Reliving Portuguese Conquests

Transcription

1 Reliving Portuguese Conquests Porto Business School Sara Anas Harsha Fernando

2 Agenda Key Issues Analysis Recommendations Financials Plan and Risks Summary

3 Why are we here today? How do you prioritize your international expansion to increase sustainable profitability?

4 What are the key issues? Sustain Established Markets Spain Organic growth v. Inorganic growth Partnerships Grow Emerging Markets India, Turkey, Middle East Organic v. inorganic growth

5 Analysis

6 What is Sonae today? Presence in 60 countries Low Brand Value Focus on Retail Sonae World Business Council for Sustainable Development High Borrowing Capacity

7 Sonae is a diversified ecosystem Owned 100% by Sonae 52.6% privately owned Sonae SGPS Invested Capital MC SR RP IM Sierra COM Continent SportZone Shopping Centres NOS Wells Meu Super Worten MO MC SR RP IM Other Turnover Zippy Sonae SR has low capital and high return MC SR RP IM

8 What does Sonae SR look like? Worten Sportzone Zippy MO Own Brands <20% 50% 100% 100% Capital-Light International Expansion Same scale as Portugal Profitable in Spain Franchise model in middle-east Low differentiation and international penetration Revenue Structure of SR Store Structure of Sonae SR Number of Stores of total SR 14% % 39% 18% 68% % Worten Sport Zone Worten Sport Zone MO and Zippy Worten Sport Zone MO and Zippy

9 Which stores counts for the most revenue? Where revenue is coming from Revenue of total SR Size of total SR Worten 68% 39% Sport Zone 18% 20% MO and Zippy 14% 41% MO and Zippy Sport Zone Worten 0% 10% 20% 30% 40% 50% 60% 70% 80% Size of total SR Revenue of total SR

10 Worten has the highest revenue per sqm.. SR Average SQM/Store total revenue M euros Revenue per sqm (M euros) Worten Sport Zone MO and Zippy Revenue per sqm (M euros Revenue per sqm (M euros) Worten Sport Zone MO and Zippy

11 Financial Analysis of Sonae SR in Spain Spain no. Stores % of stores Turnover estimated % Turnover M EUR Turnover M EUR per store Worten Spain 44 37% 68% Sport Zone Spain 35 29% 18% MO Spain and Zippy Spain 41 34% 14% Total Spain Turnover M EUR per store Worten Spain Sport Zone Spain MO Spain and Zippy Spain

12 What is the future of Retail? Convenience Intimate shopping stores Eliminate billing queues Technology Virtual Reality Beacon technology Omnichannel shopping stores Customer Experience Customization Customer Service

13 What are the consumers looking for today? Value High quality Competitive Price Sonae provides Value through competitive pricing at Zippy and MO SR needs to provide same value in the international locations Convenience Smaller stores Proximity to stores Sportzone is conveniently located as compared to Decathlon in Portugal Spain lacks convenient locations Experience Me-centric Customization Sonae MC has loyalty programs in Portugal Sonae SR has opportunities to exploit the latest trends

14 To summarize our analysis S High Borrowing Capacity Strong diversity and foothold in Portugal High competence in sustainable business W Low Brand Value O Emerging Trends in Retail Emerging markets with middle-income T Low Price Index in the emerging markets

15 Recommendations

16 Why are we here today? How do you prioritize your international expansion to increase sustainable profitability?

17 What are the key issues? Sustain Established Markets Spain Organic growth v. Inorganic growth Partnerships Grow Emerging Markets India, Turkey, Middle East Organic v. inorganic growth

18 Which markets should SONAE target Knowledge Price index Investment Risk Partnership s India Turkey Middle East

19 Which markets should SONAE target Knowledge Price index Investment Risk Partnership s India Turkey Middle East India provides a strong opportunity to grow through partnerships

20 What brands should SONAE take to India? Profit Competition Stability Control Investment Worten MO \ Zippy Sportzone SportZone is the most promising brand for the Indian Market

21 How to take Sportzone to India? What Create a partnership in India to expand Sportzone Why Use a capital light model High sports affinity in India Low competition How Establish a Joint Venture with TATA Take advantage of the large distribution network and knowledge

22 What alternatives should you consider for Spain? Culture Proximity Competition Investment loss Risk Grow Don t grow

23 What alternatives should you consider for Spain? Culture Proximity Competition Investment loss Risk Grow Don t grow Spain is a very important market where you can take advantage of the investment done

24 How should you adjust your presence in Spain MO Zippy SportZone Worten What Focus in convenient locations Why Consumers are looking for more convenience Establish MO and Zippy has strong fashion brands How Move stores into shopping malls controlled by SONAE Relocate stores that are not profitable and located in the suburbs to malls

25 How should you adjust your presence in Spain MO Zippy SportZone Worten What Keep the current Business Model How Why Good presence with good future perspectives

26 How should you adjust your presence in Spain MO Zippy SportZone Worten What Create digital stores How Why Keep organic model Increase convenience and costumer experience How Digital shelving Dynamic prices and promotions Automatized storages to reduce store space

27 How should you adjust your presence in Spain MO Zippy SportZone Worten What Store and brand integration How Why Create a more convenient and integrated experience across the independent brands Create synergies across different shops How Implement the Lloyalty card model across all stores Cupons targeted for specific costumers Collect big data from consumer preferences

28 Plan & Risks

29 Assumptions % COST Equity 30% 13% Debt 70% 7% Tax 23% WACC 8% 30% profit margin

30 We estimate an NPV of 240$ CapEx h h Digital store 5 Loalty cards 2 Total CapEx OpEx h h Open new 20 store rent COGS Other Ex Total OpEx NPV $ h h Expected Sales h h Total Ex FCF

31 Financials

32 How do you implement our recommendations?

33 Probability What are the associated risks? Success of Worten in the Canary Island does not translate to continental Spain By continuing the joint-venture that you are currently utilizing, as well as leveraging collected customer data to increase sales while reducing risk and costs Risk Sonae s partnership with Tata could be cannabilized by Tata s other stores Offering differentiated products with high value, that are targeted to Indian consumers will reduce risk. As well as data collected.

34 Summary

35 What are the key issues? How do you prioritize your international expansion to increase sustainable profitability? Sustain Established Markets Spain Organic growth v. Inorganic growth Partnerships Grow Emerging Markets India, Turkey, Middle East Organic v. inorganic growth