INVESTOR PRESENTATION Q1 2007/0814 November 2007
AGENDA
> INTRODUCTION
> Henrik Theilbjørn, CEO
>Q1 2007/08 FINANCIALS
> Chris Bigler, CFO
> INWEAR PRESENTATION
> Thomas Ulstrup, Brand Director
>GENERAL DEVELOPMENT & CONCLUSIONS
> Henrik Theilbjørn, CEO
A BRIEF ABOUT Q1…> REVENUE UP BY 9% TO DKK 1,190 MILLION
> Planned later winter deliveries of DKK 45 million will be realized in Q2
> GROSS MARGIN UP BY 2.6%-POINT TO 60.9%
> Currency impact 2.3%-point
> EBIT UP BY 14%
> EBIT-margin up by 1%-point to 21.0%
> CONTINUING PROGRESS IN ALL CHANNELS OF DISTRIBUTION:
> Same-store growth of 15%
> Franchise growth of 22%
> 4.2%-point improvement in retail profitability
> 0.8%-point improvement in wholesale profitability
WE MAINTAIN OUR GUIDANCE FOR 2007/08…
> REVENUE GROWTH OF 12% - 15% TO DKK 3,750 – 3,850 MILLION
> EBIT GROWTH OF 30% - 40% TO DKK 440 – 480 MILLION (EBIT MARGIN 11.5% -
12.5%)
> TOTAL INVESTMENTS OF DKK 150 – 170 million
> SHARE BUY BACK PROGRAMME OF DKK 200 MILLION
> Will start January 2008
STRONG ORDER INTAKE FOR AUTUMN, WINTER & SPRING 2007/08…
> Expected growth of 10% - 12% in order intake for Summer 2008
Growth
Autumn, Winter & Spring 2007/08
12 months 2006/07
12 months 2005/06
Peak Performance 15% 22% 16%Tiger of Sweden 38% 5% 31%InWear 2% 11% 2%Jackpot -18% -10% 0%Matinique 22% 16% 3%Cottonfield 8% 17% 18%Part Two 9% 14% -1%By Malene Birger 40% 32% 77%Soaked in Luxury 13% 9% 12%Designers Remix Collection 30% 68% 85%Total own brands 13% 12% 11%
AGENDA
> INTRODUCTION
> Henrik Theilbjørn, CEO
>Q1 2007/08 FINANCIALS
> Chris Bigler, CFO
> INWEAR PRESENTATION
> Thomas Ulstrup, Brand Director
>GENERAL DEVELOPMENT & CONCLUSIONS
> Henrik Theilbjørn, CEO
INCOME STATEMENT Q1 2007/08
DKK million 2007/08 2006/07 IndexRevenue 1,190 1,096 109
Gross profit 725 639 113 Gross margin 60.9% 58.3% +2.6PP
OPEX (475) (419) 113 OPEX efficiency 39.9% 38.3% +1.6PP
Operating profit 249 219 114 EBIT margin 21.0% 20.0% +1.0PP
Net financials (5) (3) 176
Profit be fore tax 244 217 113 Income tax (68) (63) 109Net profit 176 154 114
REVENUE BY BRAND Q1 2007/08
DKK million Q1 2007/08 Q1 2006/07 Growth
Peak Performance 301 274 10%Tiger of Sweden 187 144 30%InWear 173 179 -4%Jackpot 134 155 -14%Matinique 88 73 20%Cottonfield 84 77 9%Part Two 63 59 6%By Malene Birger 62 43 45%Saint Tropez 33 38 -14%Soaked in Luxury 30 30 -1%Designers Remix Collection 26 15 70%Total own brands 1,181 1,087 9%
REVENUE BY MARKET Q1 2007/08DKK million Q1 2007/08 Q1 2006/07 Growth
Sweden 268 250 7%Denmark 212 184 15%Norway 115 96 20%Holland 92 99 -7%UK and Ireland 64 64 0%Belgium 63 54 17%Finland 58 54 7%Germany 57 52 10%Switzerland 44 40 10%Canada 36 31 16%Poland 29 23 26%Spain 22 28 -21%Austria 20 19 5%Russia 17 26 -35%France 16 15 7%Other 68 52 31%Total own brands 1,181 1,087 9%
REPORTING OF OUR DISTRIBUTION CHANNELS NOW CORRESPONDS WITH UPDATED GROUP STRATEGY…
> RETAIL IS NOW LONGER ONLY WHOLESALE SUPPORT
> Retail now carries a proportional share of the cost related to product development and
brand building
> THE NEW COST ALLOCATION UNDERLINES THE VAST POTENTIAL IN RETAIL AND
THE ATTRACTIVENESS OF WHOLESALE
> Full Year 2006/07 Retail margin 8.5% (14.9% before change)
> Full Year 2006/07 Wholesale margin 16.6% (14.1% before change)
> INFORMATION AND COMPARABLE QUARTERLY DATA ARE AVAILABLE IN NOTE 6 TO
THE QUARTERLY REPORT
DISTRIBUTION CHANNELS Q1 2007/08
* Unallocated corporate costs comprise IT, finance, HR and general management.
DKK million Q1
2007/08 Q1
2006/07 Q1
2007/08 Q1
2006/07 Q1
2007/08 Q1
2006/07 Q1
2007/08 Q1
2006/07
Revenue 894 854 265 211 31 31 1,190 1,096 Growth 5% 26% 0% 9%
Distribution channel profit/(loss) 253 235 22 9 10 9 285 253 Distribution channel profit margin 28.4% 27.6% 8.3% 4.1% 33.6% 28.7% 24.0% 23.1%
Unallocated corporate costs* (36) (34)
Operating profit 249 219 EBIT margin 21.0% 20.0%
Wholesale Retail Outlet Group
BALANCE SHEET Q1 2007/08
30 September 30 September 30 JuneDKK mill ion 2007 2006 2007
Total non-current assets 826 832 816 Inventories 430 375 466 Receivables and prepayments 824 812 422 Cash and cash equivalents 195 128 145 Total assets 2,274 2,147 1,849
Equity 732 736 567 Non-current liabilities 203 205 202 Short Term Debt 721 594 535 Trade Payables 231 234 297 Other Debts 388 379 249 Total l iabil i ties and equity 2,274 2,147 1,849
Working capital adjusted for non-cash items as a percentage of 12 month trailing revenue 20.5% 19.9% 11.7%
CASH FLOW STATEMENT Q1 2007/08
30 September 30 September
DKK million 2007 2006
Cash flow from operating activities (115) (148)
Cash flow from investing activities (34) (74)
Cash flow from financing activities 11 32
Change in cash and cash equivalents (137) (190)
Net interest-bearing debt (694) (642)
Committed credit lines 1,419 1,216
AGENDA
> INTRODUCTION
> Henrik Theilbjørn, CEO
>Q1 2007/08 FINANCIALS
> Chris Bigler, CFO
> INWEAR PRESENTATION
> Thomas Ulstrup, Brand Director
>GENERAL DEVELOPMENT & CONCLUSIONS
> Henrik Theilbjørn, CEO
InWear PresentationThomas Ulstrup Brand Director InWear
Copenhagen 14 November 2007
Agenda
InWear historyInWear todayInWear future
InWear the beginning – Niels Martinsen
The Myth and the Historical Meeting
Time: 1969Place: Copenhagen, Local Music Club at Vesterbro
Problem:In 1968 there was two kinds of wardrobe – adults & children.
Challenge:To create fashion for modern women attracted to the cosmopolitanlife style.
Two people got together:Niels Martinsen – 20 years old, trainee in a men’s wear shop – and theyoung innovative designer Kirsten Teisner. Together they createdInWear.
1970’ies
Beige, soft and neat
At the same time as demand rose at home, InWear became better at marketing itself internationally. This resulted in increasedproduction, volume and sales. During the 1970s, the small fashion brand quickly expandedand established a professional network of agents throughout Europe.
1980’ies
Shoulder pads and peach-coloured blazers
By the mid-80s, InWear had itsown shop in New York City, fiveshops in California and one on London’sKings Road. At that time, InWear’s models included such names as Helena Christensen.
1990’ies
Yuppie suits, black and white
InWear celebrates major successwith Renée Toft Simonsen as figurehead in the ”Living is…”campaign.Increased competition results in the company becoming more attentive to consumer needs. The 1990s was the era when bothstyle and sales curves becamestreamlined.
The 21st Century
Casual chic and classically stylish
Despite the fact that a great deal has happened and changed sincethe 1960s, the idea is still to create fashion with feminine appeal, quality with an edge and style.
InWear Brand positoning from the beginning
”Dressed”/formal
Young
Casual/relaxed
Mature
1970’ies
1980’ies
1990’iesThe 21st Century
2006 – Status in InWear
• A growth in the turnover with 8 – 15% the past years • Turnover increasing in all channels• Strong Retail KPI’s• Strong merchandise flow in the InWear collection
But
• The product was going in the wrong direction to the Design philosophy• Missing senior people in key positions• Marketing and branding was zig zag the past years
2007/08 Order Intake
• Combined growth of 2% in Autumn, Winter & Spring 2007/08
• Country Specific Issues– Holland– Sweden
• OTB special program
• New design team
Agenda
InWear historyInWear todayInwear future
What have we done the past year
• Product - Full attention – The heart of our business
• Building up a strong management team and team in InWear
• Marketing and communication - Back on track on our brand values
• International people in the HQ team
New Design Manager - Lene Borggaard
• Product is driving the brand• Product = InWear image• International design team
Product / Design – the heart of our business
easy-to-wearcom-po-si-tion
UPDATED classics
the RIGHT CON-STRUC-TION
FABRICS
Back to our core design strenght
Core brand values
Inspirational
Our brand is named In-Wear, because we're in fashion, in style and like to in'spire women to dress more beautifully.
Attractive
Like all women InWear wants to be attractive. Not only in our fashiondegree, our lines of products and our shops, but also in the way we dobusiness, price levels, and last but not least the way we are, the way webehave.
International
The Cosmopolitan influence
InWear is rooted in a cosmopolitan life style. We are inspired by the city'sdesign, architecture, art, books, music, magazines, colours, shopping, highstreets and people, the pulse, the energy and the possibilities of acosmopolitan life.
Change Collection structure – Step by step 2007 - 2010
Profile 20%
Core 55%
Basic 25%
Dressed Casual
Future Today
Profile
Core
Basic
60/40 90/10
The customer
Merchandise Communication
The store
Create the total service andinnovative shopping experience in all our InWear stores and Wholesale partners
Build up the InWearbrand attitude in allour communication and manner of behaving
Generate fashion authorityand clear fashion statements - Through our products
Brand building
Design philosophy
InWear is synonymous withquality and style.
Our design is international andcontemporary.
We craft modern, wearable piecesthat mix and match to makeversatile collections.
Delicate details and fabulous fitscombine to create a seductivefeminine appeal.
Low
Hig
hM
ediu
m
Pric
eProduct positioning
Lifestyle
Advanced Modern Updated Classic Traditional
PradaGucciDolce & GabbanaMiu MiuMarc JacobsChloeMarni
Donna KaranPaul & JoeDries Van NotenHugo Boss SandBy Malene BirgerIsabel Marant
BurberryBarbara BuiArmani CollezioniCacharelStrenesseRalph LaurenSandTommy Hilfiger
Armani CollezioniRalph LaurenMulberryCaractereGant
DonaldsonEscadaLaura AshleyMarellaMarina Rinaldi
Phillip LimVanessa BrunoBaum und PferdgardenPatrizia PepeAcneDieselJ. Lindeberg
Filippa KTiger of SwedenQui Set
Max & CoBruuns BazaarDay et MikkelsenKaren Millen
TurnoverWhistlesMarco PoloNoa NoaPart TwoFrench ConnectionMexxEsprit
RedGreenJackpotSignalCoastBenetton
Betty BarclayBaslerGerry WeberRosnerKrissLuciaBison
Miss SelfridgesBershkaTopshopOnlyZara
OasisMangoRiver IslandStreet OneEDCH&M
S. OliverJane NormanSaint TropezB-YoungVera Moda
GapOld NavySandwich
M & SC & A
30 countries - 1500 selling points and 119 stores/shops
Retail Wholesale/Franchise E commerce
06/07 Real 38 % 62 % 0 %07/08 Est. 42 % 56 % 2 %08/09 Est. 45 % 51 % 4 %
Ecommerce live from the 2nd November 2007 – 2 weeks old
Strategy – distribution
• Add new customers on all our markets
• Higher wholesale penetration in central europe and Capital cities
• Grow with concept / franchise
• Grow with retail/ concessions – Scandinavian focus this year
• Develop main markets with new distribution in acc. and Apparel
InWear collection structure
Collection structure4 main collections yearly
23 deliveries pr year
We offer 23 deliveries a year in drops every 14 days to increase sell through and to ensure good stock turn
To increase sell-through and improve stock turn, InWear offers 4 different open to buy concepts available from stock
each season
In-stock: Basics seasonal and non seasonal colours
Catch – up: Bestsellers and new fashion collection
Repeat: Stock products bulked from estimated bestsellers
Specials: Any needs from specific countries
The OTB concept
Agenda
InWear historyInWear todayInwear future
Selective trading up and sharpening profile by clear focus on target segments. - In product - branding
Basic options for InWear
Todays Positioning Future positioning
Price Level
Segment - Focus
Up scale
Discounting
Wide focus
Narrow Focus
Differentiation
‘Trading up‘
‘Down-market‘
Future
1
2
3
InWearfuture
Segment focus – clear focus
Future market opportunity and objectives for InWear
InWear has identified an enormous market opportunity throughoutThe international market
– Strong growth on existing markets – Build up a strong retail and franchise business in all our main markets– Create a collection structure with a wider price and fashion range to support InWear’s
internationalisation to the next level– Enter and build up Accessories lines
Accessories are an exclusive way to express a strong brand image.It is not a fast moving category, it is a way to align the brandposition in the market and make a clear fashion statement, whichcan live and grow for many years, without changing thecollection and look a lot……………….
The accessories category has doubled the turnover from 05/06 – 06/07
InWear’s growth and internationalization will continue
Supported by :• New shop concept • International fair plan • Retail and franchise openings
• Accessories lines
AGENDA
> INTRODUCTION
> Henrik Theilbjørn, CEO
>Q1 2007/08 FINANCIALS
> Chris Bigler, CFO
> INWEAR PRESENTATION
> Thomas Ulstrup, Brand Director
>GENERAL DEVELOPMENT & CONCLUSIONS
> Henrik Theilbjørn, CEO
JACKPOT – UPDATE>SPRING 2008 ORDER INTAKE DOWN BY 17%
> Jackpot is still losing selling points (net), but in a declining pace
> Spring 2007 → Fall 2007 Down by 130 Selling Points (net)
> Fall 2007 → Spring 2008 Down by 26 Selling Points (net)
> Order intake for Summer 2008 is promising
>AND THE STRONG JACKPOT RETAIL PERFORMANCE CONTINUES
> 8 consecutive months of double digit same-store growth
> Q1 2007/08 same-store growth of 37%
> Jackpot has 6,000 retail square meters
RETAIL ACADEMY – DOES IT WORK?!
>SO FAR 40% OF ALL RETAIL SHOPS TRAINED
>THE TRAINING SESSIONS ARE VERY POSITIVELY RECEIVED ACROSS
BRANDS AND MARKETS
>WE ARE SEEING SIGNIFICANT IMPROVEMENT IN KPI’S
> Especially in hit rate, which is up by 2 - 5%-points
> But, also in items per transaction, average price and basket size
>ALSO FRANCHISE PARTNERS WANT THE TRAINING
MISCELLANEOUS…
>LEADERSHIP ACADEMY PROCEEDING
> The first 20 participants have provided exceptionally positive feedback
>NEW COUNTRY MANAGER IN HOLLAND
>E – COMMERCE LAUNCH
> InWear – 2 November 2007
> Tiger of Sweden – Start December
> And more brands to follow…
15/15 IS OUR GOAL…> OUR MISSION
> WE BUILD SUCCESSFUL INTERNATIONAL FASHION BRANDS
> OUR VISION
> WE WANT TO BE THE BEST OWNER AND BUSINESS SUPPORT FOR
INTERNATIONAL FASHION BRANDS
> OUR GOAL
> NO LATER THAN OVER A PERIOD OF THREE TO FIVE YEARS, THE TARGET OF IC
COMPANYS IS TO CREATE A GROUP THAT ANNUALLY ACHIEVES A MINIMUM OF
15% ORGANIC GROWTH AND AN EBIT MARGIN OF MINIMUM 15%
Q1 WAS A STEP IN THE RIGHT DIRECTION…
Preorder
OTB(In-Season-Sales)
Franchise
Retail
Outlet
FY GuidanceCategory
15 – 30%
10 – 13%
11 – 13%
0 – 5%
11 – 15%
Q1 development
13% growth in order intake for 3 out of 4 Collec-tions. Expected growth of 10% – 12% in last.
OTB Growth of 5%in Q1
Franchise growth of 22% in Q1
Retail growth of 26% in Q1
0% growth in Outlet in Q1
Q & A