European Tax Free Consumption Fondazione Altagamma - October 17, Milan 10/25/2017
Agenda I. Europe & Top countries performance II. Tax Free key drivers in Europe III. Bain & Company Global Blue Analysis IV. 90 Outlook 2
Part I TFS Europe Country Trends and Weights
CYTD 2017- Top line performance European Sales in Store Europe progression (EUR) (Sales index base 2011) Sales in Store (Euro) 42% 15% 5% 18% -4% 11%* Sales index vs 2011 % Diff in Spend YoY * For 2017, performance is CYTD After a difficult CY 2016, Tax Free spend is growing double digit in the first 9 months of 2017 4
CYTD 2017 Europe Tax Free Spending Performance EUROPE YTD SIS Dev vs PY FRANCE ITALY UK GERMANY SPAIN EUROPE 7% 8% 22% - 4% 18% 11% Europe Tax Free spend is recovering in 2017 after a difficult 2016. Spain and UK are taking benefits of positive macro drivers and strengthen attractiveness for Globe shoppers. In the recent 2 months, due to the comps effect and Euro strengthening, the growth trend soften. Since the beginning of the CY, the economical and political situation of middle east countries impacts negatively performance. In Germany, lower attractiveness for Chinese tourist explain partially the decline. 5
CYTD 2017- Highlights Sales in Store progression No. of Tax Free Forms Av spend per transaction France + 7% + 7% 0% Italy Spain +18% + 8% + 7% +15% + 1% UK +22% +18% + 3% Germany - 4% - 5% + 1% + 3% Europe +11% + 8% + 3% Europe Tax free growth is largely driven by an increase of number of travellers, with greater wealth compared to last year. 6
CYTD 2017- Globe Shopper nationalities performance Sales in Store progression No. of Tax Free Forms Av spend per transaction + 11% + 8% + 3% 28% 11% 9% 6% 3% 3% 39% % difference in SiS (Eur) vs YA % difference in no of transactions vs YA With positive macros in most origin markets (except GCC) and a soft competitive base, Tax Free spend is growing for most nationalities 7
CYTD 2017 - ITALY Italian Market Deep Dive YTD Tax Free Spending in Italy is increasing 8% vs last year ITALY NATIONALITIES % ON TOT DEV VS PY After a difficult CY 2016 and a increased competitive landscape, Italy is growing steadily across the last 9 months. CHINA 29% 10% RUSSIAN FED 14% 27% UNITED STATES 9% 12% Chinese, still representing the first nationality, with almost 1 out of 3 spend by Chinese travellers. Russians which always been a strong customer group for Italy are back to growth after 3 years of decline. In line with new shopper split of shopper profile, Outlet segment continues to be a sizeable segment of the Italian market (21%) growing at the same pace than the rest of the market. KOREA 6% 10% MIDDLE EAST 5% -13% OTHERS 37% 4% ITALY TOTAL 100% 8% Source: Global Blue Data (Jan Sept 17) Middle East: Kuwait, Qatar, Saudi Arabia, UAE 8
CYTD 2017 France, Spain, UK Top 5 Globe Shopper Nationality Comparison FRANCE NATIONALITIES % ON TOT DEV VS PY CHINA 24% 10% UNITED STATES 11% 21% RUSSIAN 7% 8% MIDDLE EAST 7% -7% HONG KONG 5% 5% OTHERS 47% 4% FRANCE TOTAL 100% 7% SPAIN NATIONALITIES % ON TOT DEV VS PY CHINA 36% 29% ARGENTINA 12% 36% RUSSIAN 10% 8% UNITED STATES 7% 32% MOROCCO 3% 12% OTHERS 44% 8% SPAIN TOTAL 100% 18% UK NATIONALITIES % ON TOT DEV VS PY CHINA 28% 43% MIDDLE EAST 25% 5% UNITED STATES 5% 35% HONG KONG 4% 36% THAILAND 3% -5% OTHERS 34% 22% UK TOTAL 100% 22% Source: Global Blue Data (Jan sept 17) Middle East: Kuwait, Qatar, Saudi Arabia, UAE All top 3 nationalities are increasing spend across the key destinations supported by soft comps base and positive macro in the first 6 to 8 months. 9
Part II Key Drivers of Europe Performance
China Globe shopper in Europe Last 12 months Top Categories (% of spend) Chinese Globe shopper segmentation in Europe Fashion 34% W&J 31% Leather Goods and bags 27% Others 8% Elite Shopper +4 1% 15,000+ 22% trips per year of total Globe Shoppers average spent per trip of global SIS Frequent Shopper +3 7% 2,200 16% trips per year of total Globe Shoppers average spent per trip of global SIS Infrequent Shopper <2 92% < 1,500 62% trips per year of total Globe Shoppers average spent per trip of global SIS 11
Russian Tax Free spend dynamic Evolution of Rubble vs Oil price Comparative evolution of Tax Free spend with FX Oil Barrel price Currency exchange rate RUB / USD Oil Barrel price FX RUB /USD (Inverse) The positive development of oil price, will positively influence the ruble and accordingly the spend potential of Russian Globe Shoppers 12
American Tax Free spend dynamic Comparative evolution of Tax Free spend with FX in UK Top 5 European destinations (% of total spend / % diff of Spend YoY) 1 Italy : 29% (+ 12%) 2 France : 26% (+ 21%) Comparative evolution of Tax Free spend with FX in Eurozone 3 UK : 18% (+ 35%) 4 Spain : 6% (+ 32%) 5 Germany : 5% (+ 3%) Progression Tax Free spend vs YA Progression FX USD to Local currency Americans travellers continue to take opportunity of a soft pound to travel and shop in UK 13
Part III Bain & Company Global Blue Analysis
FOCUS - Bain Analysis on Segments based on Global Blue figures 54% 12% 44% 52% 51,2% 50,7% 10,2% 10,6% 10,4% 10,5% 42% 42,1% 42,5% 50% 49,3% 10% 9,7% 40,5% 48% 47,5% 46,9% 40% 39,1% 38,7% 46% 2013 2014 2015 2016 2017 8% 2013 2014 2015 2016 2017 38% 2013 2014 2015 2016 2017 Luxury Premium Mass Transactions Trend: +9 % Transactions Trend: +12 % Transactions Trend: +11 % The percentage value in the segment is showing the weight of the segment in terms of transactions for the selected pool of brands 15
90 outlook
Europe transactional Overview % difference of number of issued transactions vs same period Year Ago. Actuals last 90 (Jul - Sep 2017) Outlook next 90 (Oct Dec 2017) The comps effect is making growth to be challenging. Last year after Brexit, a significant growth in air arrivals sustained growth in number of transactions. The recent strengthening of Euro against most of the currencies is having a direct impact on all Euro destinations. GCC context leads to a strong decline across all destinations. Global Blue S.A. 2017 17
90 transaction outlook Italy Italy Last 90 Next 90 (July- Sept 2017) (oct Dec 2017) -1% 3% 20% 20% 15% 18% -5% -29% 6% 7% Last 90 Greater China Next 90 Last 90 Russia Next 90 Last 90 USA Next 90 Last 90 Next 90 Gulf Countries Last 90 Others Tax free dynamic is stable and Italy benefits of a limited dependance to Chinese and GCC travelers. Next 90 18