable on the balance sheet is pretty low at the end of the financial year. So it's just realignment of the timing of payments.
Okay. And should we expect that cadence to pretty much remain the same, do you think, going into the next financial year?
Yes. Yes. Sure.
Your next question comes from Sam Tigar and Citigroup.
Just some very quick follow ups. Can you just provide a bit more color in terms of what's driven the improvement in the like for likes in FY 'twenty so far? Is it price, volume, air quotes or something else? And to what extent are you seeing like for like momentum build each week, particularly as more and more Australian consumers are getting their tax refunds?
I mean, keep in mind, tax refunds are isolated probably to Australia this time of year, and we're 60% of our businesses not in Australia these days. I'll I'll try and answer your question as best I can. The recovery in like for likes sometimes just as simple as what we were cycling the year before. And from memory, we're cycling tougher numbers first half than second half. So, therefore, to recover in the second half as in the six month period just closed, we're cycling easier numbers to cycle over in simple terms.
Combination of where did where did that recovery come from. That's really always gonna be a combination of everything, price. As I said, we're constantly looking for opportunities to increase our price. So there'd be some some gains there and volumes that slightly increased as well. So sort of slight marginal increase in price and volume giving us the outcomes that we're seeing there.
As far as like for like growth in the first period, I think we're comfortable to say that we're trading our range, but we're not about we don't want to start giving commentary on weeks to weeks and whether that's trending up or down over such a short cycle of time.
Sure. And last question, just how many store closures would you anticipate in FY 'twenty versus FY 'nineteen?
Again, we give a net number, and we said the net number is gonna be larger than last year.
As far as store closures, it's
yeah. The way to look at our business, if we have an average lease tenure around the world of around five years with 400 stores. That's give or take 80 leases a year that get renegotiated in some way, shape, or form. Now that's not the exact number, but that's just sort of very rough math. So so we're not we're not having we're not looking down the barrel of anything significant.
But, you know, it only takes a few of the negotiations not to go our way. The thing that we're determined to do is not renew leases that are commercially viable for us and I if the offer isn't commercial and we don't believe it's a fair and reasonable offer for the site. Then our history says that we'll walk away from that site and come back when when they're in line with what we believe it should be for that location. So it's a hard question to answer. But, again, history is probably the best guide to what what will happen in the future.
Okay. Thank you.
There are no further questions at this time. I'll now hand back to Mr. Fawshear for closing remarks.
So thanks for your time this morning. Consciously, you've got a very busy few weeks. And again, I look forward to seeing a lot of you over the next few days as we get out on the road. So thanks again. We'll talk soon.
That does conclude our conference for today. Thank you for participating. You may now disconnect.