Striving for Excellence Investor Presentation December 2011

Transcription

1 Striving for Excellence Investor Presentation December 2011

2 Contents Introduction Striving for excellence Our financial perspective 2 2

3 One of the Top 5 Largest Sports and Fashion Companies in the North brands brands 11 Scandinavian sports and fashion Sourcing Sourcing offices in China, Hong Kong, Bangladesh, Vietnam, India, and Romania Distribution through own retail, outlets, e-commerce, franchise and wholesale Revenue of of DKK 3.9b * and 2,344 employees More than 450 stores and 11,000 wholesale selling points *) FY 2010/11 around the world 3 3

4 We Have a Proud Heritage in Scandinavian Fashion InWear Group 1973: Matinique is launched 1973: First Danish 1969.: InWear is fashion brand to set up founded production in Asia 1974: First subsidiaries in Sweden and Norway 1980: First own retail store in Copenhagen 1986: Part Two is launched 1996: Copenhagen Stock Exchange 2001: IC Companys is formed through merger Carli Gry 1948: Carli Gry founded 1973: Klaus Helmersen takes over the company 1974: Jackpot is launched 1976: First subsidiary in Norway 1986: Cottonfield is launched 1996: Copenhagen Stock Exchange 1998: Peak Performance acquisition 4 4

5 Our Portfolio Was Since Strengthened by Acquisitions and Start-ups 2001/ / /2004 ACQUISITION TIGER OF SWEDEN SAINT TROPEZ STARTSTART-UPS ** DESIGNERS REMIX 5 * SOAKED IN LUXURY 5 BY MALENE BIRGER

6 IC Companys Has an Experienced Management Team with High Execution Power IC Companys Executive Management Niels Mikkelsen, CEO Chris Bigler, CFO Anders Cleemann, EVP Peter Fabrin, EVP Industry experience of more than 60 years in total sports, fashion and fast moving consumer goods Growth creation through frames and principles Cash flow management giving stability and risk reduction Crisis management securing profitability and strength 6 6

7 Two Economic Crises but with Very Different Impact Stronger, Transparent, Flexible and Efficient IC Companys share price development 210 Jul-08 Aug-08 New management Sep-08 Financial crisis Sep-09 Building growth foundation 282 Jan-10 Jul-11 Debt crisis 40 Dec-08 Feb-09 Crisis management Nov-10 New structure Aug-11 New sourcing 115 Nov

8 Contents Introduction Striving for excellence Our financial perspective 8 8

9 Our Vision: To Be Among the Best Developers of Sports and Fashion Brands Freedom Within the Framework: Respect of each individual brand entrusting it with full ownership of the value chain Best practice sharing in key areas of the value chain Corporate Shared Services with targeted operational responsibilities 9 9

10 Our Mission: To Build Successful Brands by Uniting Business Excellence with Creativity and Innovation Knowledge center Retail/franchise Wholesale E-commerce New markets Sourcing Collection development Marketing/brand building Corporate Shared Services IT, HR, Legal Corporate Finance, Financial Shared Service Corporate Responsibility, Sourcing, Logistics 10 10

11 IC Companys Is Represented in Multiple Segments, Particularly Affordable Luxury and Mid Market Clothing type only has limited effect CONTEMPORARY FORMAL CASUAL JEANS SPORT/LIFESTYLE LUXURY (HIGH PRICE) AFFORDABLE LUXURY (UPPER MID PRICE) MID MARKET (MID PRICE) FAST FASHION (LOW PRICE) The price dimension is the primary driver 11 11

12 Having the Right Key Capabilities is Essential to Succeeding Within a Segment Comparative rating 1 Very important 2 Important LUXURY AFFORDABLE LUXURY MID MARKET FAST FASHION BRAND PRODUCT DESIGN SOURCING LOGISTICS DISTRIBUTION Heritage Distinctness Celebrities PR Innovative collections Accessories Quality Selective distribution Own environment Global footprint Mass media Drive traffic Fast design Merchandise flow Speed Flexibility Standardisation Cost Retail excellence Vertical principles Geographic conc

13 Our Knowledge Centre Facilitates a Systematic and Iterative Knowledge Sharing Process Knowledge center Defining best practice Knowledge sharing and innovation Implementation and adaptation of best practices Brand 13 13

14 Frames and Principles Is Our Catalogue of Best Practice Guidelines Implemented Throughout the Organisation Frames and Principles Marketing Vision Vision Build a strong brand with loyal end-consumers and support high sales performance Sourcing Vision KEY LEVERS Vision The marketing strategy is clearly defined and reflects the brands strategic priorities Build STRATEGIC APPROACH a There strong is a detailed brand understanding with loyal of the end-consumers marketing spend and a and clear rationale support for the high sales performance Collection allocation Development Vision Marketing is an integrated part of the ongoing business planning process KEY LEVERS Vision TARGETS Marketing initiatives are coordinated across channels to achieve maximum impact CROSS CHANNEL There Develop is a structured, The collections marketing operational strategy marketing that is clearly reflect planning defined the process and brand reflects plans the DNA brands are known and strategic positioning, priorities Not applicable meet end-consumer needs OPERATIONAL DEFINED PLANNING STRATEGY and understood There by all is relevant a detailed parties understanding of the marketing spend and a clear rationale to for marketing the AND OPERATING MODEL We and know New the supports expected Markets allocation effect the of business all initiatives Vision and and follow financial up on the actual objectives impact of the brand Marketing is an integrated part of the ongoing business planning process KEY LEVERS The brand DNA Vision clearly defined and executed consistently over time and across TARGETS CONSISTENT BRAND channels and consumer Marketing touch initiatives points are coordinated across channels to achieve maximum impact EXECUTION CROSS CHANNEL Marketing is consulted There is a in structured, all decisions Collections operational relating are aligned to marketing external the communication planning brand strategy process and and and takes they plans are are continuously known optimized Not applicable to OPERATIONAL STRATEGIC PLANNING an active AND role in identifying Build and a and understood support strong by correcting all relevant the short- brand communication parties long with term that loyal financial is not end-consumers on targets brand and support high sales performance Wholesale Vision to marketing COMMERCIAL APPROACH We know the expected Collections effect reflect of all the initiatives brand DNA and and follow there up is on a the clear actual understanding impact of the target group and their needs Consumer insights are collected in a structured approach on a continuous basis LEVERAGING CONSUMER KEY LEVERS Insights are used The actively brand DNA Vision to manage is clearly the defined brand and optimize executed consumer consistently over time and across TARGETS INSIGHTS CONSISTENT BRAND communication channels and messaging and consumer Collection touch structure points takes into consideration consumer buying behavior and gives STRUCTURED COLLECTION EXECUTION Marketing is consulted designers in and all decisions sourcers The marketing a relating clear strategy frame to external is clearly direction communication defined for the and creative and reflects takes development the brands strategic priorities PLANNING To be a profitable and preferred wholesale partner through Not defined simplification, DEFINED an STRATEGY active role in Price identifying and gross and There margin correcting is a targets detailed communication are understanding differentiated that is of across not the on marketing product brand groups spend and styles a clear rationale for the (before) for collection AND OPERATING MODEL Competitor insights are collected where innovation E-Commerce in appropriate allocation and effectiveness Vision a structured approach on a continuous basis Marketing is an integrated part of the ongoing business planning process development Competitor insights are used the business planning process COMPETITOR INSIGHTS Consumer KEY insights LEVERS are collected a structured approach on a continuous basis LEVERAGING CONSUMER Insights are used The actively collection to manage development Vision the brand process and is optimize optimized consumer to support the brands business TARGETS INSIGHTS EFFICIENT PROCESS communication model and messaging Marketing initiatives are coordinated across channels to achieve maximum impact (during) CROSS CHANNEL The process is standardized There is a structured, to We ensure choose operational consistent new markets marketing execution based over planning on time growth process potential, and plans competitor are known analysis and the Not overall applicable market attractiveness OPERATIONAL DEFINED PLANNING STRATEGY and AND Profitable, understood We by have all high relevant ambitious performance partiesgrowth plan where e-commerce goals and objectives stores are based which on the to drive potential marketing multi-channel each market along expansion with OPERATING MODEL We know Retail/Franchise the expected a road map effect for of execution all initiatives Vision and follow up on the actual impact Competitor insights are collected in a structured Our approach organizational on a continuous set-up, roles basis and responsibilities effectively contribute to our profitability Competitor insights The brand are used priorities in the are business clear and planning give direction process to individuals decision making COMPETITOR INSIGHTS UNDERSTANDING COST AND KEY 2 SALES DRIVERS All functions LEVERS are The trained brand to- DNA and Vision have clearly the defined necessary and information executed consistently to make over time and across CONSISTENT BRAND informed decisions channels during and the consumer We collection develop touch development and points expand process our distribution by taking a strategic approach in our customer selection and drive growth (during) EXECUTION OUTSTANDING CUSTOMER Marketing is consulted through effective all decisions We Key have Account relating a clearly management to defined external value communication disciplines proposition for and the takes online store and have defined how the ACQUISITION DEFINED & an active STRATEGY role in AND Our identifying Outstanding innovative online business correcting channel models and communication fits offer into highly a our clear overall that value profitable is business not proposition on brand strategy inspiring retail our concepts customers to engage with long potential term partnerships for expansion RETENTION OPERATING MODEL We optimize our The distribution objectives based and goals on detailed, are based structured on the potential mapping in & each segmentation market along with a road Collection performance is systematically analyzed to understand performance and FACT BASED FOLLOW ---UP to identify the drivers Consumer of success insights We and prioritize are failure collected our map, time organisation in a structured and resources and approach based processes on on a customers get there continuous potential basis and profitability AND EVALUATION KEY LEVERS LEVERAGING CONSUMER Facts and figures Insights and key are 1 learning s used actively are used to manage in future the collection brand and developments optimize consumer (after) INSIGHTS communication We and work messaging The customer acquisition investment is optimised across channels and we have OUTSTANDING CUSTOMER efficiently by making detailed New markets action are plans chosen that we based are on accountable growth potential, for and competitor follow up regularly analysis and the overall market detailed understanding of the economics to deliver to the objectives EXCELLENT ACQUISITION AND We develop existing customers by attractiveness challenging and coaching them in frequent meetings and yearly appraisals There is a defined programme aligned to the customer lifecycle along with tactics OPERATIONS RETENTION DEFINED We engage STRATEGY with our customers on We an have ongoing an ambitious basis to play growth an plan active where role in goals optimizing and objectives their sales are performance based on the potential in each to engage each customer type based on customer insight Competitor insights are collected in a structured market approach along with a continuous a road map basis for execution AND OPERATING MODEL Competitor insights are used in the business planning process COMPETITOR INSIGHTS Our Buying & Replenishment We have a clear are based perspective on the on brand as well strategy as rationale and aligned for which to the locatons should be retail and franchise 2 Our shopping environment customers online embodies Our purchase organizational all aspects behaviour of set-up, the brand roles identity. and responsibilities The showrooms, are aligned with our strategy and effectively the dialogue, the presentation etc. ENGAGING CUSTOMER EXCELLENT OPERATIONS We closely monitor contribute our inventory to our position profitability and react quickly to changes in demand We inspire our We customer plan and to buy execute through promotions a innovative which approach deliver to the objective and serve up high- EXPERIENCE OUTSTANDING We make CUSTOMER it easy quality to do content business which Our with stores is us relevant through are well and multiple known on-brand sales highly pointsactive in the local community ACQUISITION & RETENTION We focus on building strong customer relationships through a defined retention programme The look & feel embodies all aspects of the brand identity. The site planning and ENGAGING CUSTOMER feature selection 1 helps and inspires the customer to buy and complete the tasks Our marketing and merchandising efforts are integrated across channels to ensure WORLD---CLASS EXPERIENCE MULTI--- the user wants to Our perform operational principles for store operation, buying, VM and staff planning are consistent messaging, enforcing a unique and engaging experience CHANNEL INTEGRATION Our offline and We online are propositions actively updating defined and are aligned based maintaining on best and we serve our practice the product customer categories, across landing/category EXCELLENT OPERATIONS pages to keep the store fresh and relevant channels, contributing to an engaging Our ability experience to implement and profitable is effective business at all levels (HQ, Area management, Store) Our marketing and We merchandising monitor our cost efforts base are closely integrated and take across corrective channels actions to ensure to ensure maximum profitability at all times WORLD---CLASS MULTI--- consistent messaging, enforcing a unique and engaging experience 2 CHANNEL INTEGRATION Our offline and online Our customers propositions see are our aligned stores and as an we experience serve the customer standing out across in the retail landscape ENGAGING CUSTOMER channels, contributing The customer an engaging experience experience captures and the profitable brand identity business through an inspiring approach to EXPERIENCE assortment, store design and customer service Definition A catalogue of best practice principles for each of the 7 disciplines All catalogues have a standardized structure: Discipline vision Key Levers Focus Areas Frames and Principles WORLD---CLASS MULTI--- CHANNEL INTEGRATION Our marketing and merchandising efforts are integrated across channels to ensure consistent messaging, enforcing 2a unique and engaging experience Our offline and online propositions are aligned and we serve the customer across channels, contributing to an engaging experience and profitable business

15 We Have Defined a Hierarchy of Synergies to Prioritize Our Efforts Hierarchy of Synergies: Knowledge and best practice sharing through execution of the 7 disciplines Targeted operational synergies based on brands needs General operational cost synergies across all brands 15 15

16 Our Corporate Platform Have Been Reduced Significantly From 55 % of total cost and 1,800 employees to 15 % of total cost and 400 employees 16 16

17 Corporate Shared Services Only Hold Functions Based on Value Creation and Deliver Services Based on Brands Needs One size fits all Brands needs Franchise Collection development Affordable Luxury Outlet 80 million DKK Wholesale Mid-market E-commerce Retail New Business Models Fast Fashion 1 billion DKK Merchandising planning 17 17

18 Contents Introduction Striving for excellence Our financial perspective 18 18

19 Financial Guidelines to Secure Steady High Cash Flows Guideline Assets Profitability Return on investment Inventory turnover Credit control Underlying principle An asset light approach maximises our strategic manoeuvrability and secure a steady high cash flow Converting fixed to variable costs secures stable profitability in a volatile economic environment Prioritising investments to where returns are maximised at a satisfactory level secures future access to capital High stock turnover reduces costs by freeing up capital for other purposes and ensuring fresh goods Strict credit control frees up capital for other purposes and ensure a healthy customer base 19 19

20 Top Priority in 2011/12: Secure Group Profitability Despite Significant Change in Economic Environment Revenue, DKKb and gross margin, % EBIT, DKKm and EBIT margin, % % 59.1% % % % % % 10.1% 9.3% % % 8.2% % 2005/ / / / / / / /12 Expected revenue growth in the range 0-2% in 2011/12 Gross margin under pressure from external factors and market conditions Expected EBIT growth in the range 12-28% in 2011/12 Expected EBIT margin of % One-offs 2011/12 of DKK 23m 20 20

21 Stable Cash Flow Generation and Debt Reduction Expected to Continue Operating cash flow, DKKm *Working capital project NIBD, DKKm and NIBD/EBITDA * * debt target 2005/ / / / / / / /12 Cyclic earnings but steady cash flow generation in the Group Working capital to be freed up in 2011/12 Capital structure with long term NIBDtarget of 0 DKK NIBD/EBITDA limit of

22 The Brand Portfolio of IC Companys No Loss Making Brands in 2011/12 Financial highlights 1 Revenue, mdkk (growth, %) 2 Wholesale / retail 3 Selling points / stores Development in Group brand portfolio 40% By Malene Birger (+7%) 2 70% / 30% 3 2,300 / (+18%) 2 55% / 45% 3 1,200 / 34 Latest year growth 30% 20% Inwear 10% Cottonfield Jackpot Saint Tropez Designers Remix Tiger of Sweden Group Matinique Part Two Peak Performance (+35%) 2 78% / 22% / (+13%) 2 58% / 42% 3 1,200 / (+23%) 2 65% / 35% / (+11%) 2 57% / 43% 3 1,200 / 36 (10%) (5%) 5% 10% 15% 20% (10%) Soaked in Luxury (20%) 5-yr compound annual growth rate (+7%) 2 41% / 59% 3 1,300 / (+7%) 2 69% / 31% 3 1,100 / (+5%) 2 41% / 59% / 58 Different strategy for different brands Focus on core markets vs. focus on internationalisation (+31%) 2 68% / 32% 3 1,000 / (-14%) 2 75% / 25% /

23 The Group Has Suffered from a Sudden Drop in Consumer Spending Due to Weather and the Current Debt Crisis Symptomatic retail development in Germany Positive same-store figures in most markets Trajectory set on growth Sharp decline in consumer confidence and traffic 23 23

24 IC Companys Gains Market Share due to Effective Campaign Activities Flat revenue Flat development in revenue FY 2011/12 Significant drop in consumer confidence Increased campaign activity to secure revenue Group performance in main markets above development in retail trade IC Companys continues to gain market share 35% Development in Denmark, YoY Revenue growth, IC Companys 25% Growth in retail trade, clothing 15% 5% (5%) (15%) Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 35% Development in Sweden, YoY Revenue growth, IC Companys 25% Growth in retail trade, clothing 15% 5% (5%) (15%) Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 35% Development in Norway, YoY Revenue growth, IC Companys 25% Growth in retail trade, clothing 15% 5% (5%) (15%) Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan

25 Guidance FY 2011/12 Challenging markets and high uncertainty expected to continue Significant change in consumer spending Continuation of campaign activities to secure revenue Further structural changes following corporate strategy expedited Full year effect on EBIT of DKK 50m Non-recurring costs of DKK 23m after proceeds Revenue in the range of DKK b EBIT in the range of DKK Investments in the range of DKK m 300m after non-recurring costs 25 25

26 Channel Split of Floor of Revenue Guidance FY 2011/ % (0-2)% (8-10)% (1-3)% GTN as in 2010/11 Same-store as in Q1 E-commerce as in Q1 2010/11 Wholesale Franchise Retail Outlet Currencies 2011/

27 Distribution Split of Floor of Revenue Guidance FY 2011/ % (1)-1% GTN as in 2010/ (40-50) 6-7% Same-store as in Q1 E-commerce as in Q /11 Pre-order OTB Same-store New stores Closed & Other Wholesale & Franchise Retail Currencies 2011/

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