TOM TAILOR GROUP - STRATEGY UPDATE DIETER...
Transcript of TOM TAILOR GROUP - STRATEGY UPDATE DIETER...
TOM TAILOR GROUP - STRATEGY UPDATE
DIETER HOLZER CHIEF EXECUTIVE OFFICER
Capital Markets Day, November 28, 2012
TOM TAILOR GROUP AT A GLANCE
2
Franchise stores Shop-in-shops Multi-label
283
in Europe 974
in Europe
167
in Europe
1,979
in Europe
~6,300
worldwide
Wholesale Retail
E-commerce
6 e-shops
(de, at,
nl, be, fr, ru)
TOM TAILOR BONITA TOM TAILOR
Figures as of September 30, 2012
38%
62%
Retail
Wholesale
Increasing retail share
62%
38%
FY 2011 Sept. 2012
Product portfolio – male/female/kids FY 2011 Sept. 2012
47%
42%
11% MenWomenKids 28%
66%
6%
Retail stores Retail stores
TOM TAILOR GROUP – THE INVESTMENT CASE
TOM
TA
ILO
R G
rou
p
A leading German fashion company with two complementary umbrella brands targeting attractive customer segments in stable and promising markets
Superior business model with full control over entire value chain
Strengthened profile as a vertical retailer with expanded retail distribution, strong wholesale and growing e-commerce business
Upside potential for lfl growth by reducing lead times at BONITA
Substantial economies of scale from new sourcing strategy
BONITA’s retail and logistics capabilities to support retail management and roll-out across the Group
Sufficient headroom to finance further organic growth
1
2
3
4
5
6
7
3
5.734
2.747
2.059
1.382
1.200
1.036
850
790
703
700
591
412
346
Adidas
Esprit
Hugo Boss
Multiline Textil
s.Oliver Group
Puma
Steilmann Holding
TT
Gerry Weber
CBR Fashion
JCK Holding
Holy-Gruppe
Marc O'Polo
A LEADING GERMAN FASHION
COMPANY…
Source: TextilWirtschaft September 2012 (apparel companies with sales above € 50m); BONITA and TOM TAILOR sales refer to 2011 proforma figures
Note: unaudited BONITA financials prepared in accordance with IFRS, recalendarised to Dec Y/E
The leading German apparel companies by sales (€ m) in 2011
1
The leading European apparel companies by sales (€ m) in 2011
4
No. 8 of 55 TOM TAILOR Group
2.747
2.227
2.196
2.140
2.059
790
763
703
Adidas Group
Esprit
Tommy Hilfiger
Bestseller Group
Burberry Group
Hugo Boss
TOM TAILOR Group
Groupe Zannier
Gerry Weber
TOM TAILOR Group
5.734
…
No. 24 of 139
57%
30%
9% 3% 1% <1%
13-17 18-24 25-34 35-44 45-54 55+
1% 3%
13%
29% 32%
22%
< 25 26-35 36-45 46-55 56-65 > 65
…WITH TWO COMPLEMENTARY UMBRELLA
BRANDS TARGETING ATTRACTIVE CUSTOMER
SEGMENTS… Customer segmentation by age
TOM TAILOR Casual
21%
37%
26%
11%
3% 1%
13-17 18-24 25-34 35-44 45-54 55+
TOM TAILOR Denim BONITA
1
Three clearly differentiated brands; extended customer target reach through BONITA
Focus on casual wear in mid price segment
Primarily targeting the middle income consumer segment (in Germany 55% of all households)
Increasing proportion in women‘s apparel (almost 70%)
5
< 25 years 87% between 18-44 years 74% > 46 years 83%
…IN STABLE AND PROMISING MARKETS
TT = TOM TAILOR; figures as of September 30, 2012 [¹] Benelux comprises Belgium and the Netherlands only; [2] South Eastern Europe comprises Bosnia, Bulgaria, Croatia, Serbia and Slovenia
TOM TAILOR presence
Joint presence
TT Bonita Total
Retail 10 117 127
Franchise 6 – 6
Total 16 117 133
TT Bonita Total
Retail 11 – 11
Franchise 2 – 2
Total 13 – 13
TT Bonita Total
Retail 283 974 1,257
Franchise 167 – 167
Total 450 974 1,424
TT Bonita Total
Retail 23 – 23
Franchise 68 – 68
Total 91 – 91
TT Bonita Total
Retail 56 – 56
Franchise 9 – 9
Total 65 – 65
TT Bonita Total
Retail 114 694 808
Franchise 52 – 52
Total 166 694 860
TT Bonita Total
Retail 7 3 10
Franchise 1 – 1
Total 8 3 11
Austria
Benelux[¹]
France
Switzerland
Total
Other
South Eastern Europe[²]
Germany
Poland
TT Bonita Total
Retail 12 41 53
Franchise 8 – 8
Total 20 41 61
TT Bonita Total
Retail 50 119 169
Franchise 21 – 21
Total 71 119 190
1
Strong presence in Germany
65%
35%
Germany
International
69%
31%
FY 2011 Sept. 2012
6
STRENGHTENED PROFILE AS A VERTICAL
RETAILER…
7
26.8 45.9
76.5 106.7
154.6
102.8
193.5
234.4 237.5
223.7
241
257
192.4
205
2007 2008 2009 2010 2011 2012e* 9M2011
9M2012*
*Includes BONITA since August 2012
Wholesale
Retail
2
Significant boost in retail share to Group sales
(€m)
261 283
300
348
412
625 - 635
399
295
…WITH EXPANDED RETAIL
DISTRIBUTION,…
8
2
Product offering focussed on customer needs (direct feedback)
Easier merchandise replenishment of stores
Strengthening of brand perception
Higher gross margins support Group profitability
Expansion plan: 60 TOM TAILOR stores p.a.
40 BONITA stores p.a.
Increased focus on strategic growth segment Retail
Target
Retail contribution to Group sales will reach 70% in 2013
and will rise even further in the coming years
…STRONG WHOLESALE…
9
2
Concentrating on controlled sales areas (franchise stores, shop-in-shops)
Connection to TOM TAILOR EDI system
Desirable brands with strong proposition for wholesale partners
Delivery of the right product at the right time to the right place in the right
quantity….
… in connection with intelligent replenishment solutions (NOS)
Knowledge transfer from retail experience to wholesale
Expansion plan: 200-250 TOM TAILOR shop-in-shops p.a.
20-25 TOM TAILOR franchise stores p.a.
TOM TAILOR Wholesale remains well positioned for future growth
…AND GROWING E-COMMERCE
BUSINESS
10
5,1 8,8
16,6
21,8 24,7 23,5
2007 2008 2009 2010 2011 9M 2012
2
TOM TAILOR e-commerce sales in €m
TOM TAILOR Constant assessment of
usability, assortment,
presentation and service
features
Launch of a European
e-shop in Q4 2012
BONITA
Introduction of BONITA
fashion card in Q1 2013
Launch of BONITA e-shop
in Q2 2013
Target
Mid-term contribution of
10% to Group sales
+73%
+88%
+31%
+14%
5.1 8.8
16.6
21.8 24.7
15.9
23.5
2007 2008 2009 2010 2011 9M2011
9M2012
+73%
+88%
+31%
CAGR 2007-2011: 48%
+48% +14%
End Sept.2011
End Sept.2012
401.400
502.800
Number of registered
customers
SUPERIOR BUSINESS MODEL WITH FULL
CONTROL OVER ENTIRE VALUE CHAIN
11
3
23 – 26 weeks
TOM
TA
ILO
R
UPSIDE POTENTIAL FOR LFL GROWTH
BY REDUCING LEAD TIMES AT BONITA
12
4
24 - 28 weeks
40 – 44 weeks Today
Sale
Sale Time saving: 16 weeks
Setting up a new design and product cycle
Short term measures
Understand consumer demand
Introduce trend scouting
Balanced product group mix
Introduce collection framework
i.e. price architecture
Positive lfl development
earliest in Q4 2013
today
goal
Target
SUBSTANTIAL ECONOMIES OF SCALE
FROM NEW SOURCING STRATEGY
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China:
18 employees
India:
26 employees
Bangladesh:
46 employees
Vietnam:
14 employees
Indonesia:
20 employees
Hong Kong:
main office
6 employees
5
2011:
TOM TAILOR Sourcing Ltd. is founded in
cooperation with long standing partner
Asmara International
2012:
68% of overall sourcing volume already
sourced directly in Q3 2012 (46% in Q3 2011)
Number of suppliers reduced from
236 to less than 200
2013:
TOM TAILOR Sourcing Ltd. starts to procure
for BONITA
Transfer of total sourcing volume to
TOM TAILOR Sourcing Ltd. completed
Gross margin improvement from 2013
onwards
BONITA’S RETAIL AND LOGISTICS CAPABILITIES TO
SUPPORT RETAIL MANAGEMENT AND ROLL-OUT
ACROSS THE GROUP
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Same pull and push logistics with store-to-store redistribution across the Group
Warehouse in Hamminkeln will become the retail logistics centre for the Group
Outsourced TOM TAILOR warehouse in Hamburg remains warehouse for wholesale segment
Highly efficient stocking and redistribution system through centrally controlled redistribution system
Automatic commissioning
Efficient store-to-store redistribution
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Goal
Delivery
of new
stock
Quality
control
Stores
Storage 10-20%
80-90%
Distribution centre
Stores
Stores Push:
first delivery
Pull: resupply
Pull: Restock
OUTLOOK 2012:
STRENGTHENING OF FINANCIAL PROFILE
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2012 incl. BONITA*
Net sales
Recurring EBITDA
Recurring EBITA
€ 625m – € 635m
€ 70m – € 75m
€ 40m – € 45m
*Consolidation of BONITA as of August 1, 2012
Outlook confirmed under the assumption that consumer confidence remains stable in Q4 2012
OUTLOOK 2013 AND BEYOND:
FOCUS ON PROFITABLE GROWTH
16
2013
Growth
Profitability
Operations
Group sales of at least € 900m
Group recurring EBITDA margin of at least 12.0%
Focus on conclusion of BONITA integration and
finalization of current projects
5 years‘ target
Profitability Group EBITDA margin of at least 15%
SUFFICIENT HEADROOM TO FINANCE
FURTHER ORGANIC GROWTH
17
40
180 85
137,5
100
137,5
Old structure New structure
Financing structure
455
225
(€m)
LC +
guarantee
line
Cash
line
Term
loan
Working capital
financing
Extension of financing structure allowed
take over of BONITA and provides room for
financing further store roll out in the future
Interest payments are variable and
based on short term Euribor plus an
additional margin
Duration of 3 years plus a renewal option for
an additional 2 years
Net debt at end of Q3 2012 at € 279.5m
Net debt / EBITDA below 2.0 times in 2014
7
as of Feb. 2012 as of Aug. 2012
Target
Reduction of net debt
by € 10m p.a.
FINANCIAL SUMMARY I
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Segment Driver 2010 2011 2012e 2013e 2017e
Net sales
Group 348 412 625-635 >900
Retail Lfl growth,
store openings,
E-commerce
107 155
Wholesale Expansion
controlled
distribution areas
241 257
Gross profit
Group 46.0% 49.0%
Retail Lfl growth 61.9% 60.8%
Wholesale Own sourcing
organisation,
synergies
38.9% 41.9%
Impact on
EBITDA margin*
* Comparison 2017 - 2012
FINANCIAL SUMMARY II
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Segment Driver 2010 2011 2012e 2013e 2017e
Gross profit
Group 46.0% 49.0%
Retail Lfl growth 61.9% 60.8%
Wholesale Own sourcing
organisation,
synergies
38.9% 41.9%
Other operating
income
Group 14.9
4.3%
13.2
3.2%
Personnel
expenses
Group 49.7
14.3%
60.7
14.7%
Marketing
expenses
Group 10.1
2.9%
14.7
3.6%
Other operating
cost
Group Freight cost 25.5
7.3%
27.8
6.7%
Administrative
expenses
11.3
3.2%
15.0
3.6%
Others 17.9
5.1%
20.4
5.0%
EBITDAR Group 60.2
17.3%
76.2
18.5%
Rents 20.1
5.8%
28.1
6.8%
EBITDA Group 40.1
11.5%
48.1
11.7%
70-75
12.0%
15.0%
Impact on
EBITDA margin*
* Comparison 2017 - 2012
FINANCIAL SUMMARY III
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Segment Driver 2010 2011 2012e 2013e 2017e
EBITDA Group 40.1
11.5%
48.1
11.7%
70-75
12.0%
15.0%
Depreciation Group 14.9
4.3%
20.3
4.9%
EBITA = EBIT Group 25.2
7.2%
27.8
6.7%
Amortisation TOM TAILOR 8.1 5.3 4.7 4.7 4.7 4.7
BONITA 1.7 4.0 4.0 2.3
Interest result 8.0
2.3%
7.2
1.7%
EBT Group 17.2
4.9%
20.6
5.0%
Taxes Group 4.8
28%
5.7
28%
Net income Group 12.4
3.6%
14.9
3.6%
Impact on net
income margin*
* Comparison 2017 - 2012
INTEGRATION UPDATE
21
INTEGRATION PROCESS BONITA
AND STRATEGIC INITIATIVES
22
E-commerce
Sourcing
Product design
Merchandise
planning &
controlling
Logistics
Aug. 8, 2012 Sept. 30, 2012 Dec. 31, 2012 March 31, 2013 June 30, 2013 Sept. 30, 2013 Dec. 31, 2013
STRATEGIC INITIATIVES I
23
Activities
Finalization
Transfer of TOM TAILOR’s e-commerce competence to BONITA
Build up e-shop at BONITA
End of Q2 2013
E-commerce
Benefits Mid-term contribution of 10% to BONITA sales
Activities
Finalization
Transfer of TOM TAILOR’s collection planning competence and design capabilities to
BONITA
Reduce lead times at BONITA
Usage of sales figures for product design
End of FY 2013
Product design
Benefits 2013 - 2015
Positive impact on lfl development earliest Q4 2013
STRATEGIC INITIATIVES II
24
Activities
Finalization
Introduction of merchandise planning & controlling
Introduction of clear price architecture
Shorten sales cycle in stores (increase stock turn rate)
Usage of sales figures for product design
End of Q2 2013
Merchandise planning & controlling
Benefits
2013 - 2015
Positive impact on lfl development earliest Q4 2013
Lower level of stock lower working capital
Activities
Finalization
Shift part of BONITA´s sourcing from Europe to Asia
Joint use of TOM TAILOR´s Asian sourcing office to increase share of direct sourcing and to
bundle volumes at same suppliers
Organisational and functional set up concluded end of FY 2013
Majority of BONITA sourcing procured by TOM TAILOR Sourcing Ltd.
Sourcing
Gross margin
benefit
2013 2014 2015
€ 2m € 6m € 10m
STRATEGIC INITIATIVES III
25
Activities
Finalization
Same pull and push logistics with store-to-store redistribution across the Group
Increase share of store-ready picking to increase staff productivity in stores
End of Q2 2014
Logistics
Benefits
2013 - 2015
Lower level of stock lower working capital
Lower mark-downs
Lfl growth
Benefits partly compensated by higher freight cost
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Become one of the leading
European fashion companies
OUR VISION