Sonae SR - The Way to Success

Transcription

1 University of Muenster School of Business and Economics Title Sonae SR - The Way to Success Presenting to Francesco Pimente and Teresa Castro Project team Pascal Lange Christoph Kirchner Marie-Sophie Kilian Timo Suellwold 1

2 Agenda Management Summary External and internal analysis Recommendation Implementation Wrap-up 2

3 Mandate Move into the international fashion realm Key challenges Expand internationally Become a profitable and asset light business Mgmt. Summary 3

4 The way to become an internationally successful asset light business Analysis High growth potential in emerging markets for fashion Increasing competition in electronics (esp. from online) Actions Expand internationally in Middle East & India with Zippy, Sports Zone and MO Focus on development and M&A of own brands to employ franchise model for expansion Boost Worten to sell it afterwards to unlock financial potential for brand M&A and expansion Result One of the leading fashion retailer with an asset light business model and own brands Mgmt. Summary 4

5 Analysis of Worten: Missing fit to your portfolio / Business is endangered External: Key success factors Increasing competition (offline and online) Large scales necessary to compete in the market for electronic devices Trend for consolidation Limited strategic fit of Worten Internal: Capital intense business but cash generating potential Limited fit to Sonae SR s strategy (products and business model) Not yet profitable in Spain Need for profitability at Worten Analysis 5

6 Analysis of Fashion and Sports: Franchise partners needed for expansion Key success factors External Price index as key lever to gain profits and to ensure profitability Use the potential of growing and emerging markets for expansion plans Capital light models: local experience and cultural knowledge needed fit to consumer preferences Price index and population growth as most important factors Need for franchise partners Analysis 6

7 Analysis of Fashion and Sports: Own brands are most profitable Key success factors Internal High margins with own brands successful business Spain is an very important market needs to be profitable and can be used as a test market Ability to develop and implement new capital-light business models Strong locations of your stores presence in the city centers Spain as test market High margins with own brands Strong locations Analysis 7

8 Overview of key success factors Limited strategic fit of Worten Need for profitability at Worten Use price index and population growth Need for franchise partners for expansion Use Spain as a test market High margins with own brands Strong locations Analysis 8

9 Decision time: Improve and then sell Worten Hold + expand Early exit Mid term exit Strategic fit Feasibility Generation of cash Increasing competition from online and large competitors as deal breaker for hold Worten Recommendation 9

10 Decision time: Short term focus India and long term China can be considered India and ME Rest of Europe and North America China Price index Growth and population Feasibility High degree of competition (ZARA, H&M, Primark) as deal breaker for Europe and North America Recommendation 10

11 Future strategy consists of two pillars Future Strategy Worten Fashion & Sports Achieve profitability in short term Sell in mid term Franchise concept and stores in stores for expansion Investment in own brands Implementation 11

12 Make Worten look nice and sell it for a high price Need for profitability Worten Short-term: Portugal: gain market share Spain: become profitable by 2017 through JV with partners, including a buy out option Online: develop an online store for Portugal, Spain & Canary Islands with own logistics online presence awareness through cross marketing with stores > Promotion codes; customer loyalty programs; black Friday week etc. Long-term: Use of the increased growth rate & profitability to sell Worten > Expected high willingness to pay due to consolidation of the electronic retail market > Earned money is used to invest in the expansion and internationalization of the fashion retail market Implementation 12

13 Employ franchise concept and develop more own brands Spain as a test market Fashion & Sports Own brands have high margins MO & ZIPPY Development of the own brands to become more attractive for franchising partners Design centers in Portugal and Spain: cooperation's with local design schools/young designers Later on: Dubai, Riad, Mubai, New Dehli etc. Research & Development center in Portugal with focus on children clothing Enter the Middle East (10) & Indian (30) market through franchising concept Focus on Urban areas and store in store concepts Possible M&A of existing brands in the same segment Implementation 13

14 Focus on attractive locations and expand in India and Middle East Location is everything Fashion & Sports SPORTZONE Already profitable in Portugal & Spain Expand presence in the center & attractive locations Built up sponsorships with successful Spanish athlets Expansion in the Indian Market with focus on shopping malls & store in store concepts Use existing franchise partners to enter Middle East Intensive market research about the sport preferences in the different areas Implementation 14

15 Implementation starts right now Time frame Actions Set up Joint Ventures Development of Online Store Development of design centers Set up franchise partnerships M&A of brands Sponsorship of athletes Implementation 15

16 Revenue is generated mainly by Worten and in Portugal Current financial situation Revenue share sorted by function Revenue share sorted by region EBITDA Margin Zippy & Moe Sports 14% Zone 18% Worten 68% 28% 72% 5% 4% 3% 2% Portugal 4% 5% Worldwide Worten Zippy & Moe Sports Zone Portugal Abroad 1% 0% 2% Zippy and Mo Sports Zone 1% Worten Sonae SR Implementation 16

17 Investments of 105 million Euro have to be made Needed investments Worten Online Shop 15 million Euro Marketing and effiency program 25 million Euro Fashion Design Center 10 million Euro Research & development center 15 million Euro Marketing program 25 million Euro Total costs approximately around 105 million Euro Sports Zone Costs for new location 10 million Euro New brand ambassadors 5 million Euro Implementation 17

18 Revenue is less dependent on Worten and EBITDA is increased Future Forecast Assumed Growth rate Worten ,045 6% Sports Zone % Zippy & Moe % total 1,290 1,434 1,602 1,799 Methods to increase EBITDA Margins Try to negotiate better conditions with the franchise owners Become more attractive partner through strengthening own brands and their position Try to save costs in IT and data management since it causes a lot of costs through current problems 5% 4% 3% 2% 1% 0% Revenue share in , 20% 401, 22% 1,045, 58% Worten Sports Zone Zippy & Moe Development Margin worldwide 4% 3% 1% 2% Implementation 18

19 Impact Potential risks are manageable Risk Mitigation A B A B Difficulties in finding franchise partners No purchasing partner for Worten Go for stores inside stores concept and JV as possible alternative Look for PE investors due to well developing business at Worten Probability Implementation 19

20 Wrap-up Expand internationally Become a profitable and asset light business Monday morning actions Expansion in India/ME with franchise concept in fashion segment Unlock financial resources by sell of Worten Set up a project team with Teresa Castro (Director of Operation) as person in charge Wrap-up 20

21 Thank you for your attention 21