Fashion, Beauty and Business

Six Degrees of Separation

1. The Economy2. Fashion as Business3. Beauty World

“Fashion is not necessarily about labels. It’s not about brands. It’s

something that comes from within you.”

Ralph Lauren

Fashion Defined

Fashion applies to many things, from apparel to furniture, from watches to foot ware.

“ In economic terms fashion is the premium people will pay over necessity costs for a product.”

Elliot Morss

Fashion Defined

Fashion is a visual and material system of symbols and meanings that extends to all things produced by people.These artifacts are suspended in what we call culture, so that changes to one family of objects can have an impact on other types.” Estelle Ellis

Fashion Defined

The U.S. Economy SlowlyRecovers

Gross Domestic Product Update

• 2014 First Quarter -2.1%• 2014 Second Quarter +4.0%

• Consumer Confidence back to 2007 (Pre-recession) levels

The U.S. Economy

Latest Unemployment Figures:

July 2014 6.2%

Average US Income Lower then 2002

• “Average” US Household Income– June 2014 $53.9K– June 2009 $55.6K (adj for

inflation)

– June 2014 is actually lower than 2000 (adj for inflation)

Wealth Inequality

“The 85 richest people in the world have as much wealth as the 3.5 billion poorest people in the world.”

The U.S. Economy

More on the “Haves” and “Have Not's”

90% of the increase in consumption between 2009 and 2012 was generated by the top 20% of households.

The Global Picture: Demographics

World Population2011: 7 Billion2050: 9 Billion

Growth where?Africa and AsiaContraction where?Europe, Japan, South Korea

GlobalWorld PopulationLargest growth in poorest countries,

straining economies and the environment.

Within the top 10 most populous countries in 2050: Russia and Japan will be replaced by Ethiopia and Congo.

GlobalWorld PopulationAging Populations especially in the

developed worldWorking Adults : Retired

Adults2010 9 : 12050 4 : 1

Impact?

The Global Economy

• European Union economy still struggles to recover from recession

The Global Economy

China• Already the world’s largest

population, will become the world’s largest economy

The Global Economy

China, cont.• Educational developments leading

to the world’s center of research.

The Global EconomyU.S. Competitiveness

For decades, the U.S. led the world in the percentage of people 25-34 with college degrees.

In 2010, we had fallen to number 12 among the 36 developed nations.

NY Times, 8-7-10

The Global EconomyU.S. Competitiveness

“It is expected that the educational level of the younger generation of Americans will not approach their parents level of education.”

NY Times, 8-7-10

Consumer Confidence is Up

Areas expected to grow

Automobiles

Electronics

FashionWe Connect fashion 2014

Economic Indicators from the World of Fashion and Beauty

• Hemline Index

• Lipstick index

Four levels• The production of raw materials

namely fibers and textiles• The production of fashion goods by

designers, manufacturers, contractors and others

• Retail sales• Advertising and promotion

FashionThe Apparel Industry

Production in Global Textile and Apparel Industry

• EU, US, Japan and China Are the biggest markets for apparel, but production concentrated in China, India, Bangladesh, Vietnam and Turkey.

• Global fiber mix is 41% natural and 59% manmade.

• Global fabric trade is estimated at $74 billion in 2012

Global Market Overview

Consumption Hubs 60%

Production Hubs 60%

Global Apparel Market $1.7 Trillion Growth 5.8%

U.S. Apparel Market $203.4 Billion Growth 2.2% U.S. is largest market @21% of global value sales

We Connect Fashion 2014

Textiles and Apparel by the Numbers

Fashion by the Numbers

• Textiles and apparel remain one of the largest industries worldwide

• Approx. 75 million people are employed in the t&a industries worldwide.

• Approx. 4 million people employed textile and apparel in the U.S. but in value added jobs not production

Textiles and Apparel by the Numbers

The textile and apparel industries have been the gateway to industrialization for LICs, but that is changing.

Textiles and Apparel by the Numbers

• Sale of Women’sApparel in U.S. $11.1Bn

• Value per apparel garment $19

• Clothing Store sales in U.S. $183Bn

Textile and Apparel by the Numbers

In 2013 there were 19, 300 fashion designer jobs .

The median income for fashion designers was $62,610.

Apparel sales will increase by 2-4% over next 18 months.

Apparel will remain the largest category of ecommerce sales through 2017

Garments will sell at every price point from $1 - $100,000 per unit.

Textiles and Apparel Facts

Market Drivers• Apparel stores post 1.2% increase in sales

for 2013

• Luxury apparel store Saks 5th Ave. saw 5.3% increase in 1st quarter

• Neiman Marcus saw 3rd quarter profits rise by 13%

Fashion Trends

• Everything Denim• M-Commerce• Social retailing• Made in America• Plus SizesWe Connect Fashion 2014

Beauty and fashion are joined at the hip thanks to Coco Chanel and Christian Dior.

Today 10 out of the top 30 best selling fragrances in the world are designer licensed brands

Beauty by the Numbers• Beauty revenues Worldwide 204Bn

Up 1.9%

L’Oreal #1 at 23Bn

Up 2.3%

Unilever #2 at 16Bn

Down 0.3%

P & G #3 at 20Bn

Down 1.0%

Affecting the Beauty Terrain• Asia will surpass the U.S. and Europe in

GDP, military spending and technology development.

• Global migration will increase due to aging population.

• People ages 65 and older will outnumber the young.

• Gender identities continue to increase.• Male grooming will lead to 30% market

increase by 2030

Tuning Strategy in the Evolving Beauty Landscape

• Multitasking brands at forefront of product innovation.

• Consumers want convenience, clarity and cash from beauty brands.

• Devices and data next for beauty

Faster. Further. Freer.Faster Incurable do-ers

Further Passionate Ideas

Freer Multicultural Perspective Multicultural perspective.

Group Heritage

Give a woman the best product you can, market it in the perfect bottle, beautiful in its simplicity yet impeccable in taste and you will witness the birth of a business the size of which the world has never known woman the best product ive a woman the best product you can, market it in the perfect bottle, beautiful in its simplicity yet impeccable in taste, ask a reasonable price for it, and you will witness the birth of a business the size of which the world has never seen.

1904 | Francois Coty, the Founder of Modern Perfume

Today$4.6 billion net sales 12,000 people 30 subsidiaries 91 markets worldwide30 subsidi Billion net salesSales x2 in 5 years

3 Yr. Objective $ 4.7 billion people30 subsidiaries/JV91 markets worldwide

3 YR Objective$4.2 BillionObjective by 2012

Leader in Fragrance

No. 2Our Position in Fragrance Worldwide

No.12o. 12No.

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Our Position in the Global Beauty Industry

Leader in Cosmetics

No. 5Our position in US Cosmetics

Building Brands

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Geographic Profile

5 R&D UnitsGranollers (SP) / Monaco / Morris Plains (US) / Hollywood (US) / Arizona (US)

6 Production UnitsAshford (UK) / Granollers (SP) / Chartre (FR) / Monaco / Sanford (US) / Hollywood (US) / Arizona (US) / China

R&D / Production

Business by Region & Segment

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Best in Class

Best In-Class CreativeAnnie Leibovitz, Craig McDean, Bruce Weber…

Impactful In-Store ExecutionHigh visibility

Packaging ExcellenceInnovative approach

DAVIDOFF Cool WaterFeaturing: Fresh, watery and crisp ingredients that started a new male fragrance category

NEW MEDIA TO TARGET RELEVANT AUDIENCE

Internet, Facebook, Twitter, Iphone…

Confidential

Best in Class

New Media to Target Relevant Audience

Long Term Commitment and Deep Partnership

To 2012 and beyond

Depth of expertise and experience.

• Focus on brand building and smooth execution• Depth of Expertise and Experience• Persistent Innovation from product to process• Deep commitment to partnerships and collaborative

relationships

Focus on brand building and smooth executions.

Persistent innovation from product to process.

Deep commitment to partners & collaborative relationships.

The Strength of a Coty Brand

Where is Coty Going?

• New Corporate Structure• New Marketing Strategy • New Brands

What’s Happening in Beauty?

• What happened to the” Lipstick Index” in 2009?

According to Leonard Lauder Nail Polish became the new Lipstick