Casual fashion for a casual life. Company Presentation

Transcription

1 Casual fashion for a casual life Company Presentation July

2 Disclaimer Important information This document has been prepared by Tom Tailor Holding AG for information purposes only, solely for the use at this investors presentation must be treated confidentially by attendees at such presentation and must not be distributed, passed on or otherwise disclosed. In particular, this document is not an offer of securities for sale in the United States or any other jurisdiction. The information contained in this document has not been independently verified. We make no representation or warranty, express or implied, as to, and you should not unduly rely on, the fairness, accuracy, completeness or correctness of the information or opinions in this document. This document contains forward-looking statements. These forward-looking statements reflect our management s current views with respect to certain future events and financial performance. A number of factors could cause our actual results to differ materially from those projected or implied in such statements. We accept no obligation to update any of the forward-looking statements in this document or to adjust them for future events or developments. Our common shares are listed on the regulated market of the Frankfurt Stock Exchange (Prime Standard). We publish annual, quarterly and other reports and announcements in accordance with German law and the rules of the Frankfurt Stock Exchange. You can find these publications on our website at 2

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5 Strong and experienced management team Dieter Holzer, CEO Dr. Axel Rebien, CFO Christoph Rosa, CPO Joined TOM TAILOR in September : CEO at Tommy Hilfiger Germany : Wholesale Manager at Esprit Europe, especially for Germany, UK and Eastern Europe Joined TOM TAILOR in October : Ernst & Young Corporate Finance, Transaction Advisory Services : Arthur Andersen : Bremer Landesbank Capital Markets Joined TOM TAILOR in November : Marketing Director Street One (Division Head, CBR Group) : Rosa Retail Proprietor : P&C Buying Department 5

6 Investment highlights A proven business concept with a strategy for systematic and profitable growth 1 Vertical system-supplier of lifestyle fashion Lean and vertical business model with full information control over entire value chain Fashion follower approach with 12 collections per year minimising fashion risk 2 Attractive growth potential Strong growth potential across product divisions Multi-channel distribution focused on controlled space driving growth and fostering brand reach 3 Strong profitability upside Strong economies of scale effects Structural margin upside potential through systematic retail expansion 4 Experienced management team Business revitalisation since entry of new management as base for systematic and profitable growth Long-standing industry experience and track record at leading apparel players 6

7 TOM TAILOR at a glance MEN WOMEN KIDS & MINIS Licenses/Accessories Denim Male Denim Female Balanced product portfolio Strong international presence Multi-channel distribution Denim 12% Denim Male 7% Licenses and other 2% KIDS & MINIS 13% WOMEN 32% Denim Female 5% Casual 86% MEN 41% International 31% Domestic 69% Retail/B2C 25% Wholesale/B2B 75% Total revenues 2009: 300.2mm Total revenues 2009: 300.2mm Total revenues 2009: 300.2mm Controlled distribution 60% Controlled distribution E-business 6% Franchise 11% Retail stores 20% Non-controlled distribution 40% Shop-in-shop 24% Total revenues 2009: 300.2mm Fiscal year 2009, as of December 31,

8 Multi-channel distribution approach providing significant growth opportunities Controlled distribution Retail / B2C Wholesale / B2B Retail E-business Franchise Shop-in-shop Multi-label PoS as of March 31, own operated stores across Europe across Europe 1,206 across Europe ~4,500 worldwide Highlights Promote identification with the brand Attract potential franchisees Fundamentally strong distribution channel launched in December 2006 High customer convenience Mono-label stores run on a franchise basis Assistance in professional retail space management Demarcated retail areas in department stores Situated in top locations in larger towns and cities and shopping centres Designed in accordance with TOM TAILOR s specifications Listings in multi-label retailers offering a limited range of TOM TAILOR products 8

9 TOM TAILOR has outperformed the apparel market Clothing market Germany ( bn) Market shares TOM TAILOR CAGR 06 08: +12.5% Western Europe Top 5 companies 11.7% Germany Top 5 companies 15.0% Market CAGR 06 08: +0.7% Source: Verdict (2009) Others 88.3% Source: Mintel report (October 2009) Others 85.0% TOM TAILOR Retail Like-for-like sales growth Excluding e-business Including e-business 16.5% 12.6% 14.0% 4.6% 2.8% Highlights Significant outperformance of TOM TAILOR, growing in Germany at a CAGR of 12.5%, systematically gaining market share Strong growth momentum through retail store roll-out and likefor-like sales growth High level of fragmentation in the Western European and German apparel industries with the top 5 companies holding a market share of 11.7% and 15.0%, respectively 9

10 1 Vertical system-supplier of lifestyle fashion A premium lifestyle brand at affordable prices Lifestyle matrix TOM TAILOR target group Exclusive segment Bridge segment BOGNER JIL SANDER STRENESSE MAX MARA RALPH LAUREN HUGO BOSS TOMMY HILFIGER STRELLSON MARC O POLO ESCADA PRADA DIESEL REPLAY CLOSED G-STAR Nominal disposable income of German households mm¹ Households (HHs) 2.5 HHs (Disp. income: > 4,500) % of HHs 6.7% Medium price segment BONITA GERRY WEBER ESPRIT S. OLIVER BENETTON STREET ONE CECIL LERROS MEXX STEFANEL NEW YORKER BESTSELLER GROUP MANGO H&M ZARA TOM TAILOR target group 20.3 HHs (Disp. income: 1,500-4,500) 54.6% Low to medium price segment KIK TAKKO C&A PIMKIE ORSAY 14.4 HHs (Disp. income: < 1,500) 38.7% Fashion degree Low High Strong market positioning in the young, casual lifestyle segment Source: German Federal Statistical Office - Statistical Yearbook 2009, Management view; ¹ Excludes ~2.9mm households for which no disposable income figures are available as per German Federal Statistical Office Primarily targeting the middle-income consumer segment with a highly attractive value-for-money proposition 10

11 1 Vertical system-supplier of lifestyle fashion Strong consumer acceptance: TOM TAILOR is one of the fastest growing apparel brands Dimensions of consumer acceptance and brand recognition across competitors Brand awareness Brand ownership Willingness to buy % +31%-pts 8% +14%-pts 12% +14%-pts 2006/7 71% 22% 26% % 27% 32% +11%-pts +12%-pts +9%-pts 2006/7 88% 39% 41% % 25% 31% +15%-pts +16%-pts +12%-pts 2006/7 87% 41% 43% % 18% 25% 2006/7 77% +9%-pts 20% +2%-pts 28% +3%-pts One of the key winners in recent history according to Spiegel Outfit a leading brand survey in Germany Industry-leading growth rates across all relevant brand dimensions Source: Spiegel Outfit study 6 (2007); Spiegel Outfit study 5 (2001) 11

12 1 Vertical system-supplier of lifestyle fashion Lean and vertical business model with full information control over entire value chain Full information control across all value chain processes Product development Sourcing Logistics Distribution e.g. Women Design Technical preparation Buying / purchasing Complete outsourcing of manufacturing and procurement Centralised warehousing system Points-of-sale Product management Low fashion risk with 12 collections per year ~90% of purchasing in wholesale segment via pre-order system minimising stock risk Outsourced to DHL with B2B portal ensuring 24/7 availability for business partners Multi-channel distribution approach with focus on controlled distribution Focus on core value added processes: product development and distribution Track record for system expertise and meticulous supply chain management 12

13 1 Vertical system-supplier of lifestyle fashion Systematic process design facilitating high flexibility to rapidly react to latest market trends Collection development Collection development jointly by designer and market scout Designer Monthly concept meeting Market scout Fashion follower approach with 12 collections per year minimising fashion risk Systematic research of market intelligence and identification of successful fashion trends Fast incorporation of market-proven fashion styles Operational value chain allows for 12 collections per year for each product division Bestseller management Product cycle time-to-market Standard process Fast track Spot style Development Sale Production Transport & warehouse /2 1/2 1T1-2 days 4W4 1/2 1/2 PoS Lead time: ~23-26 weeks ~11 weeks ~5 weeks Note: Numbers in weeks unless stated otherwise 13

14 2 Attractive growth potential Unique breadth of complementing growth drivers Internationalisation Retail store roll-out E-business Market share potential Controlled wholesale area Licensing TOM TAILOR Denim 14

15 2 Attractive growth potential Multi-channel distribution focused on controlled space driving growth and fostering brand reach Controlled distribution Retail / B2C Own operated stores E-business Number of stores Revenues ( mm) CAGR: 73.2% CAGR: 81.0% 16.6 FY 2007 FY 2009 Fast store roll-out programme in domestic market Systematic expansion in lucrative international markets Rapid development of recently launched distribution channel Significant Capex-light roll-out opportunities internationally Wholesale / B2B Franchise stores Shop-inshops Multi-label Number of stores PoS 159 CAGR: 12.4% CAGR: 21.0% 1, Number of customer accounts 5,625 CAGR: (10.4)% 4, Systematic roll-out of mono-label franchise partner stores Significant demand from international franchise partners promising material growth opportunities Fast-growing area expansion across domestic and international department stores Significant demand from international wholesale partners promising material growth opportunities Historically established dense distribution network Diminishing in relative importance due to systematic expansion of controlled distribution and conversion of multi-label into SIS Note: PoS, number of stores and customer accounts as of year-end (31 Dec) 15

16 2 Attractive growth potential Established international footprint as strong base for continuous growth Established international presence Steady internationalisation in core markets Breakdown by region 2009 International 31.0% Core international ( mm) Other international ( mm) Austria 30.1% Other 37.0% Germany 69.0% Total revenues 2009: 300.2mm % % France 3.3% Switzerland 11.3% Benelux 18.4% Today present in 35 countries International brand reach through >360 controlled points-of-sale Controlled expansion in lucrative growth regions Congruency between market potential and TOM TAILOR brand Attractive size and growth of middle-income consumer segment Increase in purchasing power Balanced and diversified international brand reach Core markets Austria, Benelux, Switzerland and France accounting for 63.0% of international sales Strategic decision to reduce expansion in Eastern Europe due to difficult economic environment in FY

17 3 Strong profitability upside Economies of scale: Cost dilution and positive scale effects driven by revenue growth Sales organisation wholesale Optimised sales force capacity utilisation Full benefit of economies of scale as a result of in-sourcing of sales force Retail distribution Significant scale effects resulting from fast-growing store-roll out and e-business Leverage on established retail infrastructure Increased maturity profile of retail operations Purchasing Continuous improvements in purchasing terms as a result of higher order quantities and increased buying power Significant further upside potential from optimised supplier base and higher volumes per supplier Product development Significant cost dilution driven by economies of scale in product development Head office Significant economies of scale across major group functions, including IT/Services Administration 17

18 3 Strong profitability upside Structural margin upside potential through systematic retail expansion Increasing Retail contribution Retail/B2C 10.3% Retail/B2C 25.5% Average Retail store EBITDA margin¹ Stores opened before 1 Jan 07 Stores opened in 2007 Stores opened in % 12.8% 16.3% 12.9% Wholesale/B2B 89.7% 2007 Wholesale/B2B 74.5% % 8.3% Retail Recurring EBITDA margin Retail Like-for-like sales growth 6.3% 12.0% 12.6% Excluding e-business 14.0% Including e-business 16.5% 1.8% 2.8% 4.6% ¹ Pre retail overhead expenses 18

19 4 Experienced management team Business revitalisation since entry of new management as base for systematic and profitable growth Modification of product mix Expansion of controlled space Improvement of organisational structure Improvement of operational processes Key management initiatives Launch of new product lines Denim Male and Denim Female Repositioning of product line WOMEN Casual Launch and development of e-business platform Optimisation of store/shop concept Expansion and optimisation of retail business Systematic expansion of controlled premium floor space through franchise operations and shop-in-shops Implementation of EDI/Navision Introduction of divisional structure Insourcing of sales organisation Upgrading of logistics platform Reduction of lead-times in standard processes Streamlining of supplier network Strategic focus on PoS marketing Status Dec Continuously Continuously 2008 End of In implementation In implementation

20 Strong financial momentum Key historical financials Historical performance Growth potential Revenues ( mm) % % Resilience to difficult sector trading environment Superior growth momentum, outgrowing the European apparel market Temporary reduction of Eastern European business Systematic retail store roll-out (Casual and Denim) Controlled wholesale growth via franchise and SIS network Strong wholesale order book 2010 Fast-growing e-business International expansion in lucrative markets Gross profit ( mm) Margin % 42.6% 41.4% Recent improvement in gross margins due to successful implementation of operational initiatives and economies of scale Fast retail store roll-out Procurement chain efficiencies and better buying terms Recurring EBITDA ( mm) Margin % 12.6% 7.8% Extraordinary circumstances in 2008 as a result of sales force integration Recovery of EBITDA margin 2009 driven by revenue growth and realised efficiency gains Continued materialisation of operational improvements Scalability of business model and rapid growth allowing degression of overhead costs 20

21 Financial snapshot Wholesale Wholesale Revenues ( mm) Shop-in-shop format Wholesale Recurring EBITDA Franchise format 34.6 ( mm) Margin % % 12.9%

22 Financial snapshot Retail Retail Revenues and PoS Casual stores Revenues ( mm) Number of PoS CAGR 07-09: 68.8% Retail Recurring EBITDA Denim stores ( mm) Margin % % % Note: PoS exclude e-business 22

23 Use of IPO proceeds: Expansion Retail store roll-out Funding of Shop-In-Shop expansion TOM TAILOR CASUAL concept sqm net selling area Capex approx. 1,000 /sqm Inventory level 40-60k EUR sqm net selling area up to 350 /sqm contribution TOM TAILOR DENIM concept sqm net selling area Capex 1,000 /sqm Inventory level 40-60k EUR 250 SIS p.a. all divisions stores p.a. 23

24 Strengthening of balance sheet: PRE and POST IPO capital structure PRE IPO capital structure (as of Dec. 31, 2009) in mm in mm POST IPO capital structure (as of March 31, 2010) in mm Financial liabilities Cash Net debt Post-IPO dividend policy Committed to progressive dividend policy with dividends increasing broadly in line with EPS growth Focus on reinvestment of operating cash flows in expansion of controlled distribution channels 24

25 Financial highlights QI/ Increase of consolidated net revenues + 6.7% QI/2010: 76.4 mm QI/2009: 71.6 mm QI/2009: 19.3 % 2. Increasing retail contribution: QI/2010: 26.5 % 3. Like-for-like growth own operated retail stores + 5.8% (including e-shop %) 4. Increase of gross margin + 2.5%-points QI/2010: 47.0% QI/2009: 44.5% 5. Increase of recurring EBITDA of % QI/2010: 9.9 mm QI/2009: 8.3 mm 25

26 Investment highlights A proven business concept with a strategy for systematic and profitable growth 1 Vertical system-supplier of lifestyle fashion Lean and vertical business model with full information control over entire value chain Fashion follower approach with 12 collections per year minimising fashion risk 2 Attractive growth potential Strong growth potential across product divisions Multi-channel distribution focused on controlled space driving growth and fostering brand reach 3 Strong profitability upside Strong economies of scale effects Structural margin upside potential through systematic retail expansion 4 Experienced management team Business revitalisation since entry of new management as base for systematic and profitable growth Long-standing industry experience and track record at leading apparel players 26

27 Annual balance sheet Assets ( mm, Dec Y/E) Intangible assets Tangible assets Inventories Trade receivables Cash and short-term deposits Other assets Equity and liabilities ( mm, Dec Y/E) Total equity (52.0) (62.5) (68.2) Financial liabilities Pensions Deferred tax liabilities Provisions Deferred income Trade payables Current income tax liabilities Other liabilities Total liabilities Total assets Total equity and liabilities Recapitalisation 2006 Negative balance of total equity due to the recapitalisation of TOM TAILOR in December 2006 Recapitalisation classified as business combination under common control according to IFRS 3. Consequently, a step-up of hidden reserves was not realised under IFRS and the amounts distributed to shareholders decreased the group equity (positive equity under German HGB resulting from the additional step-up in the course of the recapitalisation) As a result, net loss in FY2006 amounted to 107.2mm 27

28 Annual income statement Summary income statement ( mm, Dec Y/E) Revenues % growth 8.5% 5.9% Material expenses (150.0) (166.2) (162.5) Gross profit % margin 42.6% 41.4% 45.9% Other operating income Personnel expenses (31.0) (39.6) (41.3) Other operating expenses (61.8) (77.0) (72.3) Reported EBITDA % margin 10.3% 3.9% 12.3% Depreciation and amortisation (13.7) (18.2) (21.1) Reported EBIT 13.2 (7.3) 15.9 Financial result (14.9) (21.7) (17.7) EBT (1.7) (29.0) (1.8) Income taxes (3.8) Net result 12.8 (25.3) (5.6) 28

29 Annual cash flow statement ( mm, Dec Y/E) Net result 12.8 (25.3) (5.6) Depreciation and amortisation Change of long-term provisions (1.1) (0.1) (0.1) Cash flow 25.4 (7.3) 15.3 Interest on shareholder's loan PIK interest on Mezzanine financing Change of deferred taxes (16.8) 0.5 (1.9) Change of short-term provisions 6.3 (0.7) (0.9) Gain/loss on the disposal of fixed assets 0.0 (0.2) (0.2) Change of inventories (9.9) 0.0 (0.6) Change of receivables and other assets (15.0) (6.3) (1.4) Change of payables and other liabilities Other non-cash items 0.0 (0.1) 0.2 Operating cash flow Purchases of fixed assets (7.9) (23.7) (11.5) Proceeds from the sale or disposal of fixed assets Investing cash flow (7.8) (23.5) (11.3) Change in equity due to payments to and from shareholders Change in debt due to payments to and from shareholders Change of financial liabilities (6.4) 9.3 (19.7) Financing cash flow (6.4) 24.3 (10.7) Currency effects (0.0) Net change in cash (4.9)

30 Q1 balance sheet Assets ( mm) Dec. 31, 2009 March 31, 2010 Intangible assets Tangible assets Deferred income tax Inventories Trade receivables Income tax receivable Other assets Cash and short-term deposits Prepaid assets Equity and liabilities ( mm) Dec. 31, 2009 March 31, 2010 Total equity (68.2) 84.8 Financial liabilities Pensions Deferred tax liabilities Provisions Deferred income Trade payables Current income tax liabilities Other liabilities Total liabilities Total assets Total equity and liabilities

31 Q 1 income statement Summary income statement ( mm) Q1/ 2009 Q1/2010 Revenues % growth 6.7% Material expenses (39.8) (40.5) Gross profit % margin 44.4% 47.0% Other operating income Personnel expenses (10.0) (11.4) Other operating expenses (16.7) (18.7) Recurring EBITDA* % margin 11.6% 12.9% Depreciation and amortisation (5.0) (5.2) Reurring EBIT* Financial result** (6.2) (4.0) Recurring EBT* (2.9) (0.7) Income taxes (1.6) (0.8) Recurring net result*** (4.5) (0.1) *7.0m one time effects for IPO **3.4m one time effects for restructuring of financial liabilites ***10.4m total non-recurring one time effects 31

32 Reconciliation to recurring net income Reconciliation Notes ( mm) Reported net income Adjustments IPO costs 7.0 Release of former transaction cost 3.4 PPA amortisation % tax shield on adjustments -3.7 Deferred taxes on IPO costs 1.8 Impact on EBITDA included in financial result included in depreciation & amortisation accrual due to IPO Adjustments total 10.5 Adjusted Net Income -0.1 Not adjusted for higher interest (net of tax) 1.7 elimination of January to March LBO structure Total

33 Q1 cash flow statement ( mm) Q Q Net result (3.4) (10.6) Depreciation and amortisation Change of long-term provisions Cash flow 1.6 (5.4) Interest on shareholder s loan PIK interest on Mezzanine financing Change of deferred taxes Change of short-term provisions (4.8) 2.5 Gain/loss on the disposal of fixed assets (0.2) 0.0 Change of inventories 3.4 (0.8) Change of receivables and other assets (6.1) (6.9) Change of payables and other liabilities 0.5 (7.0) Other non-cash items Operating cash flow 0.1 (14.2) Purchases of fixed assets (7.1) (5.7) Proceeds from the sale or disposal of fixed assets Investing cash flow (6.9) (5.7) IPO proceeds Transaction costs due to IPO 0.0 (6.2) Change in debt due to payments to and from shareholders 0.0 (32.6) Change of financial liabilities 7.8 (70.9) Financing cash flow Currency effects TOM Net change TAILOR in COMPANY cash PRESENTATION

34 International wholesale footprint Wholesale operations Germany Format PoS Franchise: 39 SIS: 995 Showrooms: 7 Other Format PoS Franchise: 42 SIS: 32 Showrooms: 9 Russia Format PoS Franchise: 21 SIS: 4 Showrooms: 1 Benelux Format PoS Franchise: 10 SIS: 26 Showrooms: 2 Bulgaria Format PoS Franchise: 13 France Format PoS Franchise: 6 SIS: 22 Showrooms: 1 Slovenia Format PoS Franchise: 10 SIS: 3 Showrooms: 1 Switzerland Format PoS Franchise: 9 SIS: 93 Showrooms: 1 Broad international distribution network Austria Format PoS Franchise: 44 SIS: 31 Showrooms: 2 Croatia Format PoS Franchise: 8 Showrooms: 1 TOM TAILOR core markets TOM TAILOR regional wholesale operations Stable and highly visible performance as a result of established pre-order system PoS and showrooms as of March 31, 2010 SIS = Shop-in-shop 34

35 International retail footprint Retail operations Netherlands PoS Full price 2 Outlet 2 e-shop 1 Market entry 2008 Belgium PoS Full price 1 Outlet 1 Market entry 2009 Germany PoS Full price 44 Outlet 16 e-shop 1 e-coop 2 Market entry 2002 Northern Ireland¹ PoS Outlet 1 Market entry 2008 Ireland¹ Czech Republic PoS Outlet 3 Italy PoS Full price 2 Market entry 2009 Market entry 2009 PoS Outlet 2 France PoS Outlet 1 Market entry 2009 Note: PoS as of March 31, 2010 ¹ Joint venture Austria PoS Full price 15 Outlet 2 e-shop 1 Market entry 2004 Switzerland PoS Full price 3 Outlet 1 Market entry 2003 Market entry 2009 TOM TAILOR core markets TOM TAILOR regional wholesale operations 35

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