Mediobanca Research Area The Italian fashion Top15 and Italian fashion companies: and first nine months of 2015

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1 Mediobanca Research Area The Italian fashion Top15 and Italian fashion companies: and first nine months of 2015 Sector situation In 2014, the turnover of the global fashion industry (personal luxury goods) is estimated to have reached 224bn. 1 Excluding exchange rate effects, 2 the growth rate in 2014 was similar to the previous year (+2%, +3% in 2013), after remaining in the double-digits for the previous three years: +10% in 2012, +11% in 2011 and +13% in 2010 (at current exchange rates). Growth estimates for 2015 are positive, indicating a return to double-digit growth, around +13%, although this is led by the positive dynamics of exchange rates, with only +1-2% growth at constant exchange rates, and a 253bn turnover. Forecasts for 2016 suggest a moderate growth for all sectors and markets, in line with the ongoing normalisation of the sector. In 2014, the leather goods segment was again the largest one in the personal luxury goods market, in absolute value ( 65bn, of which 38bn for bags and 14bn for shoes), as well as the most dynamic (+4%), followed by clothing ( 54bn, +2%), jewellery and watches ( 52bn, +1%) and beauty products and perfumes ( 45bn, +2%). Europe was again the largest market, with approximately 76bn sales (+2% on 2013), while the Americas were the most dynamic one (+3%, to 72bn). Asia-Pacific reached 47bn (+1%) and Japan 18bn (+2%). In Europe, the decrease in purchases by residents was offset by the continuing expansion of tourist shopping, which was more than half of the total. Chinese buyers accounted for approximately 36% of the total tax free shopping market, +16% with respect to 2013, offsetting the decrease in spending by the Russians -10%, still in second position with 9%. 3 Also in Italy the Chinese were the top spenders with 32% of the tax-free shopping (with Milan as the favourite destination followed by Rome) ahead of the Russians (13%) and the Americans (8%). Europe is the continent most reliant on tourist shopping, followed by the Americas. Tax-free purchases are very attractive to tourists from Countries where luxury goods are subject to substantial duties. Tax-free shopping in Europe grew by 26% in the first nine months of 2015 with respect to the same period of last year (+19% in Italy). This market is estimated at around 48bn in 2015 in Europe and is mainly concentrated in four Countries, i.e. France, Germany, U.K. and Italy, which represent overall 74% of the European market. The forecasts for 2016 see the positive trend in tax-free shopping to continue, with an increase between +6% and +8% in Europe. 4 With regard to sales, we note the double-digit growth in on-line, outlet and airport sales, and also the good performance of single-brand stores, which still account for more than half of the market and continue to be the main engine of growth. Global on-line sales in 2014 were around 12bn: this is the sales channel expected to grow faster with the highest growth estimates for 2015, +40% (reaching approximately 7% of the total value of the luxury market from the current 5%): outlet sales at global level accounted for approximately 19billion and they 1 Bain & C., Fondazione Altagamma, Worldwide Luxury Market Monitor, October 2014 and October In 2014 the dynamics of the exchange rates did not affect the evolution of growth rates: +3% both at current exchange rates and at constant exchange rates (in 2013: +3% at current exchange rates and +7% at constant exchange rates). Some currencies appreciated slightly against the Euro between 2013 and 2014 (average): +4.4% the US dollar, +2.4% the British pound, +4.6% the Renminbi, +1% the Hong Kong dollar, +0.2% the Swiss Franc; other values, instead, have lost ground: -23.4% the rouble and -12.2% the yen. 3 The decrease in purchases by Russians tourists is the direct consequence of the weaker rouble and the delicate political situation of the country. Chinese spend abroad over three times what they spend locally. 4 Global Blue data for tax-free shopping. 1

2 are expected to grow by another +35% in 2015, to reach approximately 10% of the total value of the market from the current 9%; global sales in airports were approximately 11 billion and they are expected to grow by another +29% in 2015, to reach approximately 6% of the total value of the market from the current 5%. Single-brand stores accounted for 53% of the luxury market: the top players are committed to strengthen the mono-brand retail segment, also through direct sales (flagship stores), in the most prestigious locations. This allows a better control of image and service quality and for support the price positioning on the market, increasing the perception of exclusivity and aesthetic-aspirational value by the buyer. 5 *** R&S-Mediobanca has created an aggregate, using data for 15 of the largest fashion Groups based in Italy (Italian fashion Top15). 6 The aggregate can be considered representative of the top operators of the sector (clothing, shoes and leather goods, eyewear), with the exception of the following Groups: Gucci: it does not prepare consolidated financial statements, as it has been part of the French group Kering since sales for the Gucci Group were 3,497 million, with 1,056 million EBIT, 9,623 units average workforce and 505 direct sales outlets. Its turnover accounts for 35% of the Kering Group. 7 Bottega Veneta: it is part of the Kering Group since 2001 and does not prepare consolidated financial accounts. In 2014 sales of the Bottega Veneta Group were equal to 1,131 million, with 357 million EBIT, 3,212 units average workforce and 236 direct sales outlets. Its turnover accounts for 11% of the Kering Group. Benetton: it does not prepare consolidated financial accounts because it is part of the Edizione conglomerate. In 2014 it had sales at the consolidated level for 1,633 million (Edizione Group clothing division), with -84 million EBIT, 9,429 units average workforce. The Benetton Group (SpA) was in any case included in the Italian fashion Top The distribution in the companies of fashion takes place usually wholesale (through third parties) or retail (directly to the client with single-brand retail outlets managed by the company that owns the brand or by third parties under licence, to increase the brand recognition and its perception as luxury good). Source: Study IAS/IFRS Financial Statements and sectoral specificities IPSOA For the operations of a company in the fashion sector, the key concept is the collection, i.e. the set of products proposed for the season and created by designers. Companies usually prefer to have multiple suppliers and external producers to contain the risks. The fashion shows are crucial in the sales process. These events are organised by the fashion houses a few months before the beginning of the actual sale of the collection. The purpose of a fashion show is to prove the quality of the collection to the major distributors, involving Press and Communication professionals. Source: Study IAS/IFRS Financial Statements and sectoral specificities IPSOA The Kering Group (founded by François Pinault in 1963 and until June 2013 called PPR - Pinault-Printemps-Redoute) in 2014 had sales for 10,038 million (of which 6,759 million in the Luxury Division, 3,245 million in the Sport&Lifestyle Division and the remaining in other segments); it is the third fashion group in France by revenue after the Groups LVMH ( 30,638 million in 2014, of which 10,828 million Fashion & Leather, 3,973 million Wines & Spirits, 3,916 million Perfumes & Cosmetics, 2,782 million Watches & Jewelry and 9,139 million Selective Retailing - Sephora brand- and other activities) and L Oreal ( 22,532 million); followed, in France, by Chanel (Chanel International B.V., privately held company ) with sales of 6,186 million and Hermes( 4,119 million). Besides Gucci and Bottega Veneta, the Kering Group, has also had control of the Pomellato Group since In December 2013, the Group LVMH has taken over Loro Piana, in June 2013 the Cova patisserie and in 2011 the Bulgari Group; it has also held Fendi since 2001 and Emilio Pucci since Other fashion multinationals in Europe are the Swiss Group Richemont ( 10,410 million, of which 82% in watches and jewellery), the German Groups Adidas ( 14,534 million) and Hugo Boss ( 2,572 million) and the British Burberry Group ( 3,239 million). 8 The Benetton Group s.r.l. is the old Bencom s.r.l., which in 2014 changed its name and incorporated Benind. The Aziende Moda Italia group also includes the Olimpias Group s.r.l. (spinning, dyeing and weaving), which reported sales of 1,701 million in 2014 and is also part of the Edizione Group. 2

3 All most recent financial statements relate to the year ended at December 2014, with the exception of D&G (year ended at March 2015) and Prada (year ended at January 2015). All 15 Groups considered have Italian majority shareholders, with the exception of Valentino, held by Qatar investors, and Safilo, where the majority shareholder is a Dutch holding company. Seven of the 15 companies are listed on the stock exchange (all in Milan, except Prada, listed only in Hong Kong, and Luxottica, listed also in New York). As for their main activity, nine Groups operate primarily in the clothing sector, four in the leather goods and shoes sector and two in the eyewear sector. The Area Studi Mediobanca has also developed a wider aggregate, Italian fashion companies, which includes 143 companies based in Italy (including those in the Top15), of which 127 manufacturers and 16 retailers. These are the major Italian companies operating in the fashion industry with sales of at least 100 million in Each company is assigned to a sector according to its main activity: clothing (59 companies), textiles (20), leather goods and shoes (32), jewellery and gold (11), eyewear (5) and retailing (16). Geographically these companies operate mostly in Northern Italy (56 in the North-West and 55 in the North-East), with the remaining 32 in the Centre/South/Islands. With regard to their ownership structure, 99 are Italian and 44 foreign (of these, 18 are French). *** Fashion companies in comparison to large Italian manufacturing companies In 2014, the companies of the Italian fashion Top15 reported much better results than the large Italian manufacturing groups listed on the stock exchange, in terms both of income statement and balance-sheet; also the Italian fashion companies overall performed better than the large Italian manufacturing companies (with the sole exception of the ROE). In 2014 large Italian manufacturing companies reported a 0.8% decrease in sales against a 5.8% increase for Italian fashion companies and 5.6% for Top15. The EBIT margin for the large Italian manufacturing companies was lower than that of Italian fashion companies (9.3% against 6%), only half the level recorded for Top15 (12.3%). Top15 also had a higher ROE than that of Italian manufacturers (Tab. 1). But what most clearly distinguishes fashion companies from large Italian manufacturing companies is their financial structure. Fashion companies seem to be much better capitalised, with financial debt equal to less than 40% of equity for Italian fashion companies and less than 25% for Top15, against 140.4% for large manufacturing companies. Another difference is that the Top15 companies have plenty of liquidity, in excess of their debt, against a 73.7% incidence for Italian fashion companies and 50.8% for the large manufacturing companies (Tab. 1). In period fashion companies have been able to achieve growth rates above those of the large manufacturing companies (net of the effects of the consolidation of Chrysler). Specifically, the companies of the Top15 came on top in terms of revenue, margins and workforce, followed by the Italian fashion companies, with the large Italian manufacturing companies lagging behind (Fig. 1). 3

4 Revenues In the period, total revenues for Italian fashion companies went up by 27.7% (+29.3% manufacturing, +16.3% distribution), from 45.5bn in 2010 to 58.1bn in 2014 (Fig.2). The most substantial increases were reported by jewellery (+50.8%), leather goods (+40%) and eyewear (+28%); below average, clothing and textiles (both +23.8%). The Top15 recorded a more substantial increase, +30.8%, from 21.3bn in 2010 to 27.8bn in 2014; the most marked increase was at Prada (+73.5%), followed by Ferragamo (+70.8%), Calzedonia (+63.8%), Moncler (+61.9%) and Armani (+59.7%); revenue fell at Benetton (-20.6%) and D&G (-5.7%). Sales at Luxottica, by far the largest Group in Top15, were 7,652 million in 2014, ahead of Prada ( 3,552 million) and Armani ( 2,535 million); the other companies remained under the 2 billion mark (Fig.3). Foreign sales are important for Italian fashion companies, and in 2014 they accounted for 60.1% of the total (+9.8 % with respect to 2010, for a +52.6% increase, against an increase of only +2.6% in domestic revenue). They were even more important for Top15, with peaks of 92.1% for Zegna (90.8% in 2010), 88.6% for Ferragamo (91.1%), 87.8% for OTB (86%), 84.4% for Prada (80.8%), 82.8% for Armani (73.7%), 81.3% for Moncler (48.5%) and 80.4% for D&G (77.1%). 9 Among the Top15, Calzedonia had the most limited international presence, 49.5% (in any case still up with respect to 35.7% of 2010). At the sectorial level, in the Italian fashion companies, eyewear and leather goods companies seem to be those most oriented to the foreign markets (90.2% and 70.1%, respectively). The companies under Italian control export more than those under foreign control (68.1% against 36.3%). In 2014, the Top15 reported a 5.6% increase in sales on 2013, slightly below the +5.8% of the Italian fashion companies (Fig.4). The growth in sales of the Top15 group reflected a 4.6% increase in European markets (with a turnover of 12.1bn) and a 6.4% increase in extra-european markets ( 15.7bn). The latter accounted for 56.3% of total sales, slightly up from 55.9% in 2013 (50.3% in 2010), with peaks of 80.3% for Luxottica, 73.1% for Ferragamo and 72.6% for Zegna (Fig.5). In 2014, double-digit sales increases with respect to the previous year were reported by Valentino (+32%), Moncler (+19.6%), Armani (+16%), Calzedonia (+10.8%) and D&G (+10%). The increase at Lir (+9.9%), Benetton (+8.9%), Ferragamo (+5.9%), Safilo (+5.1%), Luxottica (+4.6%) and Max Mara (+1.6%) remained under 10%. Sales were down only at Zegna (-4.7%), OTB and Prada (both -1%) and Tod s (- 0.2%). Employment Higher sales have led to higher employment levels: in the period, the workforce of Italian fashion companies increased by 22.7% (Fig.2), with a gain of 58 thousand jobs, reaching a total of more than 316 thousand units at the end of The increase in the workforce was stronger at manufacturing (+24.1%) than retailing companies (+10.9%). No sector reported a decrease, while the most substantial increases were reported at leather goods (+36.1%) and clothing (+27.1%) companies. Companies under Italian control increased their workforce more than those under foreign control (+24.2% against +16.6%). At Top15, the increase in employment was more substantial (+34.2%), equal to 45 thousand additional units, of which 81% hired by four Groups: Calzedonia and Luxottica (more than 14 thousand units each), Prada (+4.763) 9 Foreign sales data are not available for all companies. 4

5 and Armani (+2.845); employment was down only at Safilo (-7.7%, equivalent to 635 people). When data are available, there was usually a decrease in the percentage of the workforce in Italy: % for Moncler, % for Armani, % for Prada, -8.3 % for D&G, -8.0 % for Tod s, -6.2 % for Lir and -0.5 % for Ferragamo; against the trend only Zegna (+1.2 %). In 2014 the workforce in Top15 continued to increase (+9% on 2013), reaching 177 thousand units (from 162 thousand in 2013); at Italian fashion companies the workforce in 2014 increased by 4.7% with respect to the previous year, with a decrease in jewellery (-4.8%) and textiles companies (-4.2%) (Fig.4). Margins and Profits With regard to operating income (EBIT), in the period the overall picture, although still positive, grew slight darker for Italian fashion companies (Fig.6). In 2014 the EBIT margin for the Italian fashion companies was 9.3%; eyewear companies recorded the highest value (13.4%), followed by leather goods companies (12.1%). Bucking the trend, eyewear, textiles and jewellery companies increased their profitability in the period, with EBIT margin growing by +2.2 %, +2 % and +1.9 % respectively. Companies under Italian control had a higher operating income in 2014 than those under foreign control (respectively 10.1% and 6.8%). Also for Top15 the EBIT margin fell slightly from 2010, but was still in the double digits (12.3% ) in 2014; Moncler had the highest value (29.8%, up from 20.7% in 2010), followed by Prada (19.9%), Ferragamo (18.6%), Armani (16.3%), Tod s (15.6%) and Luxottica (15.3%); lagging behind, OTB with 2.3%, Lir with 0.9% and Benetton, the only one with a negative margin (Fig.7). The period saw instead an improvement in the bottom line: Italian fashion companies reported profits for 2.9 billion in 2014 (5% of sales), up from 2.3 billion in 2010; in the period aggregated profits were 12.8 billion, with at least 2 billion average a year and not a single year recording a loss. Leather goods and eyewear companies had the highest profits-to-sales ratios in 2014 (respectively 7.4% and 7.1%); no sector recorded a loss (Fig.8). Also Top15 increased profits in 2014: +39.1% with respect to 2010, from 1.5 to 2.1bn, from 7% to 7.4% as a percentage of sales. ROE increased from 12.7% to 13% (Fig.9). Top15 had accumulated profits in the period for 9.2bn; 4bn dividends were distributed, for a 43.8% payout. Safilo, Lir and Max Mara, despite generating profits, did not distribute dividends in the period. Luxottica, Tod s and Ferragamo had the highest payouts, respectively 65.9%, 58.7%, and 48.8%. In terms of returns on invested capital (ROI) and on equity (ROE), two Groups were well ahead of the others: Ferragamo and Moncler, with ROI of, respectively, 37.8% and 31.6% and ROE of 50.6% and 45.1%. Armani was in third place for ROI and ROE (respectively 26% and 20.1%), and Prada in fourth (20% and 17.7%). In 2014 less outstanding performances were recorded by OTB (ROI 3% and ROE 0.5%) and Lir (ROI 1.7% and ROE 0.6%); Benetton had negative returns (Fig.9). Italian fashion companies had a 12.7% ROI and a 10% ROE in 2014, both below the values recorded by the aggregate Top15 (Fig.9). 5

6 Value added per employee In the period, productivity (measured by net value added per employee) of Italian fashion companies increased by 1.8 %; in 2014 there was a further 0.4 % increase with respect to the previous year. Manufacturing companies improved more than retailing companies in the period (+2 % against +0.3 %), but with a reverse trend in the last year (+3.8 % retailing, -0.1 % manufacturing in 2014 from 2013). Jewellery companies reported the largest increase in productivity both in (+26 %) and in 2014 with respect to the previous year (+11.7 %); in 2014 the leather goods segment lost more than the others in terms of productivity (-8.5 %), even if it remains the best performing segment, ahead of jewellery (net value added per capita, respectively, 81.5 and 80.2 thousand). These increases in productivity did not translate however in competitiveness gains as measured by cost of labour per unit of product (CLUP): in fact, they were more than offset by the increases in labour costs. CLUP increased from 64% in 2010 to 66.4% in 2014 (64.7% in 2013) for the Italian fashion companies (Fig.10). Both manufacturing and retailing companies lost competitiveness, although the first less than the second, with CLUP up respectively +2.4 % and +3.7 % in the period; last year, there was a trend reversal for retailing, but not for manufacturing (+2.2 % for manufacturing and -3.2 % for retailing). In 2014, the best CLUP value was recorded by leather goods companies (54.6%), the worst by eyewear companies (81.3%); 10 manufacturing continued to be more competitive than retailing (65.1% against 77.1%). Companies under foreign control had a worse CLUP than those under Italian control (70.8% against 64.8%). A downtrend was observed also in Top15 aggregate where, in the period, productivity decreased by -10%, from 82 thousand to 74 thousand (for comparison: 80 thousand in large Italian manufacturing companies) and CLUP increased from 50.4% to 59.2% (58.1% in large Italian manufacturing companies); in 2014, the slight improvement of productivity (+1.5% on 2013) did not result in increased competitiveness (CLUP +0.1 %) as labour costs increased in parallel (+1.6%, to 44 thousand per capita; 47 thousand in large Italian manufacturing companies). In 2014, Moncler achieved the best CLUP value, confirming its leadership, with an incidence of labour cost on net value added of 25.4%, ahead of Ferragamo (43.5%) and Prada (47.3%) (Fig.11). In last position, Benetton had a CLUP value above 100%, supporting labour costs almost three times higher than productivity. In 2010 the first three companies were Benetton (22.2%) which, in 5 years reached the last position, 11 Moncler (32.5%) and Tod s (42.9%); Valentino was in last position (118.6%). Balance sheets The balance sheets of the Italian fashion companies seem overall solid, with a low incidence of financial debt to equity: 36.8% in 2014, down with respect to 45.8% of five years earlier (Fig.12). Clothing and leather goods had the strongest balance sheets, with a ratio of financial debt to equity of, respectively, 26.6% and 31.4% in Manufacturing companies appear to be financially more stable than retailing companies with a debt to equity ratio of 33.4% against 94%. Companies under Italian control had lower debt than those under foreign control: 10 Excluding Luxottica, which does not provide labour cost data, therefore the value added cannot be calculated. 11 The collapse of the competitiveness of Benetton is due largely to the combination of a marked and constant decrease in productivity (-91.1%), against a more contained increase in labour costs (+15.5%). Benetton Group in was involved in M&A operations: from 2010 to 2013 data referred to Benetton Group (ex-bencom) that in 2014 merged with Benind (one of the major productive companies in Benetton Group). 6

7 33.2% against 55.7%. Clothing and leather goods companies also stand out for higher liquidity levels than the average: the ratio of cash to financial debt was respectively 111.4% and 80.6% at the end of 2014 (Italian fashion companies: 73.7%). The financial structure of the Top15 companies was even more solid, with financial debt in 2014 representing just 23.4% of equity (down from 35.3% of 2010) and increasing liquidity levels, up by 60.2% to 5.9bn (from 3.7bn in 2010). The Top15 had the highest ratio of cash to financial debt: at 118.2% in 2014, liquidity was 1.2 times the level of debt (it was below 100% in 2010). At the end of 2014, two companies stood out, Max Mara and Armani, with negligible debt with respect to equity (respectively 2% and 1.9%) and liquidity of 904 and 561 million, respectively (25 and 19 times their financial exposure) (Fig.13-14). Even if we look at equity excluding intangible assets (almost half of which consists in the brand value), 12 the balance-sheet of the Top15 seems more solid than the average of the Italian fashion companies: 42.4% against 63.3% in 2014 (Fig.15). Again Armani (2.4%) and Max Mara (2.5%) stood out, together with Tod s (5.8%); Moncler and Luxottica seem to have been more fragile, being the only ones with financial debt exceeding tangible equity (respectively 38 and 13 times). First nine months 2015 (Tab.2 and Fig.16) If we look at 2015 data, the overall picture is positive: however, this is in large part due to the favourable exchange rate dynamics. 13 In the first nine months of the year, there was a double-digit increase in revenue, 11.8% at current exchange rates, with respect to the same period in 2014, although a large part of this growth is due to the general appreciation of many currencies, US dollar in particular, against the Euro; we estimate that, at constant exchange rates, this growth would have been around +2% on average. Of all the listed companies (the only ones that publish quarterly results), Moncler (+25.2%), Luxottica (+17.9%) and Safilo (+10.6%) stand out. 14 After the light fall of, margins have picked up: +9.4% EBIT and +8.5% profit on continuing operations; also profits continue to increase (+6.6%). Margins have fallen only at Prada, Safilo and Tod s. 12 The items representing intangible assets are perhaps the most important ones for the companies of the fashion industry and, among these, the value of the brand is certainly the most important of all. This can be developed internally or acquired from third parties and further promoted. The brand may be object of licensing agreements, by which the company that owns the brand transfers the rights to use/commercial use for a certain category of products for a consideration (royalty). Source: Study IAS/IFRS Financial Statements and sectoral specificities IPSOA In general all main currencies have appreciated against the Euro between 2014 and 2015 (average): +12.5% US dollar and Hong Kong dollar, +8.7% Renminbi, +6.6% British pound and Swiss Franc, +5.2% yen; the rouble instead continues to fall (-26.9%). 14 At constant exchange rates: Moncler +17%, Luxottica +5% and Safilo +1%. 7

8 Tab. 1 Top15 and Italian fashion companies vs large manufacturing: some KPI (key performance indicators) Large Italian Italian Italian manufacturing groups fashion fashion listed on the stock Top15 companies exchange Net sales (% change ) (in %) EBIT margin ROE Borrowings / equity Liquidity / borrowings Fig. 1 Top15 and Italian fashion companies vs large manufacturing: % changes Net sales EBIT Employees Italian fashion Top15 Italian fashion companies Large Italian manufacturing a (net of Chrysler's effect) 8

9 Fig. 2 Top15 and Italian fashion companies: % changes sales and employees Top15 Italian fashion companies manufacturing firms retail gold and jewellery leather goods eyewear clothing textile foreign ownership Italian ownership % change net sales % change employees Fig. 3 Top15: sales in 2014 (mln) 7,652 3,552 2,535 1,847 1,536 1,321 1,310 1,296 1,210 1,179 1, Luxottica Prada Armani Calzedonia OTB (Diesel) Ferragamo Max Mara Benetton (SpA) Zegna Safilo D&G Tod's Lir (Geox) Valentino Moncler 9

10 Fig. 4 Top15 and Italian fashion companies: % changes sales and employees Top15 Italian fashion companies retail manufacturing firms -4.2 textile clothing eyewear leather goods gold and jewellery foreign ownership Italian ownership % change net sales % change employees Fig. 5 Top15: % of sales outside Europe in Luxottica Ferragamo Zegna Prada Safilo Valentino Armani D&G OTB (Diesel) Moncler Tod's Max Mara Lir (Geox) Benetton (SpA) Calzedonia Top15 10

11 Fig. 6 Top15 and Italian fashion companies: % ratio between EBIT and sales (EBIT margin) in 2010 and Top15 Italian fashion companies manufacturing firms retail eyewear leather textile goods clothing gold and jewellery Italian foreign ownership ownership EBIT margin 2010 EBIT margin 2014 Fig. 7 Top15: % ratio between EBIT and sales (EBIT margin) in 2010 and Moncler Prada Ferragamo Armani Tod's Luxottica Zegna Max Mara Calzedonia Safilo D&G Valentino OTB (Diesel) Lir (Geox) Benetton (SpA) EBIT margin 2010 EBIT margin

12 Fig. 8 Top15 and Italian fashion companies: profits as % of sales in 2010 and Top15 Italian fashion companies manufacturing firms retail leather goods eyewear clothing textile gold and jewellery Italian ownership foreign ownership Profit as % of net sales 2010 Profit as % of net sales 2014 Fig. 9 Top15: ROI and ROE in Ferragamo Moncler Armani Prada Tod's Luxottica Zegna Calzedonia Max Mara Safilo D&G Valentino OTB (Diesel) roi 2014 roe Lir (Geox) Benetton (SpA) Top15 Italian fashion companies 12

13 Fig. 10 Top15 and Italian fashion companies: labour cost per unit of product (CLUP) in 2010 and Top15 Italian fashion companies manufacturing firms retail gold leather goods and jewellery textile clothing Clup 2010 = Labour cost per employee /Net value added per employee (%) eyewear Italian ownership foreign ownership Clup 2014 = Labour cost per employee /Net value added per employee (%) Fig. 11 Top15: labour cost per unit of product (CLUP) in 2010 and Moncler Ferragamo Prada Armani Tod's Max Mara Calzedonia Zegna D&G Safilo Valentino OTB (Diesel) Lir (Geox) Benetton (SpA) Clup 2010 = Labour cost per employee /Net value added per employee (%) Clup 2014 = Labour cost per employee /Net value added per employee (%) 13

14 Fig. 12 Top15 and Italian fashion companies: borrowings as % of equity and Liquid assets as % of borrowings in Top15 Italian fashion companies manufacturing firms retail clothing leather goods textile eyewear gold and jewellery Italian ownership foreign ownership Borrowings / Equity (%) 2014 Liquidity / Borrowings (%) 2014 Fig. 13 Top15: borrowings as % of equity in Borrowings / Equity (%) Armani Max Mara Tod's OTB (Diesel) D&G Benetton (SpA) Lir (Geox) Prada Valentino Calzedonia Safilo Ferragamo Zegna Luxottica Moncler 14

15 Fig. 14 Top15: liquidity as % of borrowings in Liquidity / Borrowings (%) Max Mara Armani Tod's D&G Lir (Geox) Zegna OTB (Diesel) Prada Ferragamo Luxottica Moncler Valentino Safilo Benetton (SpA) Calzedonia Fig. 15 Top15 and Italian fashion companies: financial stability in 2014 Borrowings / Tangible equity (%) Armani Max Mara Tod's D&G Lir (Geox) Benetton OTB Prada Calzedonia Ferragamo Zegna Safilo Valentino Luxottica Moncler Top15 Italian fashion companies 15

16 Tab. 2 Consolidated data first nine months 2015 (in million Euro) First nine months 2015 % net sales 2014 % net sales % change Luxottica Group Net sales 6,822 5, EBIT 1, Current profit 1, Profit Prada Net sales 2,583 2, EBIT Current profit Profit Salvatore Ferragamo Net sales 1, EBIT Current profit Profit Safilo Group Net sales EBIT Current profit Profit Tod's Net sales EBIT Current profit (*) Profit (*) Geox Net sales EBIT Current profit Profit Moncler Net sales EBIT Current profit Profit Total "Top7listed" Net sales 13,434 12, EBIT 2, , Current profit 1, , Profit 1, , YOOX NET-A-PORTER GROUP Net sales EBIT Current profit Profit Brunello Cucinelli Net sales EBIT Current profit Profit (*) First six months. Source: R&S-Mediobanca on Interim Reports. 16

17 Fig. 16 TopModa Groups listed: % changes of sales first nine months at current and constant exchange rates Moncler Luxottica Safilo Ferragamo Tod's Geox Prada Total "Top7listed" YOOX Net-A- Porter Group Brunello % net sales at current exchange rates first nine months % net sales at constant exchange rates first nine months

18 LUXOTTICA GROUP '000 (%) ASSETS Liquid assets (including securities) 679, , , ,995 1,453, Working capital and current assets 1,472,686 1,594,389 1,636,773 1,618,007 1,714, Net fixed assets 1,795,637 1,703,183 1,520,837 1,540,550 1,690, Intangibles 4,045,404 4,441,484 4,494,458 4,306,353 4,735, brands and capitalised costs 1,155,007 1,350,921 1,345,688 1,261,137 1,384, Total assets 7,993,579 8,644,156 8,442,161 8,082,905 9,594, LIABILITIES Short-term financial debt 356, , , , , Medium/long-term financial debt 2,435,071 2,244,583 2,052,107 1,716,410 1,688, Other debt and reserves 1,932,890 2,082,324 1,996,458 1,853,538 2,199, Equity 3,269,404 3,625,120 3,993,240 4,149,936 4,928, Total liabilities and equity 7,993,579 8,644,156 8,442,161 8,082,905 9,594, Investments 230, , , , , Net sales 5,798,035 6,222,483 7,086,142 7,312,611 7,652, Value added EBITDA 1,031,011 1,128,300 1,373,031 1,437,936 1,557, EBIT 729, ,011 1,014,750 1,071,282 1,173, Profit (loss) on continuing operations 622, , , ,975 1,076, Profits 402, , , , , In % of sales Value added EBITDA EBIT Profit (loss) on continuing operations Profits EBIT / value added (%) Employees (average number) 61,373 63,795 67,959 71,861 75, of which Italy (%) n.a. n.a. n.a. n.a. n.a. Sales x employee Net VA x employee Labour cost x employee CLUP=labour cost x empl. / Net VA x empl. (%) ROI (%) ROE (%) Accumulated profits last 5 years (a) 2,583,522 Dividends in the last 5 years 202, , , , ,714 Accumulated dividends last 5 years (b) 1,701,657 Average payout last 5 years (b/a in %) 65.9 Accumulated tangible inv. last 5 years 1,275,404 Financial debt / Total equity (%) Financial debt / Total tangible equity (%) neg. neg. neg. neg. 1,277.9 Liquid assets / Financial debt (%) Intangibles / Total equity (%) Sales by geographic region (in million) Italy 1,164 1,243 1,317 1,443 1,507 Europe } Americas 3,482 3,605 4,123 4,124 4,287 Asia and Oceania and others 1,152 1,374 1,646 1,746 1,858 Total 5,798 6,222 7,086 7,313 7,652 Italy as % of total n.a. n.a. n.a. n.a. n.a. Abroad as % of total n.a. n.a. n.a. n.a. n.a. Europe (including Italy ) as % of total Extra-European sales (%) Source: R&S-Mediobanca 18

19 SAFILO GROUP '000 (%) ASSETS Liquid assets (including securities) 88,267 90,368 59,388 82,608 88, Working capital and current assets 552, , , , , Net fixed assets 282, , , , , Intangibles 563, , , , , brands and capitalised costs 13,731 11,713 45,646 48,703 54, Total assets 1,486,309 1,501,021 1,491,317 1,465,637 1,597, LIABILITIES Short-term financial debt 56, , ,643 73,874 75, Medium/long-term financial debt 287, ,741 92, , , Other debt and reserves 374, , , , , Equity 767, , , , , Total liabilities and equity 1,486,309 1,501,021 1,491,317 1,465,637 1,597, Investments 27,355 21,866 26,720 28,198 28, Net sales 1,079,937 1,101,882 1,175,292 1,121,531 1,178, Value added 372, , , , , EBITDA 108, , , , , EBIT 68,010 86,383 66,013 85,467 80, Profit (loss) on continuing operations 29,195 51,531 36,174 60,805 51, Profits ,862 25,865 15,521 39,030 5, In % of sales value added EBITDA EBIT Profit (loss) on continuing operations Profits EBIT / value added (%) Employees (average number) 8,244 8,075 7,950 7,821 7, of which Italy (%) n.a. n.a. n.a. n.a. n.a. Sales x employee Net VA x employee Labour cost x employee CLUP=labour cost x empl. / Net VA x empl. (%) ROI (%) ROE (%) Accumulated profits last 5 years (a) 109,009 Dividends in the last 5 years Accumulated dividends last 5 years (b) 0 Average payout last 5 years (b/a in %) 0.0 Accumulated tangible inv. last 5 years 132,433 Financial debt / Total equity (%) Financial debt / Total tangible equity (%) Liquid assets / Financial debt (%) Intangibles / Total equity (%) Sales by geographic region (in million) Italy Europe } Americas Asia and Oceania and others Total 1,080 1,102 1,175 1,122 1,179 Italy as % of total n.a. n.a. n.a. n.a. n.a. Abroad as % of total n.a. n.a. n.a. n.a. n.a. Europe (including Italy ) as % of total Extra-European sales (%) Source: R&S-Mediobanca 19

20 MONCLER '000 (%) ASSETS Liquid assets (including securities) 57,929 58,345 94, , , Working capital and current assets 197, , , , , Net fixed assets 49,411 80,726 86,661 95, , Intangibles 473, , , , , brands and capitalised costs 318, , , , , Total assets 778, , , , , LIABILITIES Short-term financial debt 54, ,378 96, ,244 80, Medium/long-term financial debt 145, , , , , Other debt and reserves 259, , , , , Equity 318, , , , , Total liabilities and equity 778, , , , , Investments 16,138 27,136 20,792 27,408 38, Net sales 428, , , , , value added 147, , , , , EBITDA 99, , , , , EBIT 88, , , , , Profit (loss) on continuing operations 79,558 93, , , , Profits 49,701 55,032 28,844 76, , In % of sales value added EBITDA EBIT Profit (loss) on continuing operations Profits EBIT / value added (%) Employees (average number) 873 1,144 1,340 1,132 1, of which Italy (%) ,8 % -3,9 % Sales x employee Net VA x employee Labour cost x employee CLUP=labour cost x empl. / Net VA x empl. (%) ROI (%) ROE (%) Accumulated profits last 5 years (a) 339,987 Dividends in the last 5 years ,000 30,012 Accumulated dividends last 5 years (b) 55,012 Average payout last 5 years (b/a in %) 16.2 Accumulated tangible inv. last 5 years 129,606 Financial debt / Total equity (%) Financial debt / Total tangible equity (%) neg. neg. neg. neg. 3,770.7 Liquid assets / Financial debt (%) Intangibles / Total equity (%) Sales by geographic region (in million) Italy Europe Americas Asia and Oceania and others Total Italy as % of total Abroad as % of total Europe (including Italy ) as % of total Extra-European sales (%) Source: R&S-Mediobanca 20

21 CALZEDONIA HOLDING '000 (%) ASSETS Liquid assets (including securities) 26,566 96,237 27,946 24,174 44, Working capital and current assets 489, , , , , Net fixed assets 559, , , ,204 1,014, Intangibles 113, , , , , brands and capitalised costs 100, , , , , Total assets 1,189,396 1,594,375 1,675,137 1,719,998 1,986, LIABILITIES Short-term financial debt 21, , ,950 51, , Medium/long-term financial debt 72, , ,013 89, , Other debt and reserves 267, , , , , Equity 828, ,308 1,071,286 1,168,579 1,242, Total liabilities and equity 1,189,396 1,594,375 1,675,137 1,719,998 1,986, Investments 110, , , , , Net sales 1,127,656 1,295,376 1,502,830 1,665,994 1,846, value added 410, , , , , EBITDA 264, , , , , EBIT 191, , , , , Profit (loss) on continuing operations 185, , , , , Profits 145, , , ,230 83, In % of sales value added EBITDA EBIT Profit (loss) on continuing operations Profits EBIT / value added (%) Employees (average number) 16,069 19,753 22,649 26,148 30, of which Italy (%) n.a. n.a. n.a. n.a. n.a. Sales x employee Net VA x employee Labour cost x employee CLUP=labour cost x empl. / Net VA x empl. (%) ROI (%) ROE (%) Accumulated profits last 5 years (a) 609,598 Dividends in the last 5 years 5,000 5,000 7,000 5,000 5,000 Accumulated dividends last 5 years (b) 27,000 Average payout last 5 years (b/a in %) 4.4 Accumulated tangible inv. last 5 years 813,019 Financial debt / Total equity (%) Financial debt / Total tangible equity (%) Liquid assets / Financial debt (%) Intangibles / Total equity (%) Sales by geographic region (in million) Italy Europe Americas Asia and Oceania and others } Total 1,128 1,295 1,503 1,666 1,847 Italy as % of total Abroad as % of total Europe (including Italy ) as % of total Extra-European sales (%) Source: R&S-Mediobanca 21

22 BENETTON GROUP (separate) '000 (%) ASSETS Liquid assets (including securities) 17,754 17,380 12,909 14,502 43, Working capital and current assets 860, , , , , Net fixed assets 92, , , , , Intangibles 577, , , , , brands and capitalised costs 488, , , , , Total assets 1,548,690 1,622,057 1,752,508 1,561,041 1,857, LIABILITIES Short-term financial debt 344, , , , , Medium/long-term financial debt 200, , ,421 1,147 1, Other debt and reserves 192, , , , , Equity 811, , , ,952 1,216, Total liabilities and equity 1,548,690 1,622,057 1,752,508 1,561,041 1,857, Investments 15,692 19,504 66,460 30,439 22, Net sales 1,633,291 1,589,497 1,379,969 1,190,186 1,296, value added 234, , ,947-89, , EBITDA 192, ,023 60, ,131-13, EBIT 145,883 57,474 8, ,241-77, Profit (loss) on continuing operations 120,815 41,984-10, ,616 5, Profits 50,324 16,355-15, ,259-16, In % of sales value added EBITDA EBIT Profit (loss) on continuing operations Profits EBIT / value added (%) Employees (average number) 1,223 1,279 1,450 1,916 3, of which Italy (%) n.a. n.a. n.a. n.a. n.a. Sales x employee 1,335 1, Net VA x employee Labour cost x employee CLUP=labour cost x empl. / Net VA x empl. (%) ROI (%) ROE (%) Accumulated profits last 5 years (a) -103,451 Dividends in the last 5 years 55, Accumulated dividends last 5 years (b) 55,000 Average payout last 5 years (b/a in %) Accumulated tangible inv. last 5 years 154,652 Financial debt / Total equity (%) Financial debt / Total tangible equity (%) Liquid assets / Financial debt (%) Intangibles / Total equity (%) Sales by geographic region (in million) Italy Europe Americas Asia and Oceania and others Total 1,633 1,589 1,380 1,190 1,296 Italy as % of total Abroad as % of total Europe (including Italy) as % of total Extra-European sales (%) Source: R&S-Mediobanca 22

23 LIR (GEOX) '000 (%) ASSETS Liquid assets (including securities) 393, , , , , Working capital and current assets 438, , , , , Net fixed assets 280, , , , , Intangibles 86,123 76,515 74,326 78,524 74, brands and capitalised costs 86,123 75,177 73,045 77,386 73, Total assets 1,198,641 1,253,132 1,266,035 1,311,995 1,384, LIABILITIES Short-term financial debt 29,406 26,103 24,842 89, , Medium/long-term financial debt 24,793 19,865 15,023 10,342 14, Other debt and reserves 220, , , , , Equity 923, , , , , Total liabilities and equity 1,198,641 1,253,132 1,266,035 1,311,995 1,384, Investments 61,427 43,895 41,044 33,021 29, Net sales 913, , , , , value added 251, , , , , EBITDA 144, ,950 64,307 25,213 53, EBIT 88,057 78,434 13,887-26,328 8, Profit (loss) on continuing operations 89,091 80,036 22,271-20,863 8, Profits 37,884 35,575 3,581-12,671 4, In % of sales value added EBITDA EBIT Profit (loss) on continuing operations Profits EBIT / value added (%) Employees (average number) 2,661 2,856 2,945 3,405 4, of which Italy (%) ,2 % -1,0 % Sales x employee Net VA x employee Labour cost x employee CLUP=labour cost x empl. / Net VA x empl. (%) ROI (%) ROE (%) Accumulated profits last 5 years (a) 69,130 Dividends in the last 5 years Accumulated dividends last 5 years (b) 0 Average payout last 5 years (b/a in %) 0.0 Accumulated tangible inv. last 5 years 209,059 Financial debt / Total equity (%) Financial debt / Total tangible equity (%) Liquid assets / Financial debt (%) , Intangibles / Total equity (%) Sales by geographic region (in million) Italy Europe Americas Asia and Oceania and others } Total Italy as % of total Abroad as % of total Europe (including Italy) as % of total Extra-European sales (%) Source: R&S-Mediobanca 23