Sonae SR Ensuring the Future

Transcription

1 GGFBM GGFBM Conultants: Anat Cohen, Iddo Diamant, Oded Harel, Roey Yamin Sonae SR Ensuring the Future

2 Agenda Introduction Analysis Recommendation Implementationn Financial implications Risks Conclusion

3 Introduction

4 Sonae SR in 2015 Stores Turnover EBITDA PL EBITDA Internaitonal Portugal Spain Others Company aims to develop its global presence with better financial performances

5 Key Issues House of Brands Growth Geographic markets Business models Stores Profitability Strategic Plan for the next 3 years

6 Analysis

7 Company Analysis International Expansion Lower risk Capital- Light Lower profits Market Knowledge Successful Examples: Middle East (market knowledge, strong partner) Canary Islands (correct business model) International expansion can succeed if done correctly

8 Company Analysis Worten Lucrative electronics 40 million euros profits, Revenue/store mil = 1.73 million High costs 10% own-brand Very profitable, there is need for JV and large market presence

9 Company Analysis Sport Zone 10 million euros profits, Revenue/store mil = 0.9 mil 50% own brands franchise works well Desirable locations, strong layout and design More focused than competitors Profitable and strong brand, needs to grow in new markets

10 Company Analysis Zippy Small profits, Revenue/store mil = 0.33 mil High quality and affordable 100% own brands Works well in Middle Eastern market Franchising in the Middle East has strengthened the brand

11 Company Analysis MO Small profits - Revenue/store mil = 0.33 mil Low price Not in attractive locations Began entering middle eastern market Only fashion brand, attracts a very specific segment

12 Company Analysis Spain Recovering from economic crisis Long-term investment and profits JV in Canary Island turned successful Spanish market demands patience

13 Bottom Line International expansion can succeed if done correctly Worten - Very profitable, there is need for JV and large market presence Sport Zone - Profitable and strong brand, needs to grow in new markets Zippy - Franchising in the Middle East has strengthened the brand MO - Only fashion brand, attracts a very specific segment Spanish market demands patience International expansion can succeed if done correctly

14 Recommendation

15 Key Issues House of Brands Growth Geographic markets Business models Stores Profitability Strategic Plan for the next 3 years

16 3 Alternatives for Sonae SR Bundling all together Two lines of strategy Deeper penetration in Spain and Europe All retail stores in same places Focus on ME Franchising Zippy & MO Middle East Worten & Sport Zone Latin America Franchising and JV Increase company control in Spain Franchise in Eastern Europe Work on wholesale

17 Evaluation of Alternatives 1 Negative 5 - Positive Fits company profile Bundling all together Two lines of strategy Risk Profitability Strengthen the brand TOTAL Deeper penetration in Spain and Europe

18 Evaluation of Alternatives 1 Negative 5 - Positive Fits company profile Bundling all together Two lines of strategy Risk Profitability Strengthen the brand TOTAL Deeper penetration in Spain and Europe Two line of strategy is the biggest opportunity

19 Growth Strategy Worten Sport Zone Zippy MO Countries Latin America - Brazil Latin America - Brazil Existing Middle East markets Middle East Business model JV with local player Franchise Deeper penetration by franchising Franchising through bundling and acquisition of new brand Worten and Sport Zone Zippy and MO

20 House of Brand Sonae SR has it all Worten Electronic and house supplies Sport Zone sportwear and gear Zippy children brand MO mid-level fashion? European high end fashion Highlighting the Sonae SR brand in all stores

21 Profitability Increasing profitability through franchising 60/40 Investing in Worten Gaining profits from Latin America and Middle East 109 million Euros in profit by 2018

22 Two Lines of Strategy Growth Branding Profitability House of Brands Growth MO & Zippy & High end Fashion in the ME Purchasing High end brand Franchising Profitability Worten & Sport Zone in Latin America Emphasizing Sonae SR in all stores Profits from ME and Latin America A new strategy for Sonae SR

23 Execution

24 Implementation H 1H 2H 1H 2H 1H 2H Research local retailer in Brazil Worten JV in Brazil Evaluation and of JV Sport Zone Research to gain market knowledge in Brazil Franchising in Brazil Expanding franchising agreement to MO Zippy & MO Research local retailer for MO franchising in ME Franchising MO with new partner in the ME New brand Research potential high end fashion acquisition Acquisition of new high end fashion brand

25 Financial Assumptions Worten 5% rise in Portugal, Spain base in 2H17, 5% annual rise in Brazil Sport Zone 7% rise from 2H16 in Brazil Zippy & MO annual rise in current franchising, 5% rise due to new franchising New brand 1 mil Euro in 2H17 and 30% annual rise

26 Turnover 1,600 Turnover (mil) 1,400 1,200 1, H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18

27 EBITDA Margin 10.0% EBITDA Margin 8.0% 6.0% 4.0% 2.0% 0.0% 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18-2.0% -4.0% 109 million Euros in profit by 2018

28 Risk Mitigation

29 Risk Mitigation Risk Action Following the trends in Chile and NY, Zippy is not attractive for franchisers Alhokair will refuse to bring MO to the Middle East Partners in Latin America won t agree to invest Worten s required establishment expenses Avoid the boom abroad- slower and more planned expantion. Finding another fashion retail from the Middle East 1. Offering better share in revenues 2. Starting with organic growth for penetrate the market

30 Conclusion

31 Two Lines of Strategy Growth Branding Profitability House of Brands Growth MO & Zippy & High end Fashion in the ME Purchasing High end brand Franchising Profitability Worten & Sport Zone in Latin America Emphasizing Sonae SR in all stores Profits from ME and Latin America A new strategy for Sonae SR