flf investor presentation
TRANSCRIPT
Investor Presentation 2016
Disclaimer
2
This report contains forward-looking statements, which may be identified by their use of words like ‘plans’, ‘expects’, ‘will’,‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’, or other words of similar meaning. All statements that address expectationsor projections about the future, including but not limited to statements about the Company’s strategy for growth, productdevelopment, market position, expenditures, and financial results are forward-looking statements. Forward-looking statements arebased on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions andexpectations are accurate or will be realized. The Company’s actual results, performance or achievements could thus differmaterially from those projected in any such forward looking statements. The Company assumes no responsibility to publiclyamend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.
Future Group overview
Investment proposition
Company overview
Future Lifestyle Fashion Brands
Future Lifestyle Fashion Retail
Investee Brands
Financials
Outlook
Technological architecture
Appendix
Index
4
7
11
19
28
35
41
47
49
50
Future Group in Numbers
Key facts & figures
4Investor Presentation 2016
The Foremost Player Catering to the “Consumption Sector” in India
Total Revenue
`20,000 cr+
Market Cap Increase
294%Retail Footprint
1,100+ Stores
Total Area
18 mn sq ftCustomer Footfalls
340 mn+Cities Present
250+
(31 Mar 14 to 19 Sep 16)
*:Market Cap for 19 Sep 16 includes FRL , FLF, FCEL and FEL while for 31 Mar 14 includes erstwhile FRL, FLF and FCEL
Future Group overview
5Investor Presentation 2016
Well capitalized businesses with leaner balance sheets and improving operating performance every quarter
Focussing on Food, Fashion & Home
Power Brands
Small store
network
Building Strong Brand
Portfolio
Multi channel
approach
Faster Stock to Cash
Conversion
The above businesses are driven through the following 5 Pillars
Offers end to end logistics and supply chain solutions to the Group
Caters to in store retail infrastructure including furniture, fixtures, IT etc
Operates acrosshypermarkets, conveniencestores and home segment
Pure play integrated Food &FMCG company with a portfolio
of brands across categories
Business Backed by strong retail infrastructure & supply chain operations
Key Investors
Focuses on branded fashion from design to distribution; with a portfolio of brands in
fashion space
Mission & Vision
6Investor Presentation 2016
To be the leading lifestylefashion company in Indiaby creating exceptionalbrands and shoppingexperiences that willbring alive the Indianidiom of fashion.
Vision
Group Core Values
Indianness
Leadership
Respect & Humility
Introspection
Openness & Adaptability
Valuing & NurturingRelationships
Simplicity &Positivity
Flow
Company overview
Mission
Be the most preferred fashiondestination of India
Create the most preferredportfolio of fashion brands
Be as the most innovative,efficient, and profitable retailer
Be the preferred employer in thefashion space
Be the trendsetter in Indianfashion through superiorunderstanding of the culture,style code, passion andaspirations of Indian consumers
Create happiness for customers,colleagues, business partnersand every stakeholder
Investment proposition
7Investor Presentation 2016
Indian Fashion Industry Rapidly Shifting towards Branded ApparelCoupled with Stronger Macroeconomics
# Source: UNESCO, CLSA Report
75% 71% 66%
25% 29% 34%
2011 2015 2021e
Unbranded Branded
40 52 88
Branded Apparel Market GrowingFaster Than Overall Market #
(US$ bn)
41
34
1410
2020
47
33
137
2015Sports/ Others Kids Women's Men's
(US$ bn)
15
29 CAGR (%)
Indian fashion market is a very large opportunityIndia’s fashion industry was worth ~US$100bn in 2015. FLF’s offerings are
present across majority of the segments
Clear and rapid shift towards branded products
Branded fashion grew at 24% CAGR over 2011-15
Branded apparel growing faster than overall market (14% vs. 9.2% CAGR)
Modern retail has high (~43%) penetration of branded apparel
Branded apparel market split by segment
Men’s and women’s wear to comprise ~76% of market by 2020
Athletics/sports wear / others category to grow at 2x of men’s wear
FLF is well positioned to capture growth across all segments – particularly
Women’s wear and athletics/leisure market through combination of own
brands (e.g. Cover Story, aLL, Lee Cooper) and non-FLF brands
14 %
19 %
21 %
15 %
10 %
8Investor Presentation 2016 # Source: UNESCO, CLSA Report
Investment Proposition
Fashion Industry is at an Inflection Point
Fashion market expected to witness disproportionate growth as per Capita GDP nears US$ 2,000 mark
Reached GDP per capita of
$2000 in (Year)
Trajectory of Retail sales after it reached $2000 per capita GDP
China Russia Brazil South Korea Singapore
Revenues grew 3x
from 2002-2012, with
highergrowth
kicking in once per
capita GDP crossed$2000 in
2006
Revenues doubled over
the nextdecade
Revenues doubled over
the nextdecade
Revenues grew 4x in
the next decade
Revenues grew 3x in
the next decade
2006 2001 1986 1984 1982
Country
At present Per Capita GDP of India is ~US$ 1,700
9Investor Presentation 2016
Investment Proposition
Trends in apparel industry
Buoyancy in branded fashion is expected to continue at anaccelerated phase.
Indian fashion and lifestyle segment is witnessing a paradigm shiftwith women’s apparel expected to match men’s apparel – 37 percent market share each – in 2016.
Fast fashion
A phrase used for designs that move quickly from thecatwalk to showrooms, is growing at yearly pace of 25-30%,twice the rate of overall market.
Fast fashion brands bucked the economic downturn byoffering stylish designs at prices that were reasonable toIndian consumers
International fast fashion brands such as Zara, H&M anddomestic players like W, FabAlley are key players in India.
Fast Fashion requires more nimble and efficient supplychain.
Women’s wear seeing scale up of branded ethnic wear brands likeBIBA, SOCH, Nalli and FAB India.
Sports and At-Leisure category growing at faster phase.
This is also evidenced by lot of national brands working onbrand extension in this category.
Marquee national brands which started out selling formalclothes, have launched semi-formal brand extensions.
Brand Retail
Brand Retail
10Investor Presentation 2016
Investment Proposition
Integrated Fashion Play is the Way to Go
Developed markets saw theemergence of distinctbusiness models in fashionindustry (i) Multi BrandPortfolios (ii) SpecialtyRetail
In emerging markets, thisindividualistic approach offocusing on either brandsor retail has not worked
Pure-play retailers in Indiaare facing price pressurefrom Ecommercecompanies, leading tomuted SSG growth for thelast several quarters
Retailers in India haveconsolidated now to bigplayers (FLF, SS, Lifestyle)
Pure-play brandedplayers without theirown retail channel endup paying 35%-40%channel margins to largeformat retailers
Further, own storeexpansion for brandedplayers is capitalexpensive and wouldlead to drag on ROCEs
Investment in fashion entities accelerate growth momentum
vs
FLF best positioned to win since it is oneof the few apparel players with strongown brands and a large retail channel
&
Own brandssales comprise~40% of totalFLF revenues
Own-channelcomprises~70% of ownbrand sales
Company structure
Carved out in the year 2013
Company overview
Food Edutainment Fashion(Brands)
Lifestyle Fashion(Central &
Brand Factory)
Hyper Market
FCLerstwhile FVIL
12Investor Presentation 2016
Company overview
Company overview
Milestones
13Investor Presentation 2016
2004 2005 2006 2012 2014 2015 2016
Focus on
Power Brands
2013
14Investor Presentation 2016
Board of Directors
Shailesh HaribhaktiChairman
During a career span of four decades,successfully established and led manyinnovative services. A Chartered andCost Accountant, and a Certified InternalAuditor, Financial Planner & FraudExaminer
Kishore BiyaniCEO Future Group
Founder and Group CEO of FutureGroup. Has over 25 years experienceand is known as the pioneer of modernretail industry in India
Rakesh BiyaniNon-Executive Director
Associated with Future Group for over20 years. Led the management andexpansion of the Group’s flagshipformats like ‘Pantaloons’, ‘Central’ ‘BigBazaar’ and ‘Food Bazaar’
Avni BiyaniNon-Executive Director
Closely involved with the launch ofIndia’s first fast fashion brand – CoverStory. Concept Head of Foodhall, thespecialty food superstore of FutureGroup
C.P ToshniwalNon-Executive Director
Associated with the Group since May1997 with over 25 years of richmanagerial experience. Won the BestCFO Award-2011 in Service Sector byICAI.
Dr. Darlie O KoshyNon-Executive Independent Director
Currently the Director General and CEOof Apparel Training & Design Centre(ATDC),network of 58 Institutes and twopremier campuses of Institute ofApparel Management under the Aegis ofAEPC
Bijou KurienNon-Executive Independent Director
Associated with marquee brands in theFMCG, consumer durables and retailindustry in India for over 34 years.Previously worked with Reliance Retail,Titan Industries & Hindustan Unilever
Sharda AgarwalNon-Executive Independent Director
Over 25 years of experience inmarketing, brand development, brandstrategies, sales & distribution strategiesat Johnson & Johnson, India & US –Consumer Business, Coca-Cola Indiaand Market Gate Consulting
15Investor Presentation 2016
Management Team
Kaleeswaran ArunachalamCFO - FLF
Comes with an experience of over 15years in the Food & Fashion industry.Previously worked with MondelezInternational, Aditya Birla Nuvo & TVSMotors. A qualified CharteredAccountant from ICAI & Masters ofBusiness Administration (Finance),Singapore.
Venkatesh RajaHuman Resources
Heads the People Office for FLF with 23years of varied experience inorganizations like Sterling Holidays,Reliance Petroleum, Reliance Infocom,MTS Group.
Sanjay MuthaCompany Secretary
Corporate experience of over 16 yearsin the Secretarial and Legal functionsand handling various corporate actions.Qualified Company Secretary from theInstitute of Company Secretaries ofIndia.
Rachna AgarwalHead – Brands
Over 22 years of experience in brandmanagement, information systemmanagement & supply chainmanagement. Serving as the Head ofFLF Brands since 2008 engaged inlifestyle brand marketing
Hetal KotakHead – Lee Cooper & aLL
Over 17 years of experience acrossbranded apparel and retail. Pastexperience includes Brand Director andChief Operating Officer, Color Plus andPark Avenue at Raymond Limited.
Manjula TiwariHead – Cover Story
Over 22 years experience in the fashion& lifestyle industry. Launched anddeveloped a range of high street brandslike Esprit, Benetton bringing significantknowledge of Indian customers. HeadsFuture Style Lab looking after CoverStory
Suresh SadhwaniHead – Brand Factory
20 years of rich retail experience.Heading Brand Factory since 2014 sincethen the format has doubled itsturnover and added more than 20 newstores across India.
Vishnu PrasadHead – Central
Over 30 years of sales and retailexperience. Joined Future Group in 2001to set up the Big Bazaar stores in thesouth before moving on to head theCentral business.
Business Overview
16
Company overview
FLF Brands(FY16 Revenue: `1,302 cr)
Portfolio includes ~30 brands, catering to men, women and kids
Third party brands are distributedto a wide distribution network ofCentral, and Brand Factory andPlanet Sports stores
Operates an overall distributionnetwork of over 367 stores in 85odd cities, spread over 5.28million square feet
FY16 Revenue`3,300 cr
Strategic Investments (FY16 Revenues `610 cr)1
• EBOs & Others• Online
Third Party Brands(FY16 Revenue: `1,998 cr)
1: As per latest filings, revenue figures are on unaudited basis & Strategic Investment revenues are not consolidated with Retail & Brand business
An integrated fashion company derivingits strength from – fashion brands,fashion distribution and investment infast growing fashion companies
Note: Store network as of 30th Sep 2016
17Investor Presentation 2016
# Source: UNESCO, CLSA Report
Investment Proposition
Snapshot – FY16
Total Income (Operations)
`3,300 crEBITDA Margin
~10%Total Debt Reduction
`104 crFree Cash Flow
`85 cr
Higher Share of Own Brand Penetration Leading to Margin Improvement
Power Brands Constitute 60% of FLF Brands Sales
FLF Brands
36%Third Party
Brands
64%
FY14
Net Sales: `2,744 cr
FLF Brands
40%Third Party
Brands
60%
FY16
Net Sales: `3,300 cr
22%
10%
8%
7%7%
6%
40%
Based on FY 16 Sales
FLF Brands Retail SSGs
Contributed ~40% to Total Income from Operations in FY16
Leading brand Lee Cooper registered a robust year on year growthof 19% in Revenue.
John Miller, BARE and Indigo Nation reported double digit growth
Distributed across 367 Stores in 85odd cities spread over 5.28 millionSqft
~80% of the total revenuecontributed from Central & BrandFactory
Delivered consistent samestore growth across allFormats.
Central clocks 10% growth
Others
Note: Store network as of 30th Sep 2016
Company store network
18Investor Presentation 2016
Brand FactoryAhmedabad | Asansol | Bengaluru | BhubaneshwarCoimbatore | Guwahati | Hubli | HyderabadKanpur | Kolkata | Mangalore | Mumbai | MysorePune | Raipur | SecunderabadThiruvananthapuram | Ujjain | Vijayawada
CentralAhmedabad | Bengaluru | Gurgaon | BhubaneswarHyderabad | Indore | Jaipur | Kochi | MumbaiNagpur | Nashik | Mumbai | Delhi | PatnaPune | Raipur | Surat | Mohali | Mangalore Vishakhapatnam | Vadodara | Lucknow | Noida
Company overview
EBO’sAhmedabad | Aurangabad | Bengaluru | AgartalaBhimavaram | Bhopal | Bhubaneshwar | Amaravati | CalicutChandigarh | Changanacherry | Chennai | Chiplun | ChittoorHanumangarh | Coimbatore | Hoskote | Delhi | Erode | Ganga NagarGuntur | Gurgaon | Guwahati | Hubli | Hyderabad | IndoreJaipur | Idukki | Kakinada | Kanchipuram | Kannur | KanpurImphal | Khammam | ITA Nagar | Kolkata | Koppal | KottayamLucknow | Jalandhar | Jodhpur | Mallapuram | MangaloreManipal | Kalarakkal | Mumbai | Mysore | NagpurNanded | Karimnagar | Navi Mumbai | NelloreNoida | Ongole | Palakkad | Kota | Patna | PuneRaipur | Rajahmundry | Ranchi | Ratlam | KolhapurSambalpur | Sikar | Siliguri | Solapur | SrikakulamSurat | Thalassery | Thane | ThiruvananthapuramThrissur | Mohali | Tirupur | Ujjain | VadodaraNashik | Kochin | Panaji | Vellore | VijayawadaVishakapatnam | Vizianagaram | Warangal
Central 33
Brand Factory 46
EBOs 288
Store count
Note: Store network as of 30th Sep 2016
Branded MarketOpportunity F L F – Key Brands
Indicative Revenues Split
Investee – Key Brands
Men’s wearSize: $ 7bn
Growth: 10% CAGR
~26%
Unisex Brands ~54%
Women’s wearSize: $ 5bn
Growth: 15% CAGR
~9%
Sports / Leisure wear
~6%
Footwear /Others
~5%
TOTAL Brand Sales (FY16) `1,302 cr `610 cr
FLF Brands
FLF Present Across All Key Categories And Well Diversified(Not Overly Dependent on Any Category For Growth)
20Investor Presentation 2016
FLF Brands
Focusing on Power Brands
21Investor Presentation 2016
FY15 FY16 FY20
• Power Brands expected toconstitute 65%-70% to own brandsales by FY20
• Expected to grow at a rate 2xgrowth rate of other brands
53% 60%
Power Brands Share of FLF Brands Revenue
Focus on building Power Brands to deliver next stage of growth
Identified 6 brands which can drive higher growth & profitability
Focused on high growth categories in the fashion space
Dedicated teams focusing to drive these brands
Resources & Capital to be allocated to grow these brands to the next level
FLF Brands
Global Denim Brand
22Investor Presentation 2016
Original British Denim Brand
having 100+ years of rich
history with large
international following.
Licensed from Iconix Brand
Group, Lee Cooper is sold in
over 100 countries
Overview
Category
Denim and Casual wear – one of the fastest growing segment
Lee Cooper Originals : 1,500
Lee Cooper : 2,500
Avg. Price Point (`):
Target Customer
Young Men and Women who are relaxed, easy going yet strong
and level headed
Competitors
Levi’s, Pepe Jeans, Wrangler, Lee, Killer
Distribution
Sold through Central, Brand Factory, EBOs and is also available on
leading ecommerce websites and third party Multi Brand Outlets
Revenue (`cr): ~300
F L
F –
Ke
y Bra
nd
s
Aspires to be a `1,000 cr brand
FLF Brands
Men’s Fashion
23Investor Presentation 2016
John Miller
Avg. Price Point (`)
1,200
Revenue (` cr)
~140
Target Customer
Successful mid level executive who is inspired and who dresses
for success. Playful but aware of decorum, Effortless and
confident, Street Smart.
Competitors
Peter England, Excalibur
Distribution
Sold through Central, Brand Factory, EBOs and is also available on
leading ecommerce websites and third party Multi Brand Outlets Men’s Fashion for the
Workplace. In today’s
corporate parlance, success
is about having an extra
edge that makes one stand
out and stride ahead. John
Miller man believes it all
starts by dressing for
success. Positioned as semi-
casual & affordable brand
Overview
Category
Shirts, trousers, business suits and accessories. Also introduced arange of relaxed office wear - John Miller Hangout in line with themore relaxed work cultureGrowing faster than formal men’s wear
F L
F –
Ke
y Bra
nd
s
FLF Brands
Brand inspired by Harvard Yale
24Investor Presentation 2016
Scullers
Avg. Price Point (`)
1,700
Revenue (` cr)
~100
Target Customer
Crafted for those who believe that life is meant to be lived and
that age doesn’t matter generations do. The elegant set who
display impeccable taste, and a formidable eye for detail.
Competitors
Parx, Color Plus
Distribution
Sold through the Central and Brand Factory network. Also
available at EBOs and MBOs including Pantaloons, Reliance Trends
and online fashion websites Inspired by the Harvard Yale
boat race, known simply as
the race. A race that reflects
a privileged life, As much as
it does kinship; the human
spirit, As much as it does the
beauty of blue Skies and
open spaces.
Overview
Category
An all-inclusive range of casual and sportswear for men, women and
kids. Renowned for its Chinos with more than 14 types
F L
F –
Ke
y Bra
nd
s
FLF Brands
Plus size unisex brand
25Investor Presentation 2016
Target Customer
Population of overweight crowd that feels judged by modern
culture and people who typically find it difficult to find clothes
that are right for their body shapes
Competitors
Only plus size brand of meaningful scale
Distribution
Sold through the Central network. Also distributed through EBOs and
its online store. aLL was also featured at the Lakme Fashion Week
aLL
Avg. Price Point (`)
1,200
Revenue (` cr)
~110
Fashion for The Plus Size. aLL
is the Largest Selling Plus Size
Brand in the Country with
PAN India retail presence.
The plus size clothing
category is pegged at `11,000
cr and is expected to double
by 2020. It makes up 15% of
the Indian apparel market.
Overview
Category
Dedicated plus-size clothing category for men and women including
everything from western to ethnic wear and accessories that make
you look sexy, cool and confident
F L
F –
Ke
y Bra
nd
s
FLF Brands
Brands Appealing to The New Generation
26Investor Presentation 2016
Target Customer
Young urban Indian male aged 21-30 years
Competitors
Wrangler, Parx
Distribution
Sold through the Central and Brand Factory network. Also available
at EBOs and MBOs including Pantaloons, Reliance Trends etc and
ecommerce sites
Indigo Nation
Avg. Price Point (`)
1,500
Revenue (` cr)
~100
Indigo Nation was launched
with the aim of delivering
Fast Fashion to the young
Indian dude who forever
aspires to be IN. Indigo
Nation is Young, Restless,
Wired, Ambitious Wild and is
always Changing.
Overview
Category
Work, Street, Club and Casual wear for young men
F L
F –
Ke
y Bra
nd
s
Women’s Fashion
27Investor Presentation 2016
Jealous 21
Avg. Price Point (`)
1,500
Revenue (` cr)
~90
Target Customer
Chic and vibrant kind of girl in groove when it comes to fashion and
lifestyle, settling for nothing less than what she wants.
Upper to middle income group
Competitors
Forever New, Levi’s, Pepe Jeans
Distribution
Sold through the Central and Brand Factory network. Also distributed
through EBOs, Pantaloons, other MBOs and ecommerce sitesAlways stood for more than
great clothes for women. It
also reflects the hip,
unapologetic young girl of
today – empowering her to
stand up for what she
believes in, arming her with
confidence, style and
independence.
Overview
Category
Casual and denim wear brand for women
F L
F –
Ke
y Bra
nd
s
FLF Brands
Positioning
Women who express herself & shows her attitude
29Investor Presentation 2016
Department store chain
that offers a complete
shopping experience
Outlet model positioned
as a stopover hub for
graduating to lifestyle
retailing
Includes Planet Sports,Converse and other sportsformats and franchisee stores
EBOs facilitate brand buildingin asset light manner
Includes third party stores suchas Shoppers Stop, Lifestyle etc.and online sales
EBOs & OthersOwn Brands – non
FLF Channels
FY16 Revenue
`261 cr (8%)
FY16 Revenue
`740 cr (22%)
FY16 Revenue
`1,911 cr (58%)
FY16 Revenue
`388 cr (12%)
# of Stores
288
# of Stores
46
# of Stores
33
# of Stores
200+
Area (mn. sq. ft)
0.48
Area (mn. sq. ft)
1.38
Area (mn. sq. ft)
3.42
Area (mn. sq. ft)
NA
FLF focused on building own brand business and developing own channelsTotal Net Sales
` 3,300 cr
Retail Formats
Note: Store network as of 30th Sep 2016
Then
Retail Formats
Central
30Investor Presentation 2016
Launched in 2004, a seamless mall and a department store chain offeringa ‘complete shopping experience’
Positioned for the premium lifestyle segment, Central appeals to thefashion shopper with its spread of leading brands
Focused strategy of premiumization of offerings, upgrading ambience &increasing the freshness quotient
Partnership with leading brands to widen premium offerings
Launched 1st TVC currently being shown on 33 channels
Recently launched an iconic Central at Aerocity, New Delhi, truly depictingfashion in HD
Strategy to showcase brands in high definition
Store to be refreshed & repositioned at upper end (eg: Aerocity)
Drive fast fashion
Now
Revenue/ sq.ft.
~`6k
Stores
17
Ticket size
~`1.6k
Overview
Our Reach
About 3.42 mn sq.ft of chargeable area
Pan India Presence in around 22 cities, 33 stores
More than 500 brands
More than 33 mn customers visit every year
Urban aspirational shoppers across all age groups
Central format has an average store size of around 100,000 sq ft
Revenue/ sq.ft.
~`10k
Stores
33
Ticket size
~`3k
Note: Store network as of 30th Sep 2016
Central – Hi Definition Fashion Experience
31Investor Presentation 2016
Ambience and Store facilities
Assisted Shopping
Valet Parking
Golf cart pickup & drop service
Central buddies & Ushers
Product reserved service
Fashion stylists by appointment
Fashion attendants
Whatsapp shopping
Lux Billing
Complimentary wifi
Central
Aroma
Mother’s
room
Central privilege
shoppers
Retail Formats
Retail Formats
Brand Factory – India’s Leading Fashion Discount Chain
33Investor Presentation 2016
Family shopping destination offering muchbetter customer experience than FactoryOutlets
Typically offers 20% -70% discounts on morethan 200 brands for men, women and kids
Perfect answer to e commerce with 365 daysattractive discounts
Strong liquidation channel not just for FLFbrands but for the industry
Efficient supply chain enables freshness ofstock at both Central and Brand Factory
Revenue/ sq.ft.
~`4.5k
Stores
13
Ticket size
~`1.3k
Overview
Our Reach
About 1.38 mn sq.ft ofchargeable area
Pan India Presence inaround 19 cities, 46stores
More than 12 mncustomers visit everyyear
Revenue/ sq.ft.
~`7.6k
Stores
46
Ticket size
~`2k
Key Highlights
Exciting growth prospectus with nooffline competition
Availability of marquee brands forfantastic shopping experience
Brand Factory has an average store sizeof around 30,000 sq ft
Apparel contributed ~95% of total salesin FY16 Aspiration to take this format tonext level tapping the significant marketpotential
Our Customers
Value seekingsuburban families
Fashion followingmini-metro/smartshoppers
Brand consciousexplorative youth
Young qualified,status seekers
Then
Now
Note: Store network as of 30th Sep 2016
36Investor Presentation 2016
Investee Key Brands
A Portfolio of over 12 Brands Generating ~`610cr
Invested in businesses backed by
talented designers / entrepreneurs at
early stage
Typical investment size is smaller,
however, offers a significant value
unlocking potential over the years
Successfully divested stakes in AND and BIBA at 24x and 6x investment value, proceeds largely utilized for debt reduction
Benefits to Future Lifestyle Fashions
Access to multiple categories like footwear, handbags, accessoriesamong others with smaller quantum of investments
Specialized and hard to build skills become easily accessible
Completing the entire spectrum of offerings by investing incomplementary categories
Current portfolio of investments expected to generate significantvalue in the near future
Benefits to the Brand
Opportunity to join hands with a Group with over 2 decades of experience in the fashion industry and significant retail footprint
Investee - Key Brands
Cover Story – A Fast Fashion Brand for Women
37Investor Presentation 2016
Target Customer
23 to 40 years, Independent woman with a rising disposable income,
She thrives on social media. Switches effortlessly between Indian and
western wear
Competitors
H&M, ZARA
Distribution
Central and EBOs
Cover Story
Avg. Price Point (`)
1,800
Stake (%)
90%
Super Trendy and affordable
Indian Fast Fashion brand for
Women. Fills up the gap
between high priced luxury
brands and low priced
unorganized brands between
the price point `1,000 to
`5,000
Overview
Category
Fast Fashion for women, which is one of the fastest growing fashion
segment, recently attracted international players such as Zara
Investee - Key Brands
Clarks – Footwear brand for Men and Women
38Investor Presentation 2016
Target Customer
Men and women in the age group of 25 – 45 yrs, Upwardly mobile
Competitors
Hush Puppies, Aldo, Charles & Keith, Geox & Woodland
Distribution
Sold through the Central network. Also available at EBOs, third party
MBOs and ecommerce sites
Clarks
Avg. Price Point (`)
4,500
Stake (%)
50%
Expert shoemakers with 190
years of experience in
making fashionable shoes
that are a pleasure to wear.
Known as a brand that
resonates with reliability.
Overview
Category
Premium boots, sandals and shoes
Partnership
Launched at a Grand Fashion Show in 2011 as part of a JV between
Future Group and C. & J. Clark International Ltd by CEO of Clarks
Melissa Potter. Offers excellent expertise in the category to FLF
Sales (` cr)
~130
Investee - Key Brands
Turtle – Focused on Men’sWear
39Investor Presentation 2016
Target Customer
Men in the age group 20-40
Competitors
Arrow, Zodiac, Van Heusen
Distribution
Sold through Central, Brand Factory, EBOs and is also available on
leading ecommerce websites and third party Multi Brand Outlets
Turtle
Avg. Price Point (`)
1,800
Stake (%)
26%
Offers formidable value and
international style across a
range of menswear apparel
and accessories. Operates
over 70 exclusive Turtle and
London Bridge stores.
Winner of Brand Trust Award
from Eastern India Retailers
Forum in FY 2015-16
Overview
Category
Shirts, Trousers, T-Shirts, Denims, Suits, Gilets, Jackets, Windcheaters,
Pullovers and Accessories for men
Sales (` cr)
~160
40Investor Presentation 2016
4 Pillars Driving Growth
People Process IT Systems
Led by a professional and experienced management team
Talented team across levels, good workplace practices
Industry veterans represent the Board of Directors
Good corporate governance and process
Dedicated top management focus on periodic MIS reviews and corrective actions
Robust IT Systems in place to support the existing business
Implementing advanced Planning Module covering product lifecycle management and forecasting
Fast Fashion vs Core Merchandise
Focus on power brands
Opportunity to take brands to the next level
Hi-definition retail
Right stores at the
right locations
Extending third
party distribution
Loyalty program
and Data analytics
at core of driving
business
Partnered with
leading firms for
analytics and data
driven retailing
Operating
efficiencies in cost
and reduce net
working capital
Optimum utilization
of resources
Power Brands Distribution Networks Loyalty Programs Supply Chain Transformation
Enablers
42Investor Presentation 2016
Financial Performance at a Glance
Free Cash Flow of `85 cr
Declared dividend of 20% for FY16
Achieved a significant debt reduction of `104 cr in FY16
Strong Gross Margins of 38% in a competitive industry
EBITDA of`325 cr
Increased share of Power Brands to the Brands Business
Reported industry leading SSGs consistently
Revenue of `3,300 cr
43Investor Presentation 2016
Financial Performance vs Peers
5
10
7
17
810
16
4
13
0
17
6 6
2
Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17
SSG (YoY%)
Central Competitor 1
11
0 -2
18
6
1517
11
17
5
19
10 9
-6
Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17
Revenue Growth (YoY%)
FLF Competitor 1
37
40
36
3938
39
35
38
40
3738
37
39
37
Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17
Gross Margin (%)
FLF Competitor 1
9 9 9
1210 10
86
4
78
6
35
Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17
EBITDA Margin (%)
FLF Competitor 1
44Investor Presentation 2016
Typical Fashion Season
Design to Consumer– 12 to 14 months cycle
Design /Merchandising Selection /
Finalization
Ordering/ Sourcing
Receipt ofSupplies
Retail Launch
T T + 1 Months
T + 3 Months
T + 7 Months
T + 8 Months
End of Season
T + 12 to14 Months
Inventory = `1,300 cr
Own Brands
~(45%)
Core
~(14%)
Fashion
~(31%)
Third Party - SoR
~(55%)
Full- year, core and non seasonal offerings
Less than 1/3rd of theoverall inventory isseasonal and non core
Concept to Consumption
Backed by equivalent Payables
Indicative Inventory Overview
45Investor Presentation 2016
Financial Overview
Income Statement (` cr.) Twelve Months ended
Particulars FY15 FY16
Net Sales 3,064 3,229
Other Operating Income 70 71
Total Income from Operations 3,134 3,300
Gross Profit 1,215 1,255
Gross Margin % 38.8% 38.0%
Total Expenditure 885 929
EBITDA 330 325
EBITDA Margin% 10.5% 9.9%
Net Profit 19 29
Balance Sheet (` cr.) As of
Particulars 31-Mar-15 31-Mar-16
Shareholders’ Funds 1,600 1,623
Net Debt 1,185 1,126
Less: Current Investments 344 375
Net Adjusted Capital Employed 2,441 2,374
Net Non-Current Assets 1,642 1,632
Net Current Assets 799 742
Net Assets 2,441 2,374
Cash Flow (` cr.) FY15 FY16
Net Cash from Operating Activities
231 358
Less:-
Net Capex 321 138
Interest paid 158 135
Free Cash Flow -249 85
Investment Grade Credit Rating of CARE A+
Consistent margin delivery and SSG growth
Total Debt Reduction of ~`104 cr in FY16
Free Cash flow of ~`85 cr in FY16 vs a negative Cash Flow
of `249 cr in FY15
46Investor Presentation 2016
Income Statement (` cr.) Six Months ended
Particulars H1FY16 H1FY17
Net Sales 1,538 1,788
Other Operating Income 35 38
Total Income from Operations 1,573 1,826
Gross Profit 589 676
Gross Margin % 37.4% 37.0%
Total Expenditure 451 513
EBITDA 138 163
EBITDA Margin% 8.8% 8.9%
Net Profit 5 11
Balance Sheet (` cr.) As of
Particulars 30-Sep-15 30-Sep-16
Shareholders’ Funds 1,604 1,634
Net Debt 1,121 1,036
Less: Current Investments 370 393
Net Adjusted Capital Employed 2,355 2,278
Net Non-Current Assets 1,634 1,634
Net Current Assets 721 645
Net Assets 2,355 2,278
Cash Flow (` cr.) H1FY16 H1FY17
Net Cash from Operating Activities
197 251
Less:-
Net Capex 42 87
Interest paid 69 59
Free Cash Flow 86 105
Investment Grade Credit Rating is reassured as CARE A+
for Long Term and upgraded to CARE A1+ for Short term.
Consistent margin delivery and SSG growth
Total Debt Reduction of ~`42 cr in H1’17
Free Cash flow of ~`105 cr in H1’17 vs a free Cash Flow of
`86 cr in H1’16
Financial Performance - H1FY17
47Investor Presentation 2016
Focus Going Forward
3,134 3,300
FY15 FY16 FY20
Targeted Revenue Trajectory
10.5% 9.9%
FY15 FY16 FY20
EBITDA Margin Expansion
Potential
7%8%
FY15 FY16 FY20
Resultant ROCE Improvement
40%50%
FY16 FY20
Potential Own Brand Share of
Revenues
Growth of 17%-19% FY20 Potential EBITDA margin expansion
of around 200 bps on the back of,
Premiumization of the Portfolio
Increasing own brand
penetration
Supply chain optimization
Potential for ROCE expansion of 450-
600 bps over next 3 years driven by,
Top line growth
Higher share of own brands
Margin expansion
Top line Growth / Margin Expansion Expected to Drive Returns
48Investor Presentation 2016
Operates an Integrated Fashion Ecosystem
Leveraging the Vertical Integration and Omnipresence in the value chain
Target revenue growth of 17-19% over FY16 to FY20
Power brands to drive the top line growth and profitability
Expanding presence in 3rd party chains
Offer industry leading retail experience and cut across consumer segments
Margin expansion by increasing the share of Own Brands
Strengthening the Loyalty Programs by leveraging data analytics
Value creation from focused investments in IT and leveraging the supply chain expertise of the Group
Focused efforts to achieve ROCE expansion targets of 450- 600bps over next 3 years
Continue to focus on attracting best talent and talent retention to build a dynamic organization
Total Income
`3,300 crNet Profit
`29 crTotal Retail space
5.3 mn sq.ft.Store Count
367Lee Cooper gross sales
`567 crCentral sale growth
~10%
Note: Store network as of 30th Sep 2016
SAP
49Investor Presentation 2016
Technological Architecture
Information Technology
Infra
People Assortment Planning
Loyalty/CFS/CRMWarehouse Management
FinancialsEnterprise Performance Management software
POS System
BI/Analytics
Shoppers
TP Linux
Payback
Manthan
Dunnhumby
SAP
Vistex
Dunnhumby
TXT
Sanchayan
Sampradan
Anushasan Purti
Operations
PRIDE
Book MI training
WMS
Infor-warehouse
51Investor Presentation 2016
Share Information
FLFL Nifty 500 Source : Bloomberg, BSE, NSEBase 100
Share Holding Pattern
Stock Data (as on 21st Oct. 2016)
Market Capitalization `24,087.2 mn
Shares Outstanding 189.8
Free Float (%) 59.2
Symbol (NSE/BSE) FLFL/536507
Average Daily Volume 40564.4
Top Institutional Holders
Institutions OS %
Premji Invest 8.1
L&T Investment Management Ltd. 2.2
Reliance Nippon Life AssetManagement Ltd. 1.7
Morgan Stanley Asia/Singapore 1.3
Mirae Asset Global Investments(India) Pvt Ltd. 0.7
60.1819.89
19.93Promoter
Institutional Holders
Non-Institutional Holders
Stock Chart (YTD) (as on 21st Oct. 2016)
Registered and Corporate Office:
Future Lifestyle Fashions Ltd
Knowledge House, Shyam Nagar, Off Jogeshwari -
Vikhroli Link Road, Jogeshwari (East), Mumbai 400 060
+91 22 30842336
www.futurelifestyle.in
Thank You
Contact Detail:
Kaleeswaran Arunachalam
Chief Financial Officer