investor presentation ic companys: our ambition · investor presentation ic companys: our ambition...
TRANSCRIPT
INVESTOR PRESENTATION
IC Companys: Our AmbitionMARCH 2011
22
Contents
Introduction
Our ambition
So far so good
33
– One of the Top 5 Largest Fashion Companies in the North
““““11 Scandinavian fashion11 Scandinavian fashion11 Scandinavian fashion11 Scandinavian fashionbrandsbrandsbrandsbrands””””
““““SourcingSourcingSourcingSourcing offices in offices in offices in offices in
China, Hong Kong, Bangladesh, Vietnam, India, and RomaniaChina, Hong Kong, Bangladesh, Vietnam, India, and RomaniaChina, Hong Kong, Bangladesh, Vietnam, India, and RomaniaChina, Hong Kong, Bangladesh, Vietnam, India, and Romania””””
““““DistributionDistributionDistributionDistribution throughthroughthroughthrough
own retail, outlets, eown retail, outlets, eown retail, outlets, eown retail, outlets, e----commerce, franchise and wholesalecommerce, franchise and wholesalecommerce, franchise and wholesalecommerce, franchise and wholesale””””
““““RevenueRevenueRevenueRevenue of of of of DKKDKKDKKDKK 3.7b3.7b3.7b3.7b**** and 2,440and 2,440and 2,440and 2,440 employeesemployeesemployeesemployees””””
““““498 stores and more than 10,000 wholesale selling points498 stores and more than 10,000 wholesale selling points498 stores and more than 10,000 wholesale selling points498 stores and more than 10,000 wholesale selling points
around the worldaround the worldaround the worldaround the world””””*) Trailing twelve months
44
� Mid-price / classic
� Male 30+
� Contemporary and casual
� Revenue DKK 197m ‘09/10
Our 11 Brands Is Mainly in the Mid-price Segment
� High Low-price / modern
� Female 20-35
� Fast to market
� Revenue DKK 244m ’09/10
� High Low-price / modern
� Female 25-35
� Glamorous and luxurious
� Revenue DKK 87m ‘09/10
� High mid-price - trend
� Male/female
� Modern Scandinavian fit
� Revenue DKK 476m ’09/10
� High mid-price / trend
� Female
� International high-end
� Revenue DKK 74m ’09/10
� Mid-price / modern
� Male 25-35
� City smart/city casual
� Revenue DKK 260m ’09/10
� Mid-price / modern
� Female 25-45
� Raw and feminine
� Revenue DKK 254m ’09/10
� Mid-price / modern
� Female 25-35
� Urban and feminine
� Revenue DKK 359m ’09/10
� Mid-price / classic
� Female
� Casual and strong colours
� Revenue DKK 398m ’09/10
� High mid-price / trend
� Female
� International high-end
� Revenue DKK 196m ‘09/10
� High mid-price / classic
� Male / female
� Sport and casual
� Revenue DKK 915m ’09/10
55
Nov-10New structure
Aug-08New management
Sep-09Building growth foundation
The World has Changed and So Has IC Companys
210 210 210 210 JulJulJulJul----08080808
40 40 40 40 DecDecDecDec----08080808
218218218218MarMarMarMar----22222222
Sep-08Financial Crisis
Feb-09Crisis management
66
Contents
Introduction
Our ambition
So far so good
77
Structural Changes to Initiate New Profitable Growth – Unlocking Potential from Brands Not Contributing to Group EBIT
Aug-08 Feb-09 Sep-09 Nov-10
Value
Time
ICC 1.0� New management� Balanced matrix
ICC 1.1� Cost rationalisations� Fixing the essentials
ICC 1.2� Building the foundation
ICC 2.0� Organisation structure� New business models
Structural changes
Operational changes
88
Problem: We Had Four Different Business Models Leading to High Complexity, Disproportionated Administration and Costs
STSTSTST
90% independence
Only knowledge sharing
BMBBMBBMBBMB/DR /DR /DR /DR
70% independence
Own sales set-up
Own invoicing
ToSToSToSToS/PP/PP/PP/PP
50% Independence
Own sales set-up
Platform brandsPlatform brandsPlatform brandsPlatform brands
0-10% independence
Few choices of sales
set-up and sourcing
99
New Organisational Structure Makes it Possible to Explore Unrealised Potential in Our Brands
� New organisational structure (line setNew organisational structure (line setNew organisational structure (line setNew organisational structure (line set----up)up)up)up)
� One generic brand organisationOne generic brand organisationOne generic brand organisationOne generic brand organisation
� Brands become fully responsible for their Brands become fully responsible for their Brands become fully responsible for their Brands become fully responsible for their
own value chain, profit and lossown value chain, profit and lossown value chain, profit and lossown value chain, profit and loss
− Wholesale, retail, e-commerce, marketing,
product management, design and sourcing
� All brands follow the same company All brands follow the same company All brands follow the same company All brands follow the same company
principles, guidelines and bestprinciples, guidelines and bestprinciples, guidelines and bestprinciples, guidelines and best----practisespractisespractisespractises
− Management and business development
ensure knowledge accumulation and diffusion
� Unrealised potential of brands not Unrealised potential of brands not Unrealised potential of brands not Unrealised potential of brands not
contributing to Group contributing to Group contributing to Group contributing to Group EBITEBITEBITEBIT
1010
We Want to Be Among the Best Developer of Sports and Fashion Brands
Business
Business
Business
Business
Models
Models
Models
Models
Backend
Backend
Backend
Backend
Platform
Platform
Platform
Platform
People &
People &
People &
People &
Culture
Culture
Culture
Culture
Portfolio
Portfolio
Portfolio
Portfolio
Strategy
Strategy
Strategy
Strategy
1111
Creating Big Future Growth by Focussing on 5 Strategic Goals
““““BuildBuildBuildBuild strong fashion brandsstrong fashion brandsstrong fashion brandsstrong fashion brands””””
““““Have aHave aHave aHave a focused market approachfocused market approachfocused market approachfocused market approach””””
““““IncreaseIncreaseIncreaseIncrease control of distributioncontrol of distributioncontrol of distributioncontrol of distribution””””
““““Optimise ourOptimise ourOptimise ourOptimise our processes processes processes processes andandandand value chainvalue chainvalue chainvalue chain””””
““““PractisePractisePractisePractise world class leadershipworld class leadershipworld class leadershipworld class leadership””””
1212
Contents
Introduction
Our ambition
So far so good
1313
TtmTtmTtmTtm EBIT, EBIT, EBIT, EBIT, DKKmDKKmDKKmDKKm and EBIT margin, %and EBIT margin, %and EBIT margin, %and EBIT margin, %TtmTtmTtmTtm revenue, revenue, revenue, revenue, DKKmDKKmDKKmDKKm and gross margin, %and gross margin, %and gross margin, %and gross margin, %
Strong Revenue Performance while One-offs from Canada Duty Case and Structural Changes Impede Profitability
� Expected revenue growth of 12-14% in
2010/11
� Gross margin under pressure from
Canada Duty Case and price pressure
� Positive EBIT in spite of crisis
� Expected EBIT margin of 8.2-9.0% in
2010/11
� Ttm one-offs Q2 of DKK 36m
3,621
3,435 3,435 3,4233,495
3,6303,738
3,900-4,000
59.6%60.3%
60.9%60.5% 60.8%
59.9% 59.8%
Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 09/10
162 153
223203
283 289 285
320-360
4.5% 4.4%
6.5%5.9%
8.1% 8.0% 7.6%8.6%
Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 09/10
1414
TtmTtmTtmTtm free cash flow, free cash flow, free cash flow, free cash flow, DKKmDKKmDKKmDKKm
159
213199
343 346326
302
261
133
Q2 08/09 Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11
End of quarter NIBD, End of quarter NIBD, End of quarter NIBD, End of quarter NIBD, DKKmDKKmDKKmDKKm and NIBD/EBITDAand NIBD/EBITDAand NIBD/EBITDAand NIBD/EBITDA
681725
533
660
348
409
243
423
361
1,8
2,2
1,7
2,2
1,01,2
0,6
1,00,9
Q2 08/09 Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11
Resumed Dividend Policy and the Acquisition of By Malene BirgerTemporarily Increase Net Interest Bearing Debt
� Working capital freed up in 2009/10
du to improved operational efficiency
� Continuing high level of free cash flows
in spite of growth
� NIBD increase due to resumed
dividend policy and BMB acquisition
� Massive debt reduction last three years
– net debt close to DKK 0 in 2010/11
1515
Since July 2008 We Have Achieved Many Operational Changes
Best practice Best practice Best practice Best practice across brands
Order suggestionsOrder suggestionsOrder suggestionsOrder suggestions and new collection structurenew collection structurenew collection structurenew collection structure� Average order intake last three collections of 13%
Optimised value chainvalue chainvalue chainvalue chain and improved cost efficiencycost efficiencycost efficiencycost efficiency
Expansion of retail distributionretail distributionretail distributionretail distribution� Average growth last five quarters of 11%
New successful franchise conceptsuccessful franchise conceptsuccessful franchise conceptsuccessful franchise concept� Average growth last five quarters of 26%
Optimised wholesale basewholesale basewholesale basewholesale base� Average growth last three quarters of 17%
1616
We Have a Number of Powerful Initiatives to Counter the Current Sourcing Pressure
ICC initiativesICC initiativesICC initiativesICC initiatives
� Long-term relationships with suppliers
� Simplifying our ways of working
� Reducing the number of suppliers
� Only a fraction of the production value
� Bigger issues for lower margin producers
� Develop brand specific geographic
sourcing strategies
� Right match between price/quality
� Dynamic prices
� Fierce competition
for capacity
� Increasing raw
material prices
� Increasing labor
costs
SituationSituationSituationSituation
1717
Using Our Competitive Advantages to Gain Market Share
Competitive advantagesCompetitive advantagesCompetitive advantagesCompetitive advantages
� NewNewNewNew collections structurecollections structurecollections structurecollections structureimprove sale out of shops
� Order suggestionsOrder suggestionsOrder suggestionsOrder suggestions and
controlled spacecontrolled spacecontrolled spacecontrolled space improve
control over merchandise flow
� Optimised buying systemsOptimised buying systemsOptimised buying systemsOptimised buying systemsreduce surplus stock
� Enhanced openEnhanced openEnhanced openEnhanced open----totototo----buybuybuybuy orders can be placed when production
capacity is ample
� Joint volumeJoint volumeJoint volumeJoint volume for 11 brands
1818
Our Main Markets Have All Been Affected by the Crisis– We Expect to Take Market Share
Scandinavia makes up 55% of Group revenue: Denmark, Sweden and NScandinavia makes up 55% of Group revenue: Denmark, Sweden and NScandinavia makes up 55% of Group revenue: Denmark, Sweden and NScandinavia makes up 55% of Group revenue: Denmark, Sweden and Norwayorwayorwayorway
-15%
-5%
5%
15%
25%
35%
Jul-07 Dec-07 Jul-08 Dec-08 Jul-09 Dec-09 Jul-10 Dec-10
-15%
-5%
5%
15%
25%
35%
Jul-07 Dec-07 Jul-08 Dec-08 Jul-09 Dec-09 Jul-10 Dec-10
-15%
-5%
5%
15%
25%
35%
Jul-07 Dec-07 Jul-08 Dec-08 Jul-09 Dec-09 Jul-10 Dec-10
TtmTtmTtmTtm growth, DKgrowth, DKgrowth, DKgrowth, DK
Clothing salesClothing salesClothing salesClothing sales
ICC RevenueICC RevenueICC RevenueICC Revenue
TtmTtmTtmTtm growth, Sgrowth, Sgrowth, Sgrowth, S
Clothing salesClothing salesClothing salesClothing sales
ICC RevenueICC RevenueICC RevenueICC Revenue
TtmTtmTtmTtm growth, Ngrowth, Ngrowth, Ngrowth, N
Clothing salesClothing salesClothing salesClothing sales
ICC RevenueICC RevenueICC RevenueICC Revenue
1919
Guidance FY 2010/11
ChallengingChallengingChallengingChallenging business environment FY 2010/11FY 2010/11FY 2010/11FY 2010/11� Gross margin under pressure
� Shift in external factors has been substantial
− Supplier capacity, transportation costs and raw material prices
� More fierce competition in the wholesale market
RevenueRevenueRevenueRevenue in the range of DKK 3,900 3,900 3,900 3,900 –––– 4,0004,0004,0004,000m� Retained
EBITEBITEBITEBIT in the range of DKK 320 320 320 320 –––– 360360360360m� Retained
InvestmentsInvestmentsInvestmentsInvestments in the range of DKK 130 130 130 130 –––– 150150150150m� Retained
2020