HANDELSBANKEN. Nordic Small/Mid Cap Seminar

Transcription

1 HANDELSBANKEN Nordic Small/Mid Cap Seminar JUNE 2010

2 Contents Section 1 INTRODUCTION Section 2 DEVELOPING IC COMPANYS Section 3 FROM FOUNDATION TO DISTRIBUTION Section 4 OUTLOOK 2 2

3 IC Companys Home of Fashion Brands 3 3

4 A Multibrand Strategy Has Several Essential Advantages SYSTEMATIC UTILIZATION OF INDUSTRY COMPETENCIES ACROSS BRANDS COST SYNERGIES A SHARED PLATFORM Sourcing International sales infrastructure Finance and administration IT backbone Human resource RISK DIVERSIFICATION ACROSS BRANDS, SEGMENTS AND MARKETS THE BRAND PORTFOLIO AS A FRANCHISE CONCEPT (COMPANYS) 4 4

5 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 5 5

6 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 6 6

7 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 7 7

8 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 8 8

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

10 Contents Section 1 INTRODUCTION Section 2 DEVELOPING IC COMPANYS Section 3 FROM FOUNDATION TO DISTRIBUTION Section 4 OUTLOOK 10 10

11 Executive Board Chief Executive Officer Niels Mikkelsen Chief Financial Officer Chris Bigler Executive Brand Officer Ander Cleemann Executive Sales Officer Peter Fabrin 11 11

12 FY 2008/09 Was Tough but this Financial Year Marks a Recovery Revenue, mdkk and EBIT margin, % 3,022 3,354 3,737 3,621 3,450-3, % 10.1% 9.3% % 4.5% 2005/ / /

13 Aggressively Adding New Retail Space 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 13 13

14 High Cash Flows Through the Crisis and Steady Investment Level Ttm operating CF, mdkk and ttm investment CF, mdkk Q3 07/08 Q1 08/09 Q3 08/09 Q1 09/10 Q3 09/

15 Substantial Debt Reduction of 515 mdkk the Last 18 months End of quarter NIBD, mdkk and NIDB/EBITDA Q3 07/08 Q1 08/09 Q3 08/09 Q1 09/10 Q3 09/

16 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

17 Contents Section 1 INTRODUCTION Section 2 DEVELOPING IC COMPANYS Section 3 FROM FOUNDATION TO DISTRIBUTION Section 4 OUTLOOK 17 17

18 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 18 18

19 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) 19 19

20 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 20 20

21 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 21 21

22 We Are Moving from Local Player to Premier League on E-commerce WE HAVE ENTERED INTO AN AGREEMENT WITH GSI COMMERCE INC., ONE OF THE WORLDS LEADING PLAYERS ON E-COMMERCE IC Companys owns a very attractive mix of brands each with a high level of fashion awareness in many markets. Therefore we see a huge potential in this partnership. Steven C. Davis, GSI EVP & President, Int. HEAVY GROWTH IN E-COMMERCE: CLOTHING MADE OUT 29% OF ALL TRANSACTIONS WITH PHYSICAL PRODUCTS IN SECOND QUARTER OF 2009 IN DENMARK (21% 2008) 22 22

23 Operational Achievements Q3 2009/10 RETAIL DISTRIBUTION HAS BEEN EXPANDED Cost development flat due to effective cost rationalisations VALUE CHAIN HAS BEEN OPTIMISED Currency pressure on gross margin More than two third has been absorbed through optimisation CONTROLLED SPACE HAS BEEN OPTIMISED 24 new stores opened (7 retail/7 consession/10 franchise) 33 retail stores with negative performance closed (6 retail/17 consession/10 franchise) WHOLESALE OPERATION HAS BEEN OPTIMISED Previously phased out customers and markets still affecting revenue 23 23

24 Contents Section 1 INTRODUCTION Section 2 DEVELOPING IC COMPANYS Section 3 FROM FOUNDATION TO DISTRIBUTION Section 4 OUTLOOK 24 24

25 Specified Guidance FY 2009/10 SPECIFICATION OF GUIDANCE DUE TO Q3 AND APRIL REALISATIONS REVENUE IN THE RANGE OF DKK 3,450 3,500 MILLION Previously DKK 3,400 3,500 million Growth Q4 of 5 14% EBIT IN THE RANGE OF DKK MILLION Previously DKK million Improvement Q4 of DKK million INVESTMENTS IN THE RANGE OF DKK MILLION Retained 25 25

26 Our Projects Are on Track CULTURE NEW BUSINESS MODELS OPTIMIZATION FOUNDATION but it Takes Time 26 26

27 Latest Financials 27 27

28 Highlights from FY 2008/09 REVENUE DOWN BY 4% POINT TO DKK 3,601 MILLION Preorder down by 5% Sale-in-season down by 7% Same-store down by 7% EBIT OF DKK 162 MILLION IN THE HIGH END OF EXPECTATIONS After non-recurring costs of DKK 115 million EBIT margin down by 4.8% point to 4.5% CASH FLOW UP BY DKK 200 MILLION TO DKK 116 MILLION Net short term interest-bearing debt down by DKK 106 million to DKK 365 million 113 NEW RETAIL SHOPS AND 46 CLOSED 28 28

29 Financial Achievements Q3 2009/10 REVENUE DOWN BY 1% TO DKK 996 MILLION Pre-order down by 10% Sale-in-season up by 23% Same-store up by 2% GROSS MARGIN DOWN BY 1.2%-POINTS TO 58.2% Currency pressure of 3.7%-points COSTS ARE FLAT REALIZING DKK 484 MILLION Cost rationalizations have proven effective Many new store openings last three quarters EBIT DOWN BY 17% TO DKK 96 MILLION EBIT margin down by 1.9%-points to 9.6% 29 29

30 Segment Overview: Higher Retail Share of Revenue and Profit Retail share of ttm revenue up by 5%-points Retail revenue growth of 14% while wholesale down by 7% Q3 Segment revenue, Q3 Ttm 2008/09 Retail 35% 2009/10 Retail 40% Wholesale 65% Wholesale 60% Retail share of ttm profit up by 9%- points Segment profit, Q3 Ttm Retail 1% Retail 10% Retail profit slightly better while wholesale down by 8% Q3 2008/ /10 Wholesale 99% Wholesale 90% 30 30

31 Overview: Geographic Segments and Brands Denmark still declining Sweden and Eastern Europe and Russia create double-digit growth in Q3 Scandinavia makes up 54% of Group ttm revenue Ttm geographic segment revenue, Q Denmark (Residency) Sweden Norway 336 Benelux Eastern Europe and Russia 249 Central Europe 804 Rest of Europe Rest of the World Q3 better than Q2 for most brands Tiger of Sweden, Jackpot, By Malene Birger, Saint Tropez, and Designers Remix Collection create growth in Q3 Peak Performance, Tiger of Sweden, and Jackpot make up 52% of own brands ttm revenue Ttm brand revenue, Q Peak Performance Tiger of Sweden Jackpot InWear Matinique Part Two Saint Tropez Cottonfield By Malene Birger Soaked in Luxury Designers Remix Collection 31 31

32 Inventories and Debtors Reduced and Rate of Turnover Increased but Still Potential for Further Improvement End of quarter inventories, mdkk and rate of turnover End of quarter debtor, mdkk and rate of turnover Q3 07/08 Q1 08/09 Q3 08/09 Q1 09/10 Q3 09/10 Q3 07/08 Q1 08/09 Q3 08/09 Q1 09/10 Q3 09/10 Inventories have been reduced by 10% to mdkk 358 in Q3 Marginal improvement in rate of turnover Debtors have been reduced by 17% to mdkk 492 in Q3 Improved rate of turnover 32 32

33 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 (12) Change in receivables Change in inventories 39 Q3 07/08 Q1 08/09 Q3 08/09 Q1 09/10 Q3 09/10 Creditors have been increased by 11% to mdkk 201 in Q3 Improvement in rate of turnover Ttm working capital improvement of mdkk 138 Ttm working capital as a percentage of revenue 2.8%-points down to 13.9% 33 33

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