23 February Investor presentation 1H 2005/06

Transcription

1 23 February 2006 Investor presentation 1H 2005/06

2 The new IC Companys Home of Fashion Brands

3 Let me start by saying that Revenue from own brands was up by 9%, including growth in wholesale of 12% Operating profit was up 57% to DKK 241m (DKK 153 million), improving the EBIT margin from 10.0% to 14.5% Improvements from growing order volume, lower discounts, fewer goods being returned, better overall sales figures, better gross margins, better sourcing currencies and was broadly founded We are comfortable with 2005/06 and can now focus on future growth

4 Let me also address the IC Companys story from short term turnaround to long term transformation... From immediatestruggleto survive... via reestablishment of industrial competencies via strategic clarifications via managerial paradigm shift...to profitable growth

5 Let my start by saying that We now focus on profitable future growth Heavy presence at 10 Fashion Fairs in Europe during January and February 2006 Fashion Shows for Jackpot, Part Two, InWear/Matinique, Designers Remix Collection and By Malene Birger 2005/06 investments in refurbishment of showrooms in Germany, Holland, Belgium, Sweden 2005/06 recruitment and training of sales staff Everything set for organic growth for all our own brands We feel comfortable with the start of selling-in Autumn 2006

6 Let my start by saying that We now focus on profitable future growth Investments in refurbishment of existing shops and new shops Franchise as a tool for growth Huge opportunities on Export markets such as Russia and China The Companys store concept to be used for growing Export markets Thorough investigations of potential for line extensions, licenses, agents and distributors

7 Miscellaneous Acquisition of production office in Turkey Soaked in Luxury continues to grow in spite of name change Matinique named Brand of the Year 2005 by Euroman New HR Director on board New Supply chain and IT director to be hired

8 Income statement, Q2 2005/06 DKKm 2005/ /05 Revenue Gross profit Gross margin 59,2% 55,7% OPEX (357) (343) OPEX efficiency 52,8% 55,2% Operating profit 44 3 EBIT margin 6,4% 0,5%

9 Income statement, 1H 2005/06 DKKm 2005/ /05 Indeks Revenue Gross profit Gross margin 58,0% 54,4% OPEX (718) (682) 105 OPEX efficiency 43,4% 44,4% Operating profit EBIT margin 14,5% 10,0%

10 Revenue, 1H 2005/06 own brands DKK million 1H 2005/06 1H 2004/05 Change InWear % Matinique % Jackpot % Cottonfield % Part Two % Peak Performance % Tiger of Sweden % Saint Tropez % By Malene Birger % Soaked in Luxury % Designers Remix Collection % Error % Total own brands %

11 Revenue, 1H 2005/06 own brands by market DKK million H1 2005/06 H1 2004/05 Change Sweden % Denmark % Holland % Norway % UK & Ireland % Finland % Belgium % Germany % Switzerland % Canada % Poland % Spain % Austria % Russia % France % Other % Total own brands %

12 Distribution channels performance in 1H 2005/06 1H 2005/06 DKK million Wholesale Retail Outlet Unallocated Group Revenue Distribution channel profit/(loss) Distribution channel profit margin 19,3% 16,5% 11,8% 18,2% Corporate costs* (60) (60) Operating profit before special items 241 EBIT margin 14,6% Special items 0 Operating profit 241 1H 2004/05 Wholesale Retail Outlet Unallocated Group Revenue Distribution channel profit/(loss) Distribution channel profit margin 15,2% 8,5% 12,4% 13,1% Corporate costs* (49) (49) Operating profit before special items 153 EBIT margin 10,0% Special items Operating profit 173

13 Balance sheet at 31 December Dec. 31. Dec. 30 June DKKm Total fixed assets Inventories Receivables Cash and cash equivalents Total assets Equity Long-term liabilities Long-term debt Bank loans Other debts Total liabilities and equity Working capital as a percentage of revenue 22% 18% 9%

14 Cash flow statement for 1H 2005/06 31 Dec. 31. Dec. DKKm Cash flow from operating activities Cash flor from investing activities (47) (39) Cash flow from financing activities 12 1 Change in cash and cash equivalents Net interest-bearing debt (194) (372) Committed credit lines

15 Investments in 2005/06 In total 150 projects more than 100 in InWear, Matinique, Jackpot, Cottonfield and Part Two Own retail shops Franchise shops Showrooms

16 Overall, satisfactory growth in orders for delivery in Q3 and Q4 2005/06... Growth InWear 0% Matinique 4% Jackpot 0% Cottonfield 14% Part Two -2% Peak Performance 13% Tiger of Sweden 25% By Malene Birger 68% Soaked in Luxury 12% Designers Remix Collection 85% Total own brands 9%

17 Turnaround of Polish operation - status Background: Why have things previously gone wrong in Poland? Growing competition Lower priority given to investments Outlet strategy/low-price strategy

18 Turnaround of the Polish operation we follow the plan... The plan includes: Higher retail prices and higher gross margin Closure/renovation of stores Implementation of training programmes for staff Implementation of marketing activities Focus on full-price sales Improved management of purchasing Reduction of administrative expenses

19 Results in Poland so far... Same store development (running stores): Jackpot: 107% Cottonfield: 111% Gross margin from 38% to 53% Additional 4-6 shops will be closed/relocated in 2006/07 EBIT: in 2004/05: -5 DKK million 2005/06: + 2 DKK million

20 Successful Export Division enables future growth Global use of traditional skills within: Key Account Management Retailing Marketing and Branding Company s store concept Switzerland: Successful Company s chain Russia: Partner since Growth of more than 20% per year Spain: Home of Zara and Mango: Yearly growth of more than 25% China: Foothold with InWear shops in Beijing and Shanghai + 25 other global markets

21 The Companys concept Companys concept Companys has its own conceptual identity but supports and develops each individual brand in the shop There is a clear link between the Companys concept and the individual brand success. Each brand is merchandised individually in shop-in-shops and identity corners according to the brand values and guidelines The Brands

22 The Companys concept has several building blocks Characteristics One-stop-shopping Cool Innovative Creative Shopping experience Focus Brands Assortment Design Visual Merchandising Service Size of shop Female: Mixed: sqm sqm Image Prices: medium to high price level Style: classic, trendy, sportive Target group: years Trendy and exclusive, wide appealing assortment Development Development and support of the total concept via the Export Division Market penetration tool for Export markets Target group Professional partners

23 The latest Companys store - Zürich NEW COMPANYS STORE - ZURICH -450m2 - biggest Swiss Companys Store - 3 floors - third Companys Store in Zurich - eighth Companys Store in Switzerland

24 Franchise to generate profitable growth Idea Branded Sales as Franchise: The ownership effect Secure and steady growth Supports Brand awareness and wholesale distribution Requires combined competences within retailing Franchise business models: Company owned leasehold: Franchisee owned leasehold: Roll out and test: Partner profile: shop manager Partner profile: professional retailer Denmark, Sweden, Holland, Belgium

25 February 2006

26 Matinique Brand of the year 2005

27 Matinique s mission OUR MISSION IS TO BE THE LEADING SUPPLIER OF HIGH-QUALITY, AFFORDABLE, URBAN, CASUAL MEN S CLOTHING CREATING A BRIDGE BETWEEN CASUAL AND FORMAL MATINIQUE MAKES IT EASY FOR THE MODERN MAN TO EXPRESS HIS INDIVIDUALITY

28 What is Matinique Matinique has better delivery Matinique is more commercial Matinique is not built on one person Matinique has a stronger international name Matinique is a strong organization built up around a team Matinique has a strong merchandise flow Matinique is a stronger international Brand Matinique has an international marketing strategy Matinique has better delivery Matinique is a volume brand Matinique has a professional merchandise flow with 12 delivery drops Matinique has better delivery Matinique is a stronger international Brand Matinique has an international marketing strategy

29 What is Matinique competitive positioning PRICE LOW MEDIUM HIGH PRADA GUCCI D 6 G HUGO HELMUT LANG JOSEPH DKNY DIESEL REPLAY H & M PAUL SMITH ARMANI HUGO BOSS CALVIN KLEIN SAND MATINIQUE BEN SHERMAN BLUES JC RAGS 4 YOU MEXX CARHARTT ZARA SELECTED ZARA H & M POLO BOSS MARC O POLO MYRPHY & NYE MARLBORO TOMMY HILFIGER COTTONFIELD RIVERWOODS A&F ESPRIT S OLIVER GAP FACONNABLE GANT RED/GREEN PEAK PERFORMANCE TIMBERLAND BISON BQ BLANC BLEU SIGNAL MASSIMO DUTTI PRIVAT LABEL GAP CELIO PAUL & SHARK HENRI LLOYD MARKS & SPENCER HYPERMARKET ADVANCED MODERN UPDATED CLASSIC CLASSIC TRADITIONAL LIFESTYLE

30 What have we done? Changed our positioning We have implemented a clear communication platform New design manager Implemented sales managers (first market was Denmark) Strong international marketing plan Int. magazine Football brings people together Fashion shows on a high international level

31 When will we see the effect? Some markets in Spring 2006 Some markets in Autumn 2006 And full effect in Spring 2007

32 Global Sourcing Setup Turkey acquisition Turkey represents 16% of sourcing Sourcing By Country External Agent Sourcing BALTIKUM 5% BANGLADESH 7% INDIA 8% OTHER 8% CHINA OTHER 22% INDIA 38% 1. Shanghai office established New hub for all China 2. Porto office closed Hungary factory closed Bucharest/Oderhei offices established 2003 Grey via ICC TURKEY 16% 56% ITALY 19% BALTIKUM 21% Baltics: Direct with dedicated factories 3. Dhaka office established Expanded from base 4. Acquisition of Turkey production office Substantial restructuring over last 3 years Focus on Asia and Romania/Turkey

33 Retention of 2005/06 financial forecast Revenue of roughly DKK 3,000m EBIT of DKK m (margin of 9.5%-10.5%) Operating investments of DKK 90m and capital investments of DKK 20m Free cash flow of DKK m Share buy back of 100 m DKK to start now

34 The forecasts are based on Lost revenue from closing down activities Sale of Sir of Sweden Closing of Error Closing of PTM Minor improvement in gross margin in 2H 2005/06 compared with 2H 2004/05 More expensive freight More expensive quota Gross to net improvements started already in 2H 2004/05 Minor improvement in sourcing currencies Investments in future growth

35 Let me finalise by saying... Brands as independent business units and brands on a shared platform have made it possible to manage IC Companys The organisational empowerment is steadily improving, leading to higher and higher ambitions IC Companys as a portfolio manager (platform, operating skills and financing

36 Q&A