Baby Bunting Group Limited (BBN) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. My name is Ian Cornell. As your Chairman, it is my pleasure to welcome you to Baby Bunting's Annual General Meeting for 2020. As the necessary quorum is present, I declare this Annual General Meeting of Shareholders open. As you are aware, today's meeting is being held virtually via the Lumi platform. This enables us to run the meeting jointly from Sydney, where I am located, and Melbourne, where our management team is based. I will introduce the other directors and some of the management team shortly. This meeting format will allow shareholders, proxies and visitors to attend virtually. All attendees can watch via a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Questions can be submitted on the platform at any time. [Operator Instructions] Please note that while questions may be submitted now, I will not address them until a relevant time in the meeting. Please also note that your questions may be moderated. For example, if we receive multiple questions on one topic that are similar, questions may be amalgamated and dealt with together. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting on the platform for all resolutions. At that time, if you're eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of items being considered today and you will be presented with voting options. To vote, simply select one of the options. There is no need to hit or submit or answer buttons as the vote is automatically recorded. You have the ability to change your vote up until the time I declare voting closed, which will be at the end of this meeting. I now declare voting open on all items of business. The polling icon will soon appear, please submit your votes at any time during the meeting. First, let me introduce you to my fellow directors and some of our management team. With me in Sydney today are 2 of our non-executive directors, Donna Player and Gary Levin. Gary is the Chairman of our Audit and Risk Committee and Donna is a member of our Remuneration and Nomination Committee. Melanie Wilson is also on the line. Melanie is the Chairman of the Remuneration and Nomination Committee. Now in Melbourne, we have Matt Spencer, our CEO and Managing Director; Darin Hoekman, our Chief Financial Officer; and Corey Lewis, our Group Legal Counsel and Company Secretary. Also present in Melbourne is Gary Kent, a Non-executive Director. Gary is also a member of the Audit and Risk Committee. Finally, Tony Morse from our auditors, Ernst & Young, is also on the line. You will have had an opportunity to read the notice of meeting and accompanying explanatory notes. It was made available to all shareholders in September. I propose to take them as read. Before we move to consider the items of business, I wish to say a few words about the 2020 financial year and the company's strategy. Baby Bunting achieved extraordinary things this year as we continued to provide essential maternity and baby goods and services to Australian parents and parents-to-be in very challenging circumstances. And I want to thank our wonderful Baby Bunting team members who have worked incredibly hard during the year. I'd like to acknowledge the support of our suppliers and partners. These are critical relationships for Baby Bunting. Our ability to successfully trade through the period impacted by COVID-19 was greatly assisted by their support. I thank our strong baby management -- Baby Bunting management team and our leadership teams in our stores, through to our team members in the store support office and in the distribution center. A lot was asked of you this year, and you've all worked hard to ensure that Baby Bunting continued to operate safely and profitably while also progressing the company's business transformation goals. And finally, again, on behalf of the Board, I thank our team members throughout Australia for their hard work and their dedication. As a mark of our appreciation, in the coming weeks, we will be providing eligible team members with $1,000 of Baby Bunting shares under our employee share plan gift offer. This is the sixth year in a row where team members have been able to receive Baby Bunting shares with a result that more than half of our nearly 1,300 team members are now Baby Bunting shareholders. In financial year '20, we continued to perform strongly and grow market share. We achieved positive comparable store sales growth, gross margin improvement and retail cost leverage while also maintaining prudent working capital management, resulting in 0 debt and $13.3 million cash in the bank at the end of the year. Total sales were $405.2 million, up 11.8% on the corresponding 52-week period. Comparable store sales growth was 4.9%. This was 1% in the first half and 10.5% in the second half. Pro forma earnings before interest, tax, depreciation and amortization were $33.7 million. This was 24.1% up on the prior corresponding period. Pro forma net tax -- net profit after tax was (sic) [ was up ] 34.1% to end the year at $19.3 million. This was a very pleasing result in some challenging circumstances and reflects the strength of the brand and the dedication of our team. And Matt will talk more about the 2020 financial year shortly. The company paid dividends of $0.105 per share fully franked for the year. This was an increase from $0.084 in the prior year. Importantly, the company did not receive any JobKeeper payments. The company's strategy to grow market share remains a key focus. The 4 key elements are: first, investing in digital to deliver the best possible customer experience across all channels and enabling new business models; secondly, investing to grow market share from our core business; thirdly, growth from new markets; and finally, to continue to pursue profit margin improvement. Baby Bunting, again, made good progress in achieving its strategy and the growth in total sales and comparable store sales is evidence of its success. We are an omnichannel retailer with Australia's leading baby goods website and we now have 57 stores throughout Australia. Online sales through our digital channel, which includes click and collect sales, grew 39% to make up 14.5% of our total sales for the year. Our digital channel also supports and complements our network of bricks-and-mortar stores. Our services business, Baby on Board, also grew significantly this year. Car seat installation grew 42% during the year, which demonstrates the opportunities we have to grow market shares from our core business. The new brand was a key highlight of the year. The new brand reflects our brand essence and what we are known for. The brand has been really well received by our customers and I have no doubt that this brand will stand alongside other national and international brands as we expand across different formats and new territories. To support our ongoing growth strategy, we continue to make investments in building the best team. In addition to the team led by Matt Spencer and supported by Darin Hoekman, the leadership team was expanded during the year to include Scott Teal as Chief Operating Officer; Sarah Serle, our new General Manager of Merchandise; Rod Williams, our General Manager of Digital; Matt Rodda, as General Manager, IT and Transformation; and Stu Chard as Executive General Manager, Strategy. It's a great team with deep retail, operational and strategic experience. Baby Bunting is a values-driven organization and we continue to examine ways in which to live our values. A fundamental priority is keeping our teams safe and that was a big focus for the year. In terms of our measurable objectives for gender diversity, good progress was made across the business. At the senior manager level, at the end of the year, 27% of roles were held by women, which is an increase from 22% in the prior year. At the regional manager and area manager level, 44% of our team in these roles are women, up from 22% and almost at our target of 50%. And more broadly, 70% of our managers across stores, areas and regions are women, an increase from 58%. We continue to work towards our objectives in this area. Our annual report describes the support we have provided to a number of organizations who assist parents of newborn and young children, including Life's Little Treasures Foundation, and we remain committed to providing that support. We also released our first modern slavery statement in August. This statement describes Baby Bunting's ethical sourcing procedures and our efforts to ensure that we are supporting improvements in our supply chain. We are committed to working with our suppliers in the coming years to ensure we are doing what we can to reduce modern slavery risks. During the year, the Board made some refinements to the company's remuneration practices following a review. Among other things, this involved remuneration specialists at Ernst & Young undertaking benchmarking exercises and an analysis of the company's current remuneration mix. Following this review, the Board made some enhancements, which are detailed in the remuneration report. The key changes involve seeking to adjust over time the remuneration mix for key management personnel to reduce the proportion of at-risk remuneration represented by long-term incentives. This will be achieved through reducing the number of rights granted annually. The Board believes that long-term incentives in the form of performance rights are very appropriate incentives given the company's stage of development and the significant growth that is being targeted in the years ahead. In the coming years, the Board will reduce over time the proportion of rights outstanding relative to the company's total issued capital. The target is for outstanding rights to be around 5% of issued capital. A number of other changes are detailed in this year's remuneration report. Given the company's strong earnings and TSR performance since listing, the Board considers the current structure provides an appropriate incentive for the executive team, which is aligned with the returns provided to shareholders over an appropriate period of time. Turning to the Board. In addition to its normal activity, this year, a key focus for the Board was monitoring and overseeing the company's response to the COVID-19 pandemic. To facilitate this, the Board established an additional Board committee, which met on short notice throughout March, April and May, in addition to the scheduled Board meetings. The Board continues to monitor management's COVID-19 response plans and the strategic planning underway to take advantage of the opportunities in the coming period and beyond. Today, Gary Levin and Donna Player are seeking reelection. I recommend their reelection to all shareholders. To close, I want to again thank all of our team members in our stores, our distribution center and our support office, who all contribute to Baby Bunting's purpose of supporting new and expectant parents in the early years of parenthood. I will now invite Matt Spencer to provide a bit more detail on financial year 2020. He will also provide an update on trading performance year-to-date. Over to you, Matt.

Thank you, Chairman, and thank you all for your attendance at today's meeting. FY '20 has been anything but normal, and I would also like to start by thanking our team, our customers and our Board for their support during the year. We approached FY '20 with a set of operational objectives and a clear strategy to continue to deliver market share growth. This resulted in a set of positive financial metrics and underlying operational improvements. We made good and steady progress with our transformation agenda despite the challenges attributable to our website disruption and the bushfires in the first half of the financial year. When COVID-19 began to affect the community, we paused our transformation agenda and program of work for what turned out to be a short period of time. We continued to achieve significant growth in GP percent in the first half. However, the second half GP percent did moderate as a consequence of a shift in product mix and channel switching to online by consumers during COVID times. Having said this, an uplift of 120 basis points for the full year was a really good achievement. Our merchandise team progressed well with our private label and exclusive products growth agenda, which is a cornerstone of our approach to differentiation in the market and this does provide gross margin benefits. Headline comparable store sales were challenged in the first half, largely as a result of the strength of some terrific new stores opened in FY '19 and some sales redirection in the key markets of Sydney and Melbourne. And also impacting are website challenges and due to the impact of bushfires. In the second half, we're pleased by the significant sales growth and the achievement of retail cost leverage. Of course, like every retail business in Australia, COVID-19 presented some extraordinary challenges in the second half. To date, I'm proud of our approach and our response to the pandemic. The resolve and the collaboration from the shop floor to the Board room to address the difficulties presented by COVID-19 really reflects the true character of the Baby Bunting team. I'm proud of the fact that we're been able to keep the business running and stores open, including all stores in stage 4 lockdown in our metropolitan Melbourne. As the Chairman said, Baby Bunting did not receive any JobKeeper financial support. In responding to the COVID-19 pandemic, management has and continued to be focused on 3 work streams: first, managing our day-to-day operations; secondly, ensuring we have a sustainable business looking 3 to 6 months ahead; and thirdly and importantly, focusing on recovery and progressing strategic opportunities. Today, we continue to manage to this plan. There is no doubt that FY '20 and FY '21 will be remembered for the impacts of COVID-19 pandemic. I will try and provide some commentary on its impacts on Baby Bunting to date. As I've mentioned before, our team has done an amazing job. We have provided support to our team by introducing a paid pandemic leave policy, providing all employees, including casuals, with paid leave to cover up to 2 weeks of work. We want our team to be confident that they can get tested when they need to and stay at home while they await their results without having to worry about coming to work during that period. To show our appreciation for the efforts of our team, we have provided them with some financial gifts, additional leave and, as mentioned by the Chairman, the opportunity for eligible team members to receive $1,000 worth of Baby Bunting shares through our employee share gift offer. We thank and appreciate the ongoing efforts by members of the Baby Bunting family. Our ways of working and our entire operating rhythm and processes have changed during this crisis to ensure the safety of our team, our customers and the community in which we operate. The challenges attributable to COVID-19 were spread across the organization as it impacted supply from China, international shipping. It created some short-run panic buying of consumables and logistics companies have struggled to keep up with demand for online shopping. We did make changes to forward purchasing that has impacted some stock availability given the significant sales uplift. To manage the operational challenges associated with the emergency, we incurred around $500,000 in extra costs in FY '20. And COVID-related costs have continued on in the current financial year. What we have seen during periods of public health restriction is that there was an increase in sales of products for the home, with a reduction in travel-related categories such as car seats, prams, et cetera. Outside of significant restrictions, these trends have reversed, and we've seen sales in our travel category -- travel-related categories rebound strongly. As a result of the pandemic, our customers' shopping behaviors have changed, not only what they shop but how they shop, with many switching channels or choosing different ways to shop. We continue to see the channel switching between online and bricks-and-mortar stores, especially in Victoria, which has had ongoing restrictions. Nevertheless, while a customer may choose to shop online, there is a significant preference by our customers to interact with our stores, leveraging our touchless click-and-collect facility. Around 50% of online sales in a catchment where we have a store end up as click-and-collect transactions rather than click-and-deliver transactions. Looking at the first quarter performance, we can see that in May and June, around 84% of sales took place in our stores, which rises to around 90% when you include click-and-collect transactions, which is a trend that continues in Q1 for Australia, excluding Victoria. In Victoria in Q1, online click-and-collect orders made up around 30% of sales. Interestingly, what we are seeing is ongoing strong growth in the online channels, especially click and collect. Click and collect has grown 233%, and online delivery-only sales have grown 83% against the prior corresponding period. If you exclude Victoria, click and collect has grown 204% and online delivery-only sales have grown 54%. The channel switching that we did see at certain times in -- again, in the second half to FY '20 needs to be looked at in the context of our digital strategy. Our multichannel retail experience is delivering sales growth. In FY '20, online sales, including click and collect, were around 14.5% of total sales. The trend in online sales growth continues, and in Q1 FY '20 -- FY '21, should I say, we've seen online sales of 20.9% of total sales. If Victoria is excluded from this number, we saw online sales of 17.7% of total sales. We are seeing increasing website visits and the conversion rate was up 77 basis points during the first quarter, noting that this is cycling the website performance issues that were present in 1H FY '20. Our focus remains on offering the widest range of products at great value every day, backed up by great service every day and every visit. That is why we have committed to a price beat guarantee where we offer to beat any competitor's price by 5%. This has given the consumer even more confidence in the value [ of our offer ]. Our strategy to achieve the balance of great value every day and also to continue to grow gross margin is supported by our investment in private label and exclusive product ranges, which made up 36.5% of sales in FY '20, which was a growth of 47.9% on the prior corresponding period. Year-to-date, in FY '21, Best Buys or everyday-low-price products make up around 27% of sales versus 24% for the same period last year. Pleasingly, year-to-date FY '21, our private label and exclusive products make up around 38% of total sales compared to around 33% of sales for the prior corresponding period. This is a significant achievement. Our goal, our long-term goal, remains to achieve 50% of sales coming from private label and exclusive products. In FY '20, we continued to see significant improvement in gross profit, up 120 basis points to 36.2%, and our focus on delivering value to the consumer remains at the center of our offer. Turning our attention to the addressable market and the competitive landscape in which we operate. Our market share of the $2.4 billion addressable market continues to grow. And in FY '20, we welcomed many new customers to our business. We're the only specialist maternity and baby goods retailer operating on a national basis. As the Chairman outlined, an element of our strategy is to deliver growth in new markets. In FY '20, we undertook a review of our potential store network plan with the assistance of third-party network planners. We do this kind of review every 2 or so years to test the appropriateness of our existing store rollout plans and to explore whether other opportunities for network expansion exist. Pleasingly, given our progression and growth in market share coupled with our improvement in store profitability, our network plan has been upgraded from 80-plus stores to 100-plus stores across a number of store formats. We will continue to focus on our rigorous ROI hurdles when recommending new stores opportunities to the Board. Clearly, our network plan guides our efforts in building out the store network as a matter of course, and it will necessarily respond and adapt to changes in consumer behavior and retail trends over the coming years. It is important to note that over 90% of sales in the areas where we have a store are either in-store purchases or click-and-collect transactions. This highlights the important role that our physical stores play in meeting the needs of our consumers. Our shopping center stores, this is pre-COVID-19, were tracking very well, and we're looking at various other format opportunities outside our traditional destination and regional store formats. We have a strong pipeline of stores to open in FY '21, and Westfield Knox here in Melbourne opened mid-September. Castle Towers in Sydney and Coffs Harbour in New South Wales will both open in Q2. And Belconnen in the ACT is expected to open in Q3 of this financial year. There are additional opportunities being assessed in Q4 and into FY '22. As we mentioned back in August, during the fourth quarter of FY '20, we spent time developing the capability to ship product from Australia to New Zealand. To achieve this, we launched a New Zealand store front on our Australian website. Leveraging digital marketing, including social media, we started marketing to New Zealand consumers with a tailored offering. This cross-border trade commenced [ early in July ], and to date, the results have been very promising. In parallel with this activity, we commenced a strategic review of the New Zealand market opportunity. Our current assessment is that the addressable market for Baby Bunting in New Zealand is around $450 million with similar market attributes as Australia. The review, which is still underway, will determine whether we will pursue an expansion into the New Zealand market and, if deemed appropriate, in what form that would take. At this stage, our review involves a deep dive into understanding the New Zealand consumer in our category, what a potential store network plan may look like if we were to pursue a bricks and mortar strategy and what the economics will need to be if we were to pursue the opportunity. We will continue to spend time finalizing the strategic review, with the hope of being able to inform a more informed longer-term view of the opportunity in New Zealand. Our business transformation agenda is significant in scope and we made some exciting progress in FY '20. Originally, we expected all projects to be delivered across FY '20 and FY '21. However, with the impacts of COVID-19, where a number of projects were temporarily paused, some projects will start later and will likely -- most likely be completed in FY '22. During FY '20, we spent $4 million in CapEx and $4 million in project-related expenses and wrote off $2.6 million in old brand assets. For the project-related costs that flow through the statutory profit, an important point is to note that these are pro forma-ed out, therefore do not impact dividend payments to shareholders, which are set based on pro forma profits. In the current year, we expect to spend a further $10 million in capital and around another $4 million in project-related costs. As we move to our new distribution center and new store support office in the second half, we also expect to write-down a further $1 million in equipment and fittings that will not migrate to the new facility. Our investment in our services business continues. The car seat business -- car seat fitting business is progressing very well. And now we are focused on establishing a number of ancillary services businesses such as the nursery hire, car seat repair; and building further the wholesale B2B and government business opportunities. The team are doing a really great job in this area. Core systems transformation. During FY '20, we implemented an automated replenishment system for our stores. This has transformed the inventory profile our stores and is delivering significant improvement in stock availability and improving our inventory efficiency. We have now commenced a project to implement a merchandise financial forecasting system, which will deliver greater agility in inventory planning and response, which will flow into improved margin management. This is anticipated to go live in the second half of FY '21. Planning has also commenced for us to transition to new people systems during the year. And once complete, our focus will move to conducting a broader review of our financial systems to be completed later in the year. We progressed our investment in data and analytics as we built out our utilization of data to make better and more informed decisions. And specifically, we will continue to develop the area of retail and customer analytics that will go hand in glove with our digital and loyalty strategies. Importantly, we are looking at leveraging data to drive insights and revenue streams. We continue to progress our new customer loyalty program and it is anticipated this will be live in the second half of FY '21. We have piloted elements of the program in the second half of FY '20, which resonated strongly with the customer, so we are looking forward to seeing the impact of a full rollout later in the year. I would like to elaborate more about our supply chain strategy and the role it plays in profit margin improvement and specifically gross margin improvement in our business. During the pandemic, we have rapidly expanded capability to fulfill online orders from multiple locations through hub stores and through other stores in our network. This is a major step towards our goal of fulfilling 90% of metro deliveries same day. This is also a key differentiator from others in the market. During FY '20, we opened our fulfillment hub store in Casula in Sydney, which was fulfilling close to 50% of all Sydney metro online orders. We also have hubs in Western Australia and Tasmania and doing similar numbers. During FY '21, we will be relocating to new, larger distribution center, which will be able to support further growth of our new stores, increases in private label and exclusive products and further direct imports. It will also reduce the storage and handling costs of third-party logistics facilities, all of which contribute to gross margin improvement. While the COVID-19 pandemic has presented some unexpected challenges and continues to do so, we remain very focused on executing on our growth strategy. We continue to focus on the expansion of our store network and have a plan of -- for a network of over 100 stores in various formats. We have plans to continue to expand our private label products and introduce new private label brands in our business. Our services business will expand further from car seat installation to car seat hire, and soon we'll be extending that into other product categories. We have commenced shipping to customers in New Zealand and are undertaking an assessment of that market. Our website and digital performance have been strong and our investments in digital will continue through the year. We have a road map to progressively transform the technologies that drive our digital channel and the ways in which our customers can interact with Baby Bunting. We have adapted well to the current circumstances and are responding to new circumstances as they arise. However, we continue to look at the bigger picture. The strategic initiatives we have talked about today and others being developed are designed to set the groundwork for further and exciting growth in the years ahead. We have seen the positive momentum in sales continue for the first quarter, which is reflective of the less-discretionary nature of the maternity and baby goods category. During the first quarter, up to the 2nd of October, comparable store sales growth, including online, was 17%. Excluding the Melbourne metropolitan stores, comparable same-store sales growth remains very strong at 28.5%. All our Victorian stores have remained open. However, sales in the Melbourne area under stage 4 restrictions have moderated under the lockdown. Online sales growth year-to-date was 126% versus the same period last year, driven by a 233% growth in click and collect sales. Excluding Victoria, online sales growth, including click and collect, was 92% against the same period last year. We continue to see an improvement in gross margin, which is up 90 basis points from Q1 at 37.5%. We've also seen an increase in COVID-19-related costs, whether that be direct costs such as cleaning and general operating costs, but there has also been increased costs due to channel switching and the impacts to the supply chain in relation to freight, storage and handling. We anticipate opening between 4 to 6 stores this financial year, with 3 new stores opening in the first half of the year. As highlighted, the COVID-19 pandemic continues to create great uncertainty, as evidenced by the current trading conditions and the future impact on the economy. Accordingly, FY '21 earnings guidance cannot be given at this time. I thank you for your support and attendance today. I'll now pass you back to the Chairman. Thank you very much.

Thank you, Matt. The business today will be conducted in the following manner. The proposed resolutions will be displayed on the screen behind me at the appropriate time. After each proposed resolution has been put to the meeting, questions that have been submitted by shareholders and proxies and are relevant to the item will be considered. After questions and comments on each proposed resolution, I will disclose the proxy position for that resolution. As I noted at the outset, voting today will be conducted by a poll and via the Lumi platform. The results of the poll will be announced through the ASX as soon as they are available and they will also be posted on the Baby Bunting website. Christina Piccolo of Computershare has agreed to act as Returning Officer and I now appoint her. Item one. The first item relates to receiving and considering the company's accounts and reports. I will now address questions from shareholders on this item. Are there any questions?

Chairman, we have a couple of questions. First question to you is from the Australian Shareholders' Association. And the background is [indiscernible]. COVID has been a great example of a black swan event and provides an opportunity for all companies to learn about [indiscernible]. What would you say [ especially around your ] biggest learning regarding [ risk strategy ] during this crisis?

Thanks, Corey. Well, I guess that's a really great question because the pandemic has tested us all. And I think, overall, I'm very pleased with the way that Baby Bunting has responded, but it all comes back to some key issues, from my view, and that is surrounding planning, planning and more planning. And I think the crisis management and business continuity plans have really been tested this time around because it is all brand new to us. And I guess that's the very nature of responding to a black swan event, that it is something brand new. So I think it is all about quickly developing the right sort of responses involving the Board, with management, to work very quickly and collaboratively to make sure that we get all of the standard operating procedures in place as quickly as possible and stay disciplined to that and build all of those responses into our risk management review, which needs to be constantly updated. I guess if I was to look at the biggest learning and I might hand over to our CEO to comment more in a functional sense, but the big learning for me is that these black swan events cause you to make sure that you are very positive and clear and concise in the way that you respond and utilizing the talent that you have in your team to be able to come up with customized solutions that are fit for purpose. And the single biggest learning for me is the amount of goodwill that you receive from communicating often and well. I think, Matt, I'd ask you perhaps to comment about what the management team -- in terms of getting communication in terms of town halls and the like.

Thank you, Chairman. I couldn't agree with you more on the need for good planning and that planning goes through our risk plans that we do to [indiscernible] on a regular basis. But coming back to your points, communication within our business was very, very important to make sure that we're all aligned as to work with the nature of the issue, how will we address the issue and then what will we see as the outcome of our response to issue. So in our business, the executive team, for instance, in the first, I think, 2 months, were meeting twice daily, [ group first thing ] in the morning and back the end of the day, talking about the issues associated with the pandemic, keeping up-to-date with what the government was doing, keeping up-to-date with what the stores were saying about the issue, making sure that we had the operational activities in place to manage the situation. And then in a more broader sense, we have town hall meetings with the whole business, letting them know exactly how we're responding to the crisis. So we had a COVID response committee within the executive team that put out a response [ charter ], which was communicated broadly across the entire business, making sure that we're communicating that our -- safety of our team and safety of our customers and safety of the community was our #1 priority. #2 priority was to keep everybody employed and with jobs. And #3 was how do we actually manage in the short term, which is around the business impacts, and then finally, how do we recover from this. And it was very important for us that the teams have sort of [ light on the heel to say ] what are the strategic things we should be undertaking because our business was operating at a very rapid pace at the time. And I think what we've achieved is we've shown and demonstrated that when you come under pressure, we allocate roles appropriately, we can operate very, very quickly in a time of crisis, always looking back and reflecting on what our risk plan is under those sorts of scenarios. I hope that answers the question.

Thanks, Matt. And I would conclude by just saying I think this is obviously a very unusual time. And I'm, on behalf of the Board, very pleased with the way that our management team have responded well and the results that have been achieved during some very trying circumstances. So thank you, Matt. Are there any further questions, Corey?

Chairman, there are no further questions on this item.

As there are no further questions, I now conclude the discussion on this item. Item 2. Now turning to item 2a. This item relates to the reelection of Gary Levin. Gary was first appointed a director in August of 2014. He is the Chairman of the Audit and Risk Committee and he seeks reelection by shareholders today. Gary, would you like to address the meeting?

Yes, thank you, Ian, and good morning, ladies and gentlemen. As Ian mentioned, I have and have been for 6 years a passionate and committed Board member of Baby Bunting. I've taken active interest in the stores, in the industry. I frequently visit stores, I keep abreast of industry developments, both domestically and overseas. I've got over 30 years of experience on retail boards, and I'm very proud of my record of anticipating and adapting to rapid changes in the retail landscape. In particular, I've been a champion of the development of our e-commerce business, which has been a key component of Baby Bunting's continuing industry outperformance. As Chair of the Audit and Risk Committee, I oversee the smooth and accurate financial reporting process and continual monitoring and mitigation of the ever-changing risk landscape. And as we've heard, we've had our challenges this year. I present myself to you for reelection as a director. Thank you.

Thank you, Gary. I'll now put the motion that Gary Levin be reelected as a director. Are there any questions on this item?

None...

As there appear to be no questions on this item...

[indiscernible] [ questions that came through and so I see there are no questions to you ].

Thank you, Corey. As there appear to be no questions, I now conclude the discussion on this item and the proxy position is as follows. You can cast your vote on the platform now. [Voting]

Now turning to item 2b. This item relates to the reelection of Donna Player. Donna was first appointed a director in January 2017. She is a member of the Remuneration and Nomination Committee. And Donna seeks reelection by shareholders today. Donna, would you like to address the meeting?

Thank you, Mr. Chairman. So Mr. Chairman said, I've been a member, a passionate member, of the Baby Bunting family for nearly -- for over 3 years now, with nearly 40 years of retail experience across specialty, discount and department stores. I'll continue to bring my experience and skills and unique perspective to this extraordinary business. It's certainly been a very exciting 2 years and certainly a challenging 7 months and I look forward to playing a small part in the success of this terrific business. Thank you for your considerations.

Thank you, Donna. I will now put the motion that Donna Player be reelected as a director. Are there any questions?

Chairman, there do not appear to be any questions on this item.

Thank you, Corey. As there appears to be no further questions, I will now show the proxy position for this item. You can cast your vote on the platform now. [Voting]

Item 3. Item 3 on the notice of meeting relates to the adoption of the remuneration report. The company submits its remuneration report to shareholders for approval. Are there any questions in relation to the adoption of the remuneration report?

Chairman, there's one question from the Australian Shareholders' Association. And the [ project is a ] [indiscernible]. Could I ask the company to put a table of action taken on [ remuneration ] [indiscernible] future reports [ as increasing ] numbers of [indiscernible]. This is different from the statutory remuneration table in section 7 and is sometimes called [indiscernible]. [ Retail ] shareholders [ have found ] remuneration reports and start [ challenging its graphs ] to a single table of what was [ taken upon versus the lot ].

Thank you, Corey, and thank you for the question from the Australian Shareholders' Association. In the case of Baby Bunting for remuneration for our key executives for the last year, they received base pay and TSR rights that vested in October '18 and no STI was achieved during the year. So for Baby Bunting for the year, it was relatively straightforward, base being the major component of that. But [ John ], I do take your point. I think we are giving more and more information in our reports, but sometimes it lacks clarity. And we will take that item forward when we review the way that we present our remuneration report for 2021. So thank you for that comment. Are there any further questions on the remuneration report?

Chairman, no other.

Thank you, Corey. I'll now put the motion, as displayed on the screen, that the remuneration report be adopted. The proxy votes received before the meeting on item 3 are now displayed on the screen. You can cast your vote on this platform now. [Voting]

Item 4 of the notice of meeting deals with the approval of the grant of performance rights to Matt Spencer under the company's long-term incentive plan. The company has established a long-term incentive plan designed to align the interests of executives and senior employees more closely with the interests of the company's shareholders by providing an opportunity for eligible employees to receive an equity interest in the company. To provide a long-term incentive for the next 3 years, the Board has determined to make new grants of long-term incentives to cover the period from the current financial year to the end of the 2023 financial year. The terms of the proposed grant are described in the notice of meeting. In short, the Board has decided to continue to apply the 2 performance conditions that have been applied for the existing performance rights, that is an earnings per share compound annual growth rate hurdle and a total shareholder return compound annual growth rate hurdle. Both of these hurdles are absolute hurdles and, in the Board's view, provide challenging performance conditions for Matt to meet before he can receive any benefit under the award. Are there any questions for this item?

Chairman, there don't appear to be any questions on this item. I should note we received a question for item 2b. So [ let's first complete the ] discussion on this item [indiscernible] [ question first ] [indiscernible].

Thank you, Corey. As there are no further questions, I'll now put the motion, with the wording displayed on the screen. The proxy votes received before the meeting on this item are now displayed. You can cast your vote on the platform now. [Voting]

Ladies and gentlemen, that concludes the business of the meeting. I will close the voting system in a moment, but please ensure that you have cast your vote on all resolutions. I'll now have a pause to give you time to finalize your votes. [Voting]

[indiscernible] it may be the appropriate time for the question we received for item 2b [ at this time ].

Sure.

Thank you, Chairman. The question which came a little bit later on the platform was from the Australian Shareholders' Association. [indiscernible] Chairman, can I ask Ms. Player to tell the meeting what she has personally achieved over the past 3 years as a director of Baby Bunting?

I'm sorry, Corey, I'm having a little trouble just hearing that one.

I'll repeat the question. So the question is for item 2b relating to Donna Player's reelection. It was a question from the Australian Shareholders' Association. [indiscernible] Chairman, can I ask Ms. Player to tell the meeting what she has personally achieved over the past 3 years as a director of Baby Bunting?

Thank you. I'll ask Donna to comment on that question that we have. Over to you, Donna.

Sure. Thank you, Mr. Chairman. So I think my main contributions have been around the space in terms of merchandising, particularly based around private label and merchandising in the store. Added to that, I've also participated in discussions around store placement and the digital world.

Thank you, Donna. And as Chairman, I can confirm that Donna Player is a very active part in our Board and in discussions. And as you know, she's one of Australia's experts on merchandise and has a stellar track record, which she has brought to the Board room for Baby Bunting. So I now speak on behalf of the directors and the management team that we highly value her contribution to the Board, not just in merchandise but in other areas of general retail management. Corey, are there any further questions?

No. I'll refresh the platform one last time. Chairman, there appear to be no further questions.

Thank you, Corey. Voting is now closed. And the results of the poll will be released shortly after the voting has been counted and will also be posted on the company's website. And I'd like to thank you for your participation today. And I now declare the Baby Bunting Annual General Meeting closed. Thank you, everyone. Bye.