investor presentation fy...

INVESTOR PRESENTATION

FY 2010/11AUGUST 2011

22

Contents

Section 1 – INTRODUCTION Niels Mikkelsen. CEO

Section 2 – Q4 2010/11 FINANCIALS Chris Bigler. CFO

Section 3 – NEWS AND DEVELOPMENTS Niels Mikkelsen. CEO

Section 4 – Q&A

33

Financial Achievements FY 2010/11

REVENUEREVENUEREVENUEREVENUE UP BY 12% TO DKK 3,9253,9253,9253,925M AND BEST EVER� Wholesale up by 13% to DKK 2,395m

� Retail up by 11% to DKK 1,531m

GROSS MARGINGROSS MARGINGROSS MARGINGROSS MARGIN DOWN BY 1.7PP TO 59.1%59.1%59.1%59.1%� One-off costs of DKK 12m due to Canadian duty case

� Price pressure in our sourcing and our markets

COSTSCOSTSCOSTSCOSTS UP BY 9% TO DKK 2,0002,0002,0002,000M� One-off costs of DKK 16m due to structural changes

� Adjusted OPEX efficiency improvement of 1.8pp to 50.6%

� Many new store openings

EBIT EBIT EBIT EBIT UP BY 14% TO DKK 321321321321M � Adjusted EBIT margin up by 0.6pp to 8.9%

NET PROFIT NET PROFIT NET PROFIT NET PROFIT UP BY 4% TO DKK 246246246246M AND BEST EVER� Dividend of DKK 4.50 per eligible share

44

Operational Achievements FY 2010/11

CONTROLLED REVENUECONTROLLED REVENUECONTROLLED REVENUECONTROLLED REVENUE HAS BEEN INCREASEDINCREASEDINCREASEDINCREASED� Double-digit growth rates in both retail and franchise

� Same-store revenue up by 3% in own retail stores

� Better countermeasures to handle gross margin pressure

CONTROLLED SPACECONTROLLED SPACECONTROLLED SPACECONTROLLED SPACE HAS BEEN EXPANDED EXPANDED EXPANDED EXPANDED � 60 new stores opened (22 own retail/5 concession/33 franchise)

� 89 stores with negative performance closed (14 own retail/58 concession/17

franchise)

� Net increase in controlled space of 300 m2

COST EFFICIENCYCOST EFFICIENCYCOST EFFICIENCYCOST EFFICIENCY HAS BEEN IMPROVEDIMPROVEDIMPROVEDIMPROVED� Operational leverage

ORDER INTAKEORDER INTAKEORDER INTAKEORDER INTAKE IS UNDER PRESSURE BUT ON A SMALL COLLECTIONSMALL COLLECTIONSMALL COLLECTIONSMALL COLLECTION� Autumn 2011 realised 11% growth

� Winter 2011 is expected to realise 5% decline

� Autumn and winter 2011 combined are expected to realise 7% growth

55

Guidance FY 2011/12

GROWTH GROWTH GROWTH GROWTH IN REVENUE AND PROFITABILITY TO BE MAINTAINED TO BE MAINTAINED TO BE MAINTAINED TO BE MAINTAINED FY

2011/12� Economic indicators have worsened considerably

� Increased uncertainty regarding revenue

REVENUEREVENUEREVENUEREVENUE IN THE RANGE OF DKK 4.1 4.1 4.1 4.1 –––– 4.34.34.34.3B � Previously DKK 4.3 – 4.4b

� Expansion of controlled distribution

− Retail and franchise

− Focus on franchise

� Same-store growth

EBITEBITEBITEBIT IN THE RANGE OF DKK 360 360 360 360 –––– 410410410410M � Previously DKK 400 – 450m

� Still improved transparency, adaptability and resource prioritising from new

structure

INVESTMENTSINVESTMENTSINVESTMENTSINVESTMENTS IN THE RANGE OF DKK 90 90 90 90 –––– 120120120120M

66

Contents




Section 4 – Q&A

77

Quarterly gross profit, Quarterly gross profit, Quarterly gross profit, Quarterly gross profit, DKKmDKKmDKKmDKKm and gross margin, %and gross margin, %and gross margin, %and gross margin, %

336

673

484

580

388

722

545

638

417

59.8%

62.2%

61.7%

58.2%

61.2%

59.4%

61.0%

58.0% 58.1%

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Quarterly revenue, Quarterly revenue, Quarterly revenue, Quarterly revenue, DKKmDKKmDKKmDKKm

562

1,081

784

996

634

1,216

893

1,100

717

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Revenue Increased in Q4 While Gross Margin Decreased due to Price Pressure

� Q4 revenue up by 13% to DKK 717m

� Positive currency effects of DKK 13m

� Net store openings of DKK 18m

� Q4 gross profit up by 7% to DKK 417m

� Q4 gross margin down by 3.1pp to 58.1%

� Substantial discounting

88

Quarterly EBIT, Quarterly EBIT, Quarterly EBIT, Quarterly EBIT, DKKmDKKmDKKmDKKm

(156)

221

42

96

(76)

227

38

101

(44)

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Quarterly OPEX, Quarterly OPEX, Quarterly OPEX, Quarterly OPEX, DKKmDKKmDKKmDKKm and OPEX efficiency, %and OPEX efficiency, %and OPEX efficiency, %and OPEX efficiency, %

Improved Cost Efficiency and Profitability in Spite of Price Pressure

� OPEX down by 1% to DKK 461m in Q4

� OPEX increase of DKK 7m due to currencies

� OPEX efficiency adjusted for one-offs improved by 7.6pp

� EBIT up by DKK 32m to a loss of DKK44m in Q4

� EBIT margin adjusted for one-offs improved by 4.6pp

492452 442

484464

495 507537

461

87.6%

41.8%

56.3%

48.6%

73.2%

40.7%

56.8%

48.8%

64.3%

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

99

TtmTtmTtmTtm EBIT, EBIT, EBIT, EBIT, DKKmDKKmDKKmDKKm and EBIT margin, %and EBIT margin, %and EBIT margin, %and EBIT margin, %

162 153

223203

283 289 285 289321

4.5% 4.4%

6.5%5.9%

8.1% 8.0% 7.6% 7.5%8.2%

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

TtmTtmTtmTtm revenue, revenue, revenue, revenue, DKKmDKKmDKKmDKKm and gross margin, %and gross margin, %and gross margin, %and gross margin, %

3,621

3,435 3,435 3,4233,495

3,6303,738

3,842 3,925

59.6%60.3%

60.9%60.5% 60.8%

59.9% 59.8% 59.7%59.1%

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Strong Revenue Performance While Improved Cost Efficiency Make up for Gross Margin Pressure

� Ttm revenue Q4 up by 12% to DKK

3,925m

� Ttm gross margin Q4 reduced by 1.7pp

to 59.1%

� Ttm EBIT Q4 up by 14% to DKK 321m

� Ttm EBIT margin improved by 0.1pp to

8.2%

� Ttm one-offs Q4 of DKK 28m

1010

Segment profit, Segment profit, Segment profit, Segment profit, ttmttmttmttm

Segment revenue, Segment revenue, Segment revenue, Segment revenue, ttmttmttmttm

Retail

13%

Wholesale

87%

2009/102009/102009/102009/10

Retail

16%

Wholesale

84%

2010/112010/112010/112010/11

Segment Overview: Higher Retail Share of Profit at Unchanged Revenue Share

� Retail share of ttm revenue

unchanged

� Retail revenue growth of 11% and

wholesale growth of 13% in

2010/11

� Retail share of ttm profit up by

3pp

� Retail profit growth of 37% and

wholesale growth of 11% in

2010/11

Retail

39%

Wholesale

61%

2009/102009/102009/102009/10

Retail

39%

Wholesale

61%

2010/112010/112010/112010/11

1111

Quarterly retail profit, Quarterly retail profit, Quarterly retail profit, Quarterly retail profit, DKKmDKKmDKKmDKKm

(23)

18

58

(19)

0

32

49

(12)

9

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Quarterly retail revenue, Quarterly retail revenue, Quarterly retail revenue, Quarterly retail revenue, DKKmDKKmDKKmDKKm

321 323

386

327 337

374

433

352371

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Higher Retail Revenue but Profit Strained by Heavy Discounting and Many New Stores

� Retail growth 7 quarters in a row

� Net store openings of DKK 18m

� Same-store increase of 7% excl. outlets

� Q4 retail profit up by DKK 9m to DKK

9m

� Gross margin flattish despite

discounting while OPEX% improved by

2.1pp despite many new stores

1212

Quarterly wholesale profit, Quarterly wholesale profit, Quarterly wholesale profit, Quarterly wholesale profit, DKKmDKKmDKKmDKKm

(96)

232

26

151

(46)

225

36

155

(12)

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Quarterly wholesale revenue, Quarterly wholesale revenue, Quarterly wholesale revenue, Quarterly wholesale revenue, DKKmDKKmDKKmDKKm

241

758

398

669

297

842

459

748

347

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Wholesale Growth and Profitability up due to Cost Structure Leverage

� Wholesale growth 5 quarters in a row

� Pre-order up by 19%, OTB up by 14%

and franchise up by 14%

� Q4 wholesale profit up by DKK 34m to

a loss of DKK 12m

� Gross margin down by 6.0pp due to

market conditions and OPEX%

improved by 18.1pp

1313

TtmTtmTtmTtm brand revenuebrand revenuebrand revenuebrand revenue

TtmTtmTtmTtm geographic segment revenuegeographic segment revenuegeographic segment revenuegeographic segment revenue205

496

387

288

401

395

974

779

74 91203

264

272

289

320

404426

563

977

Denmark (Residency)

Sweden

Norway

Benelux

Eastern Europe and Russia

Central Europe

Rest of Europe

Rest of the World

Peak Performance

Tiger of Sweden

Jackpot

InWear

Saint Tropez

Matinique

Part Two

By Malene Birger

Cottonfield

Designers Remix

Soaked in Luxury

Growth in All Markets and in 9 out of 11 Brands

� All markets realised growth in Q4

� Denmark, Norway, Eastern Europe and

Russia, Central Europe, Rest of Europe and

Rest of the World realised double-digit growth

rates in Q4

� Scandinavia made up 55% of Group ttm

revenue

� Tiger of Sweden, InWear, Saint Tropez, By

Malene Birger and Designers Remix realised

double-digit growth rates in Q4

� Jackpot, Cottonfield, Matinique and Soaked in

Luxury realised single-digit growth rates in Q4

� Peak Performance, Tiger of Sweden, and

Jackpot made up 51% of own brands ttm

revenue

1414

End of quarter debtor, End of quarter debtor, End of quarter debtor, End of quarter debtor, DKKmDKKmDKKmDKKm and rate of turnoverand rate of turnoverand rate of turnoverand rate of turnover

258

599

321

492

262

696

415

652

358

7.5 7.4

7.78.0

8.4 8.48.2

7.9

7.6

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

End of quarter inventories, End of quarter inventories, End of quarter inventories, End of quarter inventories, DKKmDKKmDKKmDKKm and rate of turnoverand rate of turnoverand rate of turnoverand rate of turnover

440 427 429

358

429

480504

462

557

3.03.0

3.1

3.23.3

3.5 3.53.4

3.3

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Inventories and Debtors Increased due to Growth, New Collection Structure and Worsening Market Conditions

� Inventories increased by 30% to DKK

557m in Q4 due to growth and new

collection structure

� Rate of turnover influenced by harder

market conditions than expected

� Debtors increased by 37% to DKK

358m in Q4 due to growth in the

wholesale channel

� Rate of turnover influenced by changed

delivery structure

1515

End of quarter creditors, End of quarter creditors, End of quarter creditors, End of quarter creditors, DKKmDKKmDKKmDKKm and rate of turnoverand rate of turnoverand rate of turnoverand rate of turnover

292

207

286

201

355

323304

233

349

6.0

5.7 5.6 5.55.4

5.35.1 5.2

5.3

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Creditors Decreased – Working Capital to Revenue Increased

� Creditors decreased by 2% to DKK

349m in Q4

� Rate of turnover slightly improved

compared to last year

� Ttm working capital increase of DKK

236m

� Ttm working capital as a percentage of

revenue up by 5pp to 11%

TtmTtmTtmTtm working capital improvements, working capital improvements, working capital improvements, working capital improvements, DKKmDKKmDKKmDKKm

Adjusted for non-cash items

(128)

(116)

9

Change in inventories

Change in receivables

Change in short-term debt

excl. tax

1616

End of quarter NIBD, End of quarter NIBD, End of quarter NIBD, End of quarter NIBD, DKKmDKKmDKKmDKKm and NIBD/EBITDAand NIBD/EBITDAand NIBD/EBITDAand NIBD/EBITDA

533

660

348

409

243

423

361

494

311

1.7

2.2

1.01.2

0.6

1.00.9

1.2

0.7

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Free cash flow, Free cash flow, Free cash flow, Free cash flow, DKKmDKKmDKKmDKKm

190

(125)

324

(63)

166

(166)

196

(136)

183

Q4 08/09 Q2 09/10 Q4 09/10 Q2 10/11 Q4 10/11

Growth Ties up Cash While Dividend Payments and the Acquisition of By Malene Birger Temporarily Increase Short-term Debt

� Q4 free cash flow up by DKK 17m

� High cash flow in spite of 13% growth

in Q4

� Considerable stock clearing

� NIBD increased by 28% to DKK 311m

in Q4

� Small increase in NIBD/EBITDA

� NIBD expected to reach 0 in 2011/12

1717

Contents




Section 4 – Q&A

1818

New Strategy Creating Big Future Growth by Focussing on 5 Strategic Goals

““““BuildBuildBuildBuild strong fashion brandsstrong fashion brandsstrong fashion brandsstrong fashion brands””””

““““Have aHave aHave aHave a focused market approachfocused market approachfocused market approachfocused market approach””””

““““IncreaseIncreaseIncreaseIncrease control of distributioncontrol of distributioncontrol of distributioncontrol of distribution””””

““““Optimise ourOptimise ourOptimise ourOptimise our processes processes processes processes andandandand value chainvalue chainvalue chainvalue chain””””

““““PractisePractisePractisePractise world class leadershipworld class leadershipworld class leadershipworld class leadership””””

1919

November 2010; Our Corporate Strategy Was Defined Setting a Clear Direction for How We as a Corporation Deliver Value

ICC STRATEGY ICC STRATEGY ICC STRATEGY ICC STRATEGY

DISTRIBUTIONPRODUCT

DEVELOPMENT MARKETING

KNOWLEDGE CENTREKNOWLEDGE CENTREKNOWLEDGE CENTREKNOWLEDGE CENTRE

� Vision and mission, principles and

frame, tools, follow-up

11 BRANDS11 BRANDS11 BRANDS11 BRANDS

� Brand strategy

ITITITIT SOURCINGSOURCINGSOURCINGSOURCING LOGISTICS LOGISTICS LOGISTICS LOGISTICS HR HR HR HR FINANCE FINANCE FINANCE FINANCE

SERVICE PLATFORMS SERVICE PLATFORMS SERVICE PLATFORMS SERVICE PLATFORMS

� Functional strategy, SLA

Aligned across the Group as of 2011Aligned across the Group as of 2011Aligned across the Group as of 2011Aligned across the Group as of 2011

PORTFOLIO STRATEGY ALIGNMENT

PORTFOLIO STRATEGYPORTFOLIO STRATEGYPORTFOLIO STRATEGYPORTFOLIO STRATEGY [IN PROGRESS]

� Rooted in the strategy and based on

our business principles

2020

0

50

100

150

200

250

300

06/07 07/08 08/09 09/10 10/11

Capitalising on the Brand Strength of By Malene Birger

Revenue, Revenue, Revenue, Revenue, ttmttmttmttm

2121

(40%)

(20%)

0%

20%

40%

07/08 08/09 09/10 10/11

The Turnaround of InWear

InWear received ”Guldknappen” for the second timesecond timesecond timesecond time – last time

was 20 years ago

Lene Borggaard has breathed new lifenew lifenew lifenew life into an established brandestablished brandestablished brandestablished brand while at

the same time being fateful to its original coreoriginal coreoriginal coreoriginal core

Revenue growth, Revenue growth, Revenue growth, Revenue growth, QoQQoQQoQQoQ

2222

Increased Focus on Corporate Responsibility – Applying Also for the Handling of Future Chemical Findings

INCREASE NUMBER OF TESTS � Testing our products with a risk

of restricted chemicals

TRANSFER TESTS TO

LOCATION� Early testing on location

� Products on hold while being

tested

� Products with restricted

chemicals never reach end-

consumer

REDUCE NUMBER OF

SUPPLIERS� Fewer and larger suppliers

� New strict requirements on our

suppliers

2323

Market comment

Development in Denmark, YoYRevenue growth, IC Companys

Growth in retail trade, clothing

(15%)

(5%)

5%

15%

25%

35%

Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

(15%)

(5%)

5%

15%

25%

35%


Development in Sweden, YoY

(15%)

(5%)

5%

15%

25%

35%


(15%)

(5%)

5%

15%

25%

35%


Revenue growth, IC Companys


Development in Norway, YoY

(15%)

(5%)

5%

15%

25%

35%


(15%)

(5%)

5%

15%

25%

35%


Revenue growth, IC Companys


GROWTH IN MAIN MARKETSMAIN MARKETSMAIN MARKETSMAIN MARKETS

BEYOND GROWTH IN RETAIL

TRADE� IC Companys is gaining market

share

GROWTH GROWTH GROWTH GROWTH IN REVENUE AND

PROFITABILITY TO BE TO BE TO BE TO BE

MAINTAINED MAINTAINED MAINTAINED MAINTAINED FY 2011/12� Economic indicators have

worsened considerably

� Increased uncertainty regarding

revenue

2424

SPLIT ON REVENUE INCREASE

How to Realize Top-line Growth under Difficult Market Conditions

REVENUEREVENUEREVENUEREVENUE IN THE RANGE OF

DKK 4.1 4.1 4.1 4.1 –––– 4.34.34.34.3B

� Previously DKK 4.3 – 4.4b

� Expansion of controlled

distribution

− Retail and franchise

− Focus on franchise

� Same-store growth

Organic growth 35-45%

Franchise expansion25-30%

Retail expansion

30-35%

Full year effect

New stores

Full yeareffect

New stores

DKK

175-375m

2525

Questions

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