project starshop 16.01.08 ppt

Investor Presentation January 2008 1

The Global Launch of the first Consumer-centric Home Fashion Licensing Idea

January 2008


Contents

1. Introduction

2. Why Project Starshop?

3. What’s in it for you?

4. Starshop Organization

5. Financial Information

6. Timing and Next Steps

“…feeling and sensuality,mood and emotion are the things that matter most

in our relationship with buildings and interiors…”

ILSE CRAWFORD, author, editor, designer and teacherQuoted in Vogue Living Australia Nov/Dec 2007


Introduction

• We are here to present a business plan: PROJECT STARSHOP• We have outlined our strategies and thoughts regarding the

development and implementation of the PROJECT STARSHOP concept for a global launch of this concept with a particular focus initially in the United States.

• The United States market presents us with a perfect green field as there really is no branded place such as PROJECT STARSHOP in this market today. Because of this, we are very excited and confident that PROJECT STARSHOP will become one of the America’s preeminent home fashion retailers within five years.

3


Starshop’s Business Proposition

Starshop is a home-fashion / lifestyle concept inspired by a European perspective of global styleexpressed emotionally through home furnishings & accessories focused on unique colour, texture and

fabric combinations showcasing a variety of moods.

Initially distributed through primary & secondary US markets and located at upscale lifestyle centres. The concept will be emotionally showcased by

creatively designed retail [and online] environments and supported by a significant e-commerce capability.


Founding partners for Project Starshop

Charles Schlaeppi

Chairman and Chief Executive Officer

Johne Albanese

President and Chief Operating Officer

Reg Anderson

Vice-President, Retail Operations and Store Development

Stephanie Sink

Vice-President, Merchandising and Product Styling


Vision Statement

“We aspire to be the United State’s and ultimately, the world’s most stylish and innovative home fashion destination by providing superior product selection, unique and eclectic styling ideas, and an environment that gives consumers permission to create their own sense of who they are inside their homes. Through such, we will provide superior sales and profit growth for our stakeholders.”


Code is a multi-cultural team of branding professionals with experience in building global lifestyle brands


Code’s commitment to Project Starshop

“Starshop is a rare opportunity: one that promises to re-define a category by infusing the powerful cultural influence and emotional pervasiveness of the world of fashion into home furnishings and accessories.

We at Code see this opportunity in terms of creating a breakthrough brand idea. We believe it’s attractive enough to take an equity stake and engage in partnership to help build this brand. We’re truly excited to be part of the Starshop initiative and are committed to bringing this brand to life.”

Nic Paul & Dominic Mason [Partners] CODE Branding & Design


Contents

1. Introduction

2. Why Project Starshop?A. Market opportunity

B. Project Starshop Concept





“…to be the United State’s and ultimately, the world’s most stylish and innovative

home fashion destination…”

OUR VISION


Source: Furniture Trends for the 21st Century, USA Today March 2000

Americans need a refuge from the pressures and stress of their complicated lives and are spending more time at home because that's where we feel secure and comfortable.

As a result, we are taking extra time to make our homes places where we are happy to live and entertain.”

- Catherine Bailley Dunne Author, Interior Designing for All Five Senses


Sources: Furniture Trends for the 21st Century, USA Today March 2000 www.furniturestyle.com; Trend Watch;

Bob Benson, Trends in Furniture, 2006, Founder, www.kitchen-furniture.info

Key trends: consumers look to home as an expression and extension of who they are and their lives

• People are looking for a personal connection with their home products. They want a product that looks as though human hands have touched it and have “stories” to tell.

• The furnishings in our homes are becoming ‘collections of our lives.'

• Today's trend about furniture is a simple one. The desire of “being yourself” has taken dominance over being purely driven by fickle trends. If you like it, buy it. If you don't, don't buy it.


Emotional connection key to long-term recognition and success

“Human beings are powered by emotion, not by reason. […]The essential difference between emotion and reason is that emotion leads to action while reason leads to conclusions”

Kevin Roberts, CEO Worldwide, Saatchi and Saatchi


Source: Euromonitor Country Sector Briefing, Home Furnishings, USA, 2007 Datamonitor United States Home Furnishings, 2004

Key trends: Fashion and furniture are no longer separate

• Analysts believe that products in fashionable colors and textures are essential to reach women with high spending power as they keep up with fashion trends.

• Fashionable home colors of the new millennium will continue to be those that are in sync with what are being displayed on catwalk runways.


Source: Euromonitor Country Sector Briefing, Home Furnishings, USA, 2007 Datamonitor United States Home Furnishings, 2004

Key trends: Exposure to multiple cultures is part of Gen Y’s lifestyle

• Younger consumers (Gen Y) are gaining importance.

• The most successful companies will be those that offer products and a buying experience that meet the needs of this group that grew up in a multi-cultural America.


Source: Bob Benson, Trends in Furniture, 2006, Founder, www.kitchen-furniture.info

Key trends: Changing definition of luxury and indulgence

• Luxury used to be defined by degree of opulence and decadence. They may be appealing, but they are losing traction.

• Nowadays, consumers are paying not only for craftsmanship and quality, but maybe more importantly, for experiences and a sense of adventure as part of the benefits they expect from brands.


A snapshot of US home furnishings retail landscape


However all in all, an overview of competitor brands reveals generic descriptors, lack of differentiation and emotional connection

Brand Themes Collections Inspiration Sub-Brands

Initiatives Others

Primary Secondary

Robb& Stucky Contemporary Elegance

Affluence & Luxury

Contemporary, Relaxed & Gracious

Luxury & Fashion Interior Design Kitchen Aid centers

Room & Board Contemporary Minimalism

Clean, Classic, Simple

No discount policy

Roche Bobois French Style & Design

Creativity Contemporary, Travel, Provincial

French Mediterranean

Natuzzi Italian Style & Design

Contemporary Minimalist

Italian Mediterranean

Ethan Allen Contemporary Elegance, Classic

Beautiful Living Interior Decoration & Consultation

Linge Roset Creativity & Beauty

Wit Art & Design

Bo Concept Urban Chic Minimalist

Crate & Barrel Contemporary + Simple & Twist

No-frills Trends & world inspired

CB2, Land Of Nod

Thomasville Craftsmanship & Heritage

Classic Elegance Style & film icons Tips on home furnishing

Flamant Casual Elegance, Nostalgia

Discrete Luxury Old-world sophistication

Pottery Barn Warm, Cosy, Well-Appointedth

Timelessness Pottery Bard Kids Ideas for interiors

Kreiss Exclusive Family Ranges named after places

World inspired, Classic Styling

Ask Michael Kreiss

Baker Enduring Style Craftsmanship, Heritage

Ralph Lauren Class, Opulence Elegance St. Germain, Noble Estate, Modern Chairman

Lifestyle [RL] & Fashion


Differences between what consumers want and what furniture brands are offering could be one of the reason for the conservative growth of 4% per annum

Source: Euromonitor Country Sector Briefing, Home Furnishings, USA, 2007

million


Learning from the fashion category that is rich with emotional meaning

The vast majority of the population consumes and shops with their mind and emotions. They look for a rational reason and then take an emotional decision.

Before seeing something in detail, you have a sense of what it is. Before understanding, you feel.

Hence the importance of a ‘story.’ Celebrity endorsements are successful because consumers already have a ‘history’ with the stars, and think of the brand as a personification of the star.

Similarly the importance of designers behind the brands. John Galliano is as much a brand as Christian Dior – the house he designs for.


‘In celebrating fashion, we celebrate our culture; we celebrate our spirit; we celebrate ourselves.’National Geographic Fashion. Cathy Newman


The hospitality category has already learnt this: no longer provides mere accommodation, but now facilitates ‘storytelling’


The accessibility of fashion: Price is irrelevant to style

Sharon Stone wearing a GAP t-shirt with Valentino and Armani at the Oscars heralded the idea that price is irrelevant to style

Designers from Vera Wang to Isaac Mizrahi now introducing low-budget lines to accommodate more clients


‘Fashion has created a vast potpourri of styles from which to select. Refreshingly, this gives a green light to the mixing of all kinds of garments: chain store, couture, secondhand, brand new, occupational and “ethnic.’‘The Fashion of Fashion’ - Valerie Mendez

The accessibility of fashion gives birth to a myriad of individual expressions of style


Consumers are inspired by different cultural identities

John Galliano of Christian Dior often combines cultures, using Arabic and Asian textiles to depict folk art in his clothes.

Eastern-heritage designers like Anna Sui and Vivienne Tam are successful in the West, designing clothes with touches of Asia

Consumers are becoming more well-traveled and their homes reflect their travel experiences


Starshop, inspired by fashion, reaching for differentiation

through emotional connection with consumers


Target market

Target Segments Profile Reference brandsProjected global

perspective

Post baby Boomers

Own home in the suburbs, 2 cars, full-time established professionals, teenage children

Kreiss, Ethan Allen, Banana Republic, Thomasville, Natuzzi, Baker, Robb & Stucky, Brooks Brothers

Aware of global affairs and issues. Probably have not traveled extensively, but take a broad outlook on life.

Generation X

Have an apartment, semi-detached house, young family, stable professionals, possibly working from home

Banana Republic, Anthropologie, Room & Board, Pottery Barn, Z-Gallery, Ethan Allen, Ikea

Informed perspective, possibly from a professional role

Generation Y

Fresh graduates, on the first step of their career, renting apartments, internet-savvy, avid magazine readers

Crate & Barrel, Pottery Barn, Ikea, Gap, Abercrombie & Fitch

Interested in humanity. Most likely to travel.


The emotional profile of our target segments: “Resolver”

• Consciously desires self-growth. Accepts personal skills and competencies and uses them actively… is responsive to communities that provide opportunity for self-growth. (Cote & Levine)

• Actively engage themselves in developing their identity, intellect & emotional maturity in their interests.

• This involves learning about the world and going out in the world to actualize their abilities.

• They yearn to grow, and desire to reach their potential.

Investor Presentation January 2008 52Re-contextualising colours, textures and forms, drawing inspiration, design and styles from the

emotionally-rich area of global fashion.

The world of ‘living big’


Fashion-inspired

Living big means a world-view that is open to change.

Seeking inspiration from the world of fashion, as fashion itself seeks inspiration

from the world.

.


EclecticismLiving big is less about

tradition and conformity, but about discovery and freedom of expression.

Diverse influences co-exist in the same setting

[e.g. elegance and informality].


Innovative ideasLiving big means daring to try

something different.

Borrowing materials from the category of fashion (& beyond) to innovate and

create a sense of adventure.


ImaginationLiving big is about daring to

dream.

The painted plant is an extension of a real-life plant on

display in the retail environment. The same motif is extended as a

pattern on products and accessories


The spirit of “Living Big” is expressed through our “moods” to capture the trade’s business & consumers’ imagination

‘Parisian’‘New Classic’

‘Mediterranean Vineyard’‘Warehouse Loft’

‘Bohemian’‘Spring Mist’‘Simple Chic’


Target : 40% of the market, largely in the mid-high segment, aptly called the “New Luxury” segment.

High / Luxury

Mid – Mid High

Mass-Mid

Starshop


Goal & Objective

Our ultimate goal will be to have approximately 75 to 100 free standing retail stores, primarily under licensing arrangements with existing home furnishings retailers, as well as 125 to 200 in-store galleries by the end of calendar 2012.

This will be accomplished by offering an excellent product (the concept itself), the very best employees on the corporate team, strong marketing efforts, healthy retail partners, and a very loyal consumer following.


A&P Activities – illustrative ideas focus on ‘guerilla marketing’ activity : high potential impact at low cost

Public relations & media

EnvironmentsEvents Rituals

Merchandising Service Delivery

Sponsoring a Cause

Others


Illustrative ideas leverage the visual language of the products and activate the idea of ‘living big’

Creating inspirational displays from merchandise: amalgamating different accessories to form a typical object like a lampshade, for example. Using large-scale textiles as banners within a retail environment and in an outdoor environment like a street or for an event.

Sponsoring a fleet of vehicles to target a retail or residential location, demonstrating high-impact visual assets.

Creating a series of individually-designed pieces by celebrities for a auction at a charity fund raising event

Bringing the brand into the world of high fashion. Limited edition fashion accessories using the textiles and materials from the Starshop range. Holding a fashion-related event like a catwalk show, again leveraging the styles and shapes from the product range


To be inserted by the Starshop team

1. Distribution2. Franchise System and Support3. E-Commerce


Financial

• Financial Objectives• To achieve a Revenue of US$ 88,813 Mio by Year 5• To achieve a NPBT of US$ 8,380 Mio by Year 5• To achieve a return on Sales of 9.4 % by Year 5• To be profitable in Year 2 • To be Cash Flow positive in Year 2


Financials

• Assumptions• To have 51 Retail Stores by Year 5• Store Revenue based on US$ 400 per sq.ft. to be achieved 6 months after store

opening• 25 % of Store Sales will be accessories• E-commerce sales to account for 20 % of overall sales from Year 3• Gross Profit Margins to decrease over 5 years due to lower margins for E-

Commerce• Staff level to increase to16 gradually over 5 years• Most services to be outsourced, e.g. Accounting, Legal, IT support, Designers,

Store Designer, E-Commerce, Website, Advertising • Credit Terms to Retailers: 30 days, E-Commerce to consumers: Credit Card• Credit Terms from Suppliers: 30 – 60 days • Starshop to share 50 % of investment into first 3 stores with additional

investments into more stores in the following years• Depreciation over 3 years for all investments• Bad Debt Provision of US$ 1,075 Mio by Year 5 or 7.2 % of A/R’s


Financials

• Profit and Loss 5 Year Forecast• To show the summary sheet only for the period of 5

years including the start up phase.• Total Sales• Total Cost of Sales• Gross Profit• Gross Profit Margin %• Expenses• Net Profit• % of Revenue


Financials

• Cash Flow 5 Year Forecast• To show the summary sheet only for the 5 year

period including the start up phase• Total Cash Inflow (Stores)• Total Cash Outflow (Purchases)• Net Cash Inflow• Cash Outflow from Operations (Expenses)• Cash Outflow from Capex• Net Opening Balance• Net Cash Inflow/Outflow• Net Closing Balance


Financials

• Capex Plans• To show the Capex breakdown in the CF summary

sheet over the 5 years period including start up phase


Financials

• Cash Requirements and Timing• Based on the Cash Flow, to show the capital that

needs to be injected and the time when these amounts are required. We should obtain US$ 3.0 Mio and show at any point in time a positive cash balance and equity position.


Financials

• Pay Back / ROI• To have two slides, i.e. one that is targeted at

furniture manufacturer and the other at venture capitalist.

• Venture Capitalist• To show the Net Profit Development for 5 years

including the start up phase. • To show the Net Disbursement for every year for the

30 % equity to investors.• This would show the Pay Back in number of years as

well as the ROI on the investment of 3 Mio.


Financials

• Pay Back / ROI• To have two slides, i.e. one that is targeted at

furniture manufacturer and the other at venture capitalist.

• Furniture Manufacturers• To add the profit furniture manufacturers would make

by selling products to Starshop. Assumption is a 5 % profit on Cost of Sales for Furniture and accessories sales but without E-Commerce sales. This would reduce the Pay back period and increase the ROI.


Financials

• Share Value/Share Holdings• Share Value will be 10 $ per share initially• A total of 1 Mio shares will be issued• A total of 30 % will be sold to investors• A total of US$ 3 Mio will be required• Based on the forecasted revenue after 5 years of 88 Mio, we

estimate the value of the company and the value of the brand to be 1 time revenue, i.e. approx 90 Mio

• OR• Based on the estimated Net Profit of US$ 8,8 Mio after 5 years,

we estimate a P/E of 10, i.e. approx 90 Mio.• In Year 5, a 30 % equity stake would be worth approx .30 Mio.


eCommerce – Key component to our success


Contents

1. Introduction






“…insert a quote from financial summary…”


Insert benefits for investors


Contents

1. Introduction2. Why Project Starshop?3. What’s in it for you? 4. Starshop Organization:

A. Organization chart, headcount, responsibilities B. Suppliers (type etc.) and working relationship C. LogisticsD. Outsourced servicesE. LegalF. E-Commerce

5. Financial Information6. Timing and Next Steps

“…75 to 100 free standing retail stores, primarily under licensing arrangements…

as well as 125 to 200 in-store galleries by the end of calendar 2012…”

OUR OBJECTIVE


Initial Organization

Charles SchlaeppiChairman, CEO

Johne AlbanesePresident, COO

Reg AndersonVP – Retail Operations/Store Development

Stephanie SinkVP – Visual Merchandising/Product Styling

Lucy SchlaeppiDirector of Customer Service/Retail Support


Organization @ 18 Months

Charles SchlaeppiChairman, CEO

Johne AlbanesePresident, COO

Reg AndersonVP – Retail Operations/Store Development

Stephanie SinkVP – Visual Merchandising/Product Styling

Lucy SchlaeppiDirector of Customer Service/Retail Support

Global Buyer - Furnishings

Customer Service Manager

Retail Trainer

Admin Assistant


Supporting services for retail licensees

• Real estate location assistance• Complete interior design services including all interior plans and

elevations• Complete exterior signage package• Complete interior signage and POP package• All merchandise (furniture/accessories/etc.)• Complete operational and sales training system • Store Operating System• Complete Grand Opening and Ongoing marketing/advertising package• Quarterly updated planagrams• Quarterly operational assessments• HR Support• Financial planning toolkit• And much, much more!


Contents

1. Introduction2. Why Project Starshop?3. What’s in it for you? 4. Starshop Organization5. Financial Information:

A. Assumptions: Financial and Non-FinancialB. Profit and Loss 5 Year ForecastC. Cash Flow 5 Year ForecastD. Capex Plans E. Cash Requirements and timingF. Share ValueG. ShareholdingsH. Payback calculationI. ‘In-Stock’ furniture


“…Insert quote from financial summary…”


Financial Information – to be inserted by Starshop team


Contents

1. Introduction



4. Stashop Organization



“…Insert quote from financial summary…”


Insert slides for timing and next steps


THANK YOU

project starshop 16.01.08 ppt

Documents

project starshop concept

cash outflow

ethan allen

pottery barn

cash requirements

summary sheet

customer service

key trends