Sonae SR s international expansion

Transcription

1 Sonae SR s international expansion Presenting to CEO Mr. Pimentel May 2015 Heinrich Heine University : Ursula Hilgers, Louisa Schuessler, Johannes Gerlach, Hannes Kurz

2 Mandate How to organize Sonae SR businesses in order to be profitable for Sonae and its partners May 2015 Heinrich Heine University 2

3 Recommendation Penetrate existing markets with each brand. Enable further growth of Mo, Zippy and Sport Zone via franchising and of Worten via a JV growth strategy May 2015 Heinrich Heine University 3

4 Agenda 1. Sonae holding and Sonae SR 2. Strategic alternatives: market penetration or market expansion 3. Implementation Mo, Zippy, Sport Zone Worten Innterconection 4. Time and costs 5. Wrap-up May 2015 Heinrich Heine University 4

5 Sonae SR excels in many areas Sonae SR 40,000 employees 60 countries > 80 retail brands 90,000 products Very efficient logistics and purchasing Knowledge of Portuguese market Experienced, hard-working team Fine-tuning of franchising model needed Competency to develop brand More comprehensive IT system Sonae SR can leverage its core competencies to overcome mostly internal issues May 2015 Heinrich Heine University 5

6 In EUR mn Development of Sonae SR s turnover and current EBITDA H14 1H15 ROW Portugal EBITDA: EUR -11mn Overall EBITDA margin: -1.9% EBITDA Portugal in 2014: EUR 48mn Stable development of turnover with Portugal accounting for above 70% of overall sales May 2015 Heinrich Heine University 6

7 Sonae SR is embedded into a holding structure and divided into four business segments EFANOR 53% Sonae SPGS Sport Zone Sonae's turnover Sonae MC Worten Sonae SR 8% 100% MO 24% Sonae Sierra Zippy Sonaeco m Sonae RP 68% Sonae IM Sonae SR Sonae MC Others May 2015 Heinrich Heine University 7

8 Sonae SR s revenues are mainly generated by Worten 14% Profits: EUR 40 million 18% Profits: EUR 10 million 68% Profits: slightly above break even Worten Sport Zone MO and Zippy The most profitable segment is the electronic one so the control needs to be maintained May 2015 Heinrich Heine University 8

9 Most stores are currently in Portugal and Spain Number of stores Stores of Worten 44 Stores of Sport Zone 1 Stores of MO, Zippy Portugal Spain Portugal Spain India Portugal Spain Others 417 Out of 590 stores you have 71 franchise stores Portugal Spain Others Worten is only in Portugal and Spain while the other segments are already international May 2015 Heinrich Heine University 9

10 Key issues Assess the overall growth strategy for Sonae SR Assess growth strategies for Sonae SR s business segments Interconnect your brands in order to generate synergies for you and your partners May 2015 Heinrich Heine University 10

11 Key issues Assess the overall growth strategy for Sonae SR Interconnect your brands in order to generate synergies for you and your partners Assess growth strategies for Sonae SR s business segments May 2015 Heinrich Heine University 11

12 Overall growth strategy for Sonae SR Penetrate existing markets Assess the overall growth strategy for Sonae SR Expand on new markets May 2015 Heinrich Heine University 12

13 Strategic alternatives Criteria Alternative Penetrate existing markets Expand on new markets Required time Market knwoledge Requird financials Coordination efforts May 2015 Heinrich Heine University 13

14 Strategic alternatives Criteria Alternative Penetrate existing markets Expand on new markets Required time Market knwoledge Requird financials Coordination efforts May 2015 Heinrich Heine University 14

15 Key issues Assess the overall growth strategy for Sonae SR Assess growth strategies for Sonae SR s business segments Interconnect your brands in order to generate synergies for you and your partners May 2015 Heinrich Heine University 15

16 Sonae SR s business segments divided into their market portfolio Domestic and near domestic markets Worton Existing markets of Sonae SR s business segments Mo Internationally diversified Zippy Sportzone May 2015 Heinrich Heine University 16

17 Domestic and near domestic markets Worton Existing markets of Sonae SR s business segments Mo Internationally diversified Zippy Sport Zone May 2015 Heinrich Heine University 17

18 Strategic alternative for Worton Alternative Criteria Local market knowledge Required financials Synergy potential Operational control Organic growth Franchise Joint venture Acquisition May 2015 Heinrich Heine University 18

19 Strategic alternative for Worton Alternative Criteria Local market knowledge Required financials Synergy potential Operational control Organic growth Franchise Joint venture Acquisition May 2015 Heinrich Heine University 19

20 Domestic and near domestic markets Worton Existing markets of Sonae SR s business segments Mo Internationally diversified Zippy Sport Zone May 2015 Heinrich Heine University 20

21 Strategic alternative for Mo, Zippy and Sport Zone Criteria Alternative Local market knowledge Required financials Synergy potential Operational control Organic growth Franchise Joint venture Acquisition May 2015 Heinrich Heine University 21

22 Strategic alternative for Mo, Zippy and Sportzone Criteria Alternative Local market knowledge Required financials Synergy potential Operational control Organic growth Franchise Joint venture Acquisition May 2015 Heinrich Heine University 22

23 Implementation MO, Zippy, Sport Zone Worten Interconnection May 2015 Heinrich Heine University 23

24 Implementation MO, Zippy, Sport Zone Worten Interconnection May 2015 Heinrich Heine University 24

25 Engage a marketing agency for further market research Market Research Clustering of segments Conjoint analysis Communication strategy Increase your market knowledge especially about potential franchisees, respond to shifts in customer needs and expand your brand awareness. May 2015 Heinrich Heine University 25

26 Penetrate your current markets of Sport Zone, Zippy and Mo with the franchising system Build up a franchising department Choose the right partners Set up standardized contracts with slight local adaptions Responsibilities for franchise agreements Hire 25 specialist for each region (Europe, Middle East, South America, North America, Africa) Trade fairs Criteria: Market knowledge, trust and reliability Negotiation freedom Disclosure paragraph Engagement of an advocacy Soneae SR Business concept Product development Sourcing Branding Quality control Franchisee: Choosing store location Operative performance Fee 5-15% Benefit of the local knowledge and the less financial investment to foster your international growth by opening 50 new stores in developed and 30 in emerging countries May 2015 Heinrich Heine University 26

27 Implementation MO, Zippy, Sport Zone Worten Interconnection May 2015 Heinrich Heine University 27

28 Use the semi-capital light model to achieve growth of Worton in your current markets Choose the right partners and locations Criteria: Market knowledge Trust, reliability Financial background Location analysis Set up the contracts Cost and profit arrangement: 51% : 49% Aim to increase own share Help of an advocacy Reasons for partnership Existing business concept Well-known brand Synergy potential Reach profitable growth for Worton in your current markets by opening 5 JV May 2015 Heinrich Heine University 28

29 Implementation MO, Zippy, Sport Zone Worten Interconnection May 2015 Heinrich Heine University 29

30 Interconnect your brands to achieve synergies Use organizational structure of Sonae SR HR: General proceedings Training of sales employees General procurement Adjust your IT Vendor management inventory system Automated re-order Inter-shop logistics Engage a cost reduction consultancy Evaluation of cost reduction potential Negotiation of contracts Screening of quality and functionality of procurement Increase profitability of Sonae SR and the JV partners through synergies May 2015 Heinrich Heine University 30

31 Implementation plan Costs (EUR) Savings Market Research 2,000,000 Franchise Department 5,000,000 Partners and negotiation 100,000 Opening of new stores 10,000,000 Searching Joint Venture partners 100,000 Opening of new stores 30,000,000 Realizing Synergies 10,000,000 30,000,000 Total costs: 57,200,000 EUR Total Savings: 30,000,000 EUR Total Investment: 27,200,000 EUR May 2015 Heinrich Heine University 31

32 Financial Outlook in EUR mn New stores Turnover EBITDA Break even of investment in 2016 May 2015 Heinrich Heine University 32

33 Your company in 2020 Break even in Spain Current markets remain but with improved internal operations MO, Zippy, Sport Zone 30 franchises in emerging markets, 50 franchises is developed markets Worten 5 JVs May 2015 Heinrich Heine University 33

34 Risk and contingency No partner for franchising / JV Benefit of providing business concept + careful screening process 2. No break even in Spain interconnection of your brand generates synergies 3. No acceptance of change by current employees competent and dedicated employees can be convinced by reasoning May 2015 Heinrich Heine University 34

35 Wrap-up Penetrate existing markets with each brand. Enable further growth of Mo, Zippy and Sport Zone via franchising and of Worten via a JV growth strategy Assess the overall growth strategy for Sonae SR Assess growth strategy for Sonae SR s business segments Interconnect your brands in order to generate synergies for you and your partners May 2015 Heinrich Heine University 35

36 Wrap-up Penetrate existing markets with each brand. Enable further growth of Mo, Zippy and Sport Zone via franchising and of Worten via a JV growth strategy Assess the overall growth strategy for Sonae SR Assess growth strategy for Sonae SR s business segments Interconnect your brands in order to generate synergies for you and your partners May 2015 Heinrich Heine University 36

37 Wrap-up Penetrate existing markets with each brand. Enable further growth of Mo, Zippy and Sport Zone via franchising and of Worten via a JV growth strategy Assess the overall growth strategy for Sonae SR Assess growth strategy for Sonae SR s business segments Interconnect your brands in order to generate synergies for you and your partners May 2015 Heinrich Heine University 37

38 Wrap-up Penetrate existing markets with each brand. Enable further growth of Mo, Zippy and Sportzone via franchising and of Worten via a organic growth strategy Assess the overall growth strategy for Sonae SR Assess growth strategy for Sonae SR s business segments Interconnect your brands in order to generate synergies for you and your partners May 2015 Heinrich Heine University 38

39 Thank you.