INVESTOR PRESENTATION DANSKE MARKETS H1 2009/10

Transcription

1 INVESTOR PRESENTATION DANSKE MARKETS H1 2009/10 MARCH 2010

2 Contents Section 1 INTRODUCTION Section 2 FINANCIAL RESULTS Section 3 OPTIMISING OUR REVENUE Section 4 Q&A 2 2

3 IC Companys Home of Fashion Brands 3 3

4 InWear Founded in The Company is founded by a young Niels Martinsen and Kirsten Teisner, who launches fashion wear for young women under the InWear brand 1973 Introduction of Matinique 1974 The first subsidiaries are established in Sweden and Norway Establishment of the first own retail store in Copenhagen Part Two is launched as a sporty and classic brand 1996 InWear's shares are listed on the Copenhagen Stock Exchange 4 4

5 Carli Gry International A/S - Founded in Carli and Jørgen Gry found a small shop in Copenhagen named Carli Gry 1974 Launch of the Jackpot brand on the Danish market 1976 The first subsidiary is established in Norway 1986 Introduction of the Cottonfield brand 1996 Carli Gry s shares are listed on the Copenhagen Stock Exchange 1998 Carli Gry acquires the Swedish company Peak Performance 5 5

6 The History of IC Companys 2007 and are assigned separate management teams instead of a shared management team 2006 Acquisition of the Norwegian distributor Adventure Sport 2005 The brand O by Isabell Kristensen becomes 2003 Joint venture with Acquisition of 2002 Acquisition of. The fashion brand O by Isabell Kristensen is launched; Introduction of Designers Remix Collection 2001 Merger between InWear Group A/S and Carli Gry International A/S forms IC Companys A/S 6 6

7 The Mission, Vision and Values of IC Companys VISION To be the best developer of fashion brands MISSION We build successful international fashion brands VALUES Customer Driven Reliable Ambitious United 7 7

8 A Multibrand Strategy Has Several Essential Advantages SYSTEMATIC UTILISATION OF INDUSTRY COMPETENCIES ACROSS BRANDS UTILISATION OF BEST PRACTICES ACROSS BRANDS AND MARKETS COST SYNERGIES A SHARED PLATFORM RISK DIVERSIFICATION ACROSS BRANDS, SEGMENTS AND MARKETS 8 8

9 9 Building a Structure to Support Our Brands Platform and Distribution Distribution Retail, ecommerce, Concepts Brands 9 Sourcing & Logistics Sales platform Finance & Administration IT HR

10 Contents Section 1 INTRODUCTION Section 2 FINANCIAL RESULTS Section 3 OPTIMISING OUR REVENUE Section 4 Q&A 10 10

11 Financial Achievements H1 2009/10 REVENUE DOWN BY 9% TO DKK 1,865 MILLION Preorder down by 17% Sale-in-season up by 1% Same-store down by 2% GROSS MARGIN UP BY 2.5% POINT TO 62.0% Higher quality on remaining revenue COSTS DOWN BY 12% TO DKK 894 MILLION Cost rationalizations have proven effective EBIT UP BY 30% TO DKK 263 MILLION Net profit up by 62% to DKK 205 million DKK 30 million from resolved tax litigations 11 11

12 Operational Achievements H1 2009/10 COST RATIONALISATIONS HAVE PROVEN EFFECTIVE Remaining organisation has not been impaired VALUE CHAIN HAS BEEN OPTIMISED Improved gross margin opposing negative currency effects CONTROLLED SPACE HAS BEEN OPTIMISED 47 new stores opened (32/15 retail/franchise) 41 retail stores with negative performance closed (25/16 retail/franchise) WHOLESALE OPERATION HAS BEEN OPTIMISED Customers and markets with negative performance closed 12 12

13 Guidance FY 2009/10 Revised Upwards STILL UNCERTAINTY IN THE ECONOMIC CLIMATE INITIATIVES TO COUNTER DECREASING ACTIVITIES HAVE BEEN FASTER THAN EXPECTED REVENUE IN THE RANGE OF DKK MILLION Previously DKK million EBIT IN THE RANGE OF DKK MILLION Previously DKK million INVESTMENTS IN THE RANGE OF DKK MILLION Retained 13 13

14 Contents Section 1 INTRODUCTION Niels Mikkelsen, CEO Section 2 H1 2009/10 FINANCIALS Chris Bigler, CFO Section 3 OPTIMISING OUR REVENUE Niels Mikkelsen, CEO Section 4 Q&A 14 14

15 Unchanged Revenue for Q2 While Improved Gross Margin Q1 Are Maintained Throughout Q2 Due to Optimisation Initiatives Quarterly revenue, mdkk Quarterly gross profit, mdkk and gross margin, % ,1% 60,1% ,2% ,9% 58,9% 59,4% ,8% 62,2% ,7% Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 H1 revenue down by 9% to 1,865 mdkk Q2 revenue unchanged H1 gross profit down by 5% to 1,157 mdkk but Q2 gross profit up by 5% Gross margin improvement H1 of 2,5% point to 62,0% and Q2 of 2,8% point 15 15

16 Initiatives on Cost Rationalisations Have Full Effect H1 and Contributes to Improved EBIT Quarterly OPEX, mdkk and OPEX efficiency, % 529 Quarterly EBIT, mdkk ,9% ,0% 62,5% 87,6% ,3% ,3% 41,8% 47,9% 41,8% Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 OPEX down by 12% to mdkk 894 H1 and down by 10% Q2 OPEX efficiency is kept constant H1 and is improved by 6.2% point Q2 in spite of lower revenue H1 EBIT up by 30% to mdkk 263 and margins up by 4,2% point to 14,1% Q2 EBIT up by mdkk 70 to mdkk

17 Cost Rationalisations of mdkk Cost base development, mdkk Cost rationalisations 74 (45) (235)-(275) % 60% 5% Cost base 07/08 Inflation adjustment Currency effects Cost rationalisations New activity Cost base 09/10 Staff costs Depreciations Other operating expenses 17 17

18 12 Month Trailing Performance Indicates Stabilisation in Revenue and Show Strong Improving in Profitability Ttm revenue, mdkk and gross margin, % Ttm EBIT, mdkk and EBIT margin, % ,3% ,0% 60,4% 60,1% 59,7% 59,5% 59,6% 60,3% 60,9% 11,4% 11,2% 9,3% 8,7% ,7% 5,8% 4,5% 4,4% 6,5% Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 09/10 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Ttm revenue stabilised at mdkk from Q1 to Q2 Ttm gross margin of 60,9% highest since Q1 2007/08 Ttm EBIT growth of 46% to mdkk 223 from Q1 to Q2 Ttm EBIT margin jumps 2.1% point in Q2 to 6.5% 18 18

19 Segment Overview: Higher Retail Share of Revenue and Profit Retail share of revenue up by 4% point Retail revenue grow by 3% H1 while wholesale decrease by 15% Segment revenue, H1 2008/09 Retail 34% 2009/10 Retail 38% Wholesale 66% Wholesale 62% Retail share of profit up by 16% point Retail profit more than quadruples H1 while wholesale grow by 4% Segment profit, H1 2008/09 Retail 7% 2009/10 Retail 23% Wholesale 93% Wholesale 77% 19 19

20 Higher Retail Revenue and Substantially Higher Profit Quarterly retail revenue, mdkk Quarterly retail profit, mdkk Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 retail revenue improvement two years in a row Net store openings effect Q2 of mdkk 26 Q2 retail profit better than 2007/08 H1 profit margin up by 7.9% point to 10,6% 20 20

21 Lower Wholesale Revenue and Substantially Higher Profit Quarterly wholesale revenue, mdkk Quarterly wholesale profit, mdkk Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 wholesale revenue decline two years in a row Summer collection 2010 up by 1% in local currencies Q2 wholesale profit improvement of mdkk 21 H1 profit margin up by 2.9% point to 22,4% 21 21

22 Overview: Geographic Segments and Brands Setback H1 in most geographic segments H1 growth of 7% in Sweden when adjusted for currency effects Scandinavia makes up 53% of group ttm revenue Ttm geographic segment revenue, Q Denmark (Residency) Sweden Norway 345 Benelux Eastern Europe and Russia 231 Central Europe 775 Rest of Europe Rest of the World Setback H1 in most brands Part Two and Saint Tropez creates growth H1 Peak Performance, Tiger of Sweden, and Jackpot make up 51% of own brands ttm revenue Ttm brand revenue, Q Peak Performance Tiger of Sweden Jackpot InWear Matinique Part Two Cottonfield Saint Tropez By Malene Birger Soaked in Luxury Designers Remix Collection 22 22

23 Inventories and Debtors Reduced but Still Potential for Further Improvement End of quarter inventories, mdkk and rate of turnover End of quarter debtor, mdkk and rate of turnover ,1 3,2 3,2 3,1 3,0 3,0 3,0 3,0 3, ,6 7, ,5 7, ,4 7, ,5 7, ,7 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Inventories have been reduced by 17% to mdkk 429 Marginal improvement in rate of turnover Debtors have been reduced by 4% to mdkk 321 Improved rate of turnover 23 23

24 Creditors Increased Substantial Working Capital Improvement End of quarter creditors, mdkk and rate of turnover Ttm working capital improvements, mdkk Adjusted for non-cash items Change in short term debt excl. tax 30 6,0 6,1 6,3 6,3 6,1 6,0 Change in receivables 23 5,5 5,7 5,6 Change in inventories 89 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Creditors have been increased by 1% to mdkk 286 Improvement in rate of turnover Ttm working capital improvement of mdkk 141 Ttm working capital as a percentage of revenue 2,7% point down to 9,9% 24 24

25 Improved Cash Flow and Substantial Debt Reduction Free cash flow, mdkk End of quarter NIBD, mdkk and NIDB/EBITDA ,1 1,4 1,4 2,1 1,8 2,2 1,7 2, ,0-269 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 Q2 07/08 Q4 07/08 Q2 08/09 Q4 08/09 Q2 09/10 H1 free cash flow improved by mdkk 147 and mdkk 3 in Q2 despite decreasing revenue Cash flow improvement mainly driven by operating activities NIBD has been reduced by 49% to mdkk 348 Improved NIBD/EBITDA 25 25

26 Contents Section 1 INTRODUCTION Section 2 FINANCIAL RESULTS Section 3 OPTIMISING OUR REVENUE Section 4 Q&A 26 26

27 The Road to Profitable Growth ICC 1.0 ICC 1.1 ICC 1.2 ICC 2.0 GOAL DESCRIPTION No decisions taken in 8 months Lack of steering and control Align and streamline Settle key positions Fix the essentials (distribution, value chain and cost) Fire fighting Optimize and prioritize Org. structure Portfolio strategy Brand building Sourcing strategy Profitable growth and new business models FOCUS Marketing Cost efficiency Dist. Coll. structure High None Sandcastles Poor Minimum High Define/priorities Reengineer Low High Implement Reengineer Point of Departure PoD-18 mdr 8-24 mdr 24 mdr

28 Management Initiatives Form the Foundation for Future Growth Franchise concept E-commerce GSI Distribution segmentation IDD Standardized retail formats Retail buying principles SSP Balanced matrix Collection development Visual merchandising 28 28

29 We Offer Customers a System That Can Help Them Improve Performance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sale out of shop Ideal delivery flow Delivery flow Better assortment that consumers can mix Better delivery flow The right merchandise when customers want it More new merchandise in the store Shops gets a better look Increased revenue and earnings Less capital tied in physical products 29 29

30 Our Road to Growth Is Based on Deliberate, Focused Choices PRINCIPLES AIMING ON OUR MARKETS COUNTRY FOCUS Denmark Denmark COMPLETE EXISTING MARKETS CLUSTERING RETURN ON INVESTMENT Scandinavia Scandinavia Alp Alp region region Region Region East East Germany Germany 30 30

31 One Standardized Common Platform Will Reduce Complexity PRINCIPLE Complexity comes not from having 11 different brands, but from having 11 different approaches One standardized common platform incl. customer facing operations for wholesale and retail will reduce complexity EXAMPLE SPACE STATION The result is clear demands both ways enforced by service level agreement (SLA) 31 31

32 We Have Improved Health in Our Retail Channel Adjustment to market Organisational changes Decreasing inventories Gross revenue Improved buying procedures Better mix Lower discounts Higher profitability in spite of lower same-store revenue Net revenue Discounts 32 32

33 and We Have Improved Health in Our Wholesale Channel Order suggestions Better mix Better utilisation of turnover mass Order intake Improved credit control Fewer cancellations 8% in Q1 and 7% in H1 Gross revenue Cancelled orders Stable Gross-to-Net index Higher profitability in spite of lower revenue Net revenue Discounts, Claims, Returns 33 33

34 High Uncertainty but Signs of Stabilisation Turning Point Not Far Away Growth Stabilisation Retail Wholesale Jul 2010 Time Crisis Decline Turn Recovery 34 34

35 We are Working on Our Strategy WE ARE SETTING THE STAGE FOR GROWTH WE EXIST TO DEVELOP BRANDS BUT NOT ALL BRANDS IN THE SAME DIRECTION WE WANT TO EXPAND OUR CONTROLLED SPACE Retail Franchise E-commerce Controlled wholesale WE ARE DEFINING OUR DISTRIBUTION SEGMENTATION WORKING TOWARDS RETAILISATION RETAILISATION 35 35

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