to be among the best developers of sports and fashion...

Corporate presentation

To be among the best developers of sports and fashion brands

April 2013

IC COMPANYS • PAGE 2

Index

1 INTRODUCTION

2 HISTORY

3 ORGANISATION

4 BRANDS

5 CORPORATE STRATEGY

6 KNOWLEDGE CENTRE

7 CORPORATE SHARED SERVICES

8 CORPORATE RESPONSIBILITY

9 FINANCIALS


BRANDS

• 11 sports and fashion brands in three distinct segments

SIZE

• Revenue DKK 3.8b and employees 2,217

SOURCING

• Offices in China, Hong Kong, India and Romania

DISTRIBUTION

• Own retail, outlets, e-commerce, franchise and wholesale

AROUND THE WORLD

• Approx. 500 retail and franchise stores and 10,000 wholesale

selling points in more than 40 countries

Note: All figures are from the annual report 2011/12

One of the largest sports and fashion companies in the Nordic region

1Introduction


CARLI GRY1948: Carli Gry is founded

1973: Klaus Helmersen takes

over the company

1974: Jackpot is launched

1986: Cottonfield is launched

1996: Listed on the Copenhagen

Stock Exchange

1998: Peak Performance

acquisition

2001: IC Companys is formed

through merger

INWEAR GROUP

1969: InWear is founded

1973: Matinique is launched

1973: First Danish fashion brand

to set up Asian production

1974: First subsidiaries in

Sweden and Norway

1980: First own retail store in

Copenhagen

1986: Part Two is launched

1996: Listed on the Copenhagen

Stock Exchange

2001: IC Companys is formed

through merger

Proud heritage in Scandinavian fashion

2History

http://pb.iccompanys.info/group.php?id=5





Portfolio strengthenedby further acquisitions and start-ups History

2001/2002 2002/2003 2003/2004

ACQUISITION

START-UP


INDUSTRY EXPERIENCE

• More than 60 years in total

– sports, fashion and fast moving consumer goods

FRAMES AND PRINCIPLES

• Generating growth through frames and principles

CRISIS MANAGMENT

• Crisis management securing profitability and strength

STABILITY

• Cash flow management providing stability and risk reduction

Experienced management team with high execution power

3Organisation

Niels Mikkelsen, CEO Chris Bigler, CFO Anders Cleemann, EVP Peter Fabrin, EVP


Separate brand organisations with full responsibility of own value chain

OrganisationChief Executive

Officer

Corporate Business Development

Chief FinancialOfficer

Finance

IT

Investor Relations

Legal

Logistics

HumanResources

CorporateResponsibility

GlobalSourcing

ExecutiveVice President

Note: Brands include own value chain (design, sourcing, product management, marketing, wholesale, retail, franchise, e-commerce)

ExecutiveManagement

Jackpot

Brand operations

ExecutiveVice President

Cottonfield

Designers Remix

Saint Tropez

Premium Outdoor

Peak Performance

Premium Contemporary

Tiger of Sweden

By Malene Birger

Mid Market Contemporary

InWear

Matinique

Part Two

Companys

Soaked in Luxury


The brand portfolio– different priorities for different brandsBrands

4


3 divisions with 4 core businesses to drive future growth and improved profitability

Premium Outdoor

Premium Contemporary

Mid Market Contemporary

Non Core

Brands


PEAK PERFORMANCE

• Founded in 1986 with roots in alpine skiing

• Revenue DKK 971m

TIGER OF SWEDEN

• Founded 1903 on a strong made-to-measure tradition


BY MALENE BIRGER

• Founded 2003 based on design-driven passion


Premium brands – outdoor and contemporaryBrands



PART TWO

• Founded 1986 working with sensual vs. raw


INWEAR & MATINIQUE

• Founded 1969 & ‘73 with roots in urban living

• Revenue DKK 354m & 280m respectively

SOAKED IN LUXURY

• Founded 2005 based on a vibrant, international

design

• Revenue DKK 89m

COMPANYS

• Franchise concept based on 6 own female brands

• More than 30 stores in total

Mid Market Contemporary brandsBrands


http://www.google.com/url?sa=i&rct=j&q=companys&source=images&cd=&cad=rja&docid=m1UXaB4xFguFBM&tbnid=b2U1YNOvjg0GpM:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.dmogt.dk%2Fda-DK%2FNyheder%2Fcompanys_vokser_i_norden.aspx&ei=OkciUfffGMz3sgaG9oCIBQ&bvm=bv.42553238,d.Yms&psig=AFQjCNE5cIKTfOxHJT5zAQRIU6F1dMqv0A&ust=1361287295996437

http://www.google.com/url?sa=i&rct=j&q=companys&source=images&cd=&cad=rja&docid=m1UXaB4xFguFBM&tbnid=b2U1YNOvjg0GpM:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.dmogt.dk%2Fda-DK%2FNyheder%2Fcompanys_vokser_i_norden.aspx&ei=OkciUfffGMz3sgaG9oCIBQ&bvm=bv.42553238,d.Yms&psig=AFQjCNE5cIKTfOxHJT5zAQRIU6F1dMqv0A&ust=1361287295996437


SAINT TROPEZ• Founded 1986 on young, independent femininity


• Not part of core platform

DESIGNERS REMIX• Founded 2002 on minimalistic elegance

• Revenue DKK 87m

• 51% ownership

JACKPOT• Founded 1974 with casual and colourful styles


• To be divested

COTTONFIELD• Founded 1986 on comfortable and casual menswear


• To be divested

Non-core brandsBrands



FREEDOM WITHIN THE FRAMEWORK

• Respect of each individual brand entrusting it with full ownership of the

value chain

• Best practice sharing in key areas of the value chain

• Corporate Shared Services with targeted operational responsibilities

HIERARCHY OF SYNERGIES

1. Knowledge sharing through execution of 7 business disciplines

2. Targeted operational synergies based on brands needs

3. General operational cost synergies across all brands

STRATEGIC FOCUS AREAS

• Building strong brands

• Having a focused market approach

• Increasing controlled distribution

• Optimising our processes and value chain

• Practising world class leadership

Vision: “to be among the best developers of sports and fashion brands”

5Corporate strategy


Mission: “to build successful brands by uniting business excellence with creativity and innovation”

KNOWLEDGE CENTER• Retail/franchise

• Wholesale

• E-commerce

• New markets

• Sourcing

• Collection development

• Marketing/brand building

CORPORATE SHARED SERVICES• Sourcing, Logistics, IT

• Finance, Legal, HR

• Corporate Responsibility

Corporate strategy


Our knowledge centre facilitates a systematic and iterative knowledge sharing process

6Knowledge centre


BRAND

KNOWLEDGE

CENTRE

Implementation

and adaptation of

best practices

Knowledge

sharing and

innovation

Defining best

practice


‘Frames and principles’ are catalogues of best practice guidelines implemented throughout the organisationKnowledge centre

2

Marketing Vision

TARGETS

Vision

Build a strong brand with loyal end-consumers and support high sales performance

STRATEGIC APPROACH

The marketing strategy is clearly defined and reflects the brands strategic priorities

There is a detailed understanding of the marketing spend and a clear rationale for the allocation

Marketing is an integrated part of the ongoing business planning process

CROSS CHANNEL

OPERATIONAL PLANNING

Marketing initiatives are coordinated across channels to achieve maximum impact

There is a structured, operational marketing planning process and plans are known and understood by all relevant parties

We know the expected effect of all initiatives and follow up on the actual impact

CONSISTENT BRAND

EXECUTION

The brand DNA is clearly defined and executed consistently over time and across channels and consumer touch points

Marketing is consulted in all decisions relating to external communication and takes an active role in identifying and correcting communication that is not ‘on brand’

LEVERAGING CONSUMER

INSIGHTS

Consumer insights are collected in a structured approach on a continuous basis

Insights are used actively to manage the brand and optimize consumer communication and messaging

KEY LEVERS

Not applicable

to marketing

COMPETITOR INSIGHTS

Competitor insights are collected in a structured approach on a continuous basis

Competitor insights are used in the business planning process

FRAMES AND PRINCIPLES

• A catalogue of best practice

principles for each of the 7

disciplines

• All catalogues have a

standardised structure:

– Discipline vision

– Key levers

– Focus areas

– Frames and principles

DEFINITION

1

Sourcing Vision

TARGETS

Vision


DEFINED STRATEGY

AND OPERATING MODEL




CROSS CHANNEL





CONSISTENT BRAND

EXECUTION



LEVERAGING CONSUMER

INSIGHTS



KEY LEVERS

Not applicable

to marketing

COMPETITOR INSIGHTS



2

Collection Development Vision

TARGETS

Vision

Develop collections that reflect the brand DNA and positioning, meet end-consumer needs

and supports the business and financial objectives of the brand

STRATEGIC AND

COMMERCIAL APPROACH

Collections are aligned with the brand strategy and they are continuously optimized to support the short- and long term financial targets

Collections reflect the brand DNA and there is a clear understanding of the target group and their needs

STRUCTURED COLLECTION

PLANNING

(before)

Collection structure takes into consideration consumer buying behavior and gives designers and sourcers a clear frame and direction for the creative development

Price and gross margin targets are differentiated across product groups and styles where appropriate

EFFICIENT PROCESS

(during)

The collection development process is optimized to support the brands business model

The process is standardized to ensure consistent execution over time

UNDERSTANDING COST AND

SALES DRIVERS

(during)

The brand priorities are clear and give direction to individuals decision making

All functions are trained to- and have the necessary information to make informed decisions during the collection development process

KEY LEVERS

Not defined

for collection

development

FACT BASED FOLLOW-UP

AND EVALUATION

(after)

Collection performance is systematically analyzed to understand performance and to identify the drivers of success and failure

Facts and figures and key learning’s are used in future collection developments

1

New Markets Vision

TARGETS

Vision


DEFINED STRATEGY

AND OPERATING MODEL




CROSS CHANNEL





CONSISTENT BRAND

EXECUTION



LEVERAGING CONSUMER

INSIGHTS



KEY LEVERS

Not applicable

to marketing

COMPETITOR INSIGHTS



2

Wholesale Vision

Vision

To be a profitable and preferred wholesale partner through simplification, innovation and effectiveness

KEY LEVERS

DEFINED STRATEGY AND

OPERATING MODEL

We choose new markets based on growth potential, competitor analysis and the overall market attractiveness

We have an ambitious growth plan where goals and objectives are based on the potential in each market along with a road map for execution

Our organizational set-up, roles and responsibilities effectively contribute to our profitability

OUTSTANDING CUSTOMER

ACQUISITION &

RETENTION

We develop and expand our distribution by taking a strategic approach in our customer selection and drive growth through effective Key Account management disciplines

Our innovative business models offer a clear value proposition inspiring our customers to engage long term partnerships

We optimize our distribution based on detailed, structured mapping & segmentation

We prioritize our time and resources based on customers potential and profitability

EXCELLENT

OPERATIONS

We work efficiently by making detailed action plans that we are accountable for and follow up regularly

We develop existing customers by challenging and coaching them in frequent meetings and yearly appraisals

We engage with our customers on an ongoing basis to play an active role in optimizing their sales performance

ENGAGING CUSTOMER

EXPERIENCE

Our shopping environment embodies all aspects of the brand identity. The showrooms, the dialogue, the presentation etc.

We inspire our customer to buy through a innovative approach

We make it easy to do business with us through multiple sales points

WORLD-CLASS MULTI-

CHANNEL INTEGRATION

Our marketing and merchandising efforts are integrated across channels to ensure consistent messaging, enforcing a unique and engaging experience

Our offline and online propositions are aligned and we serve the customer across channels, contributing to an engaging experience and profitable business

2

E-Commerce Vision

Vision

Profitable, high performance e-Commerce stores which drive multi-channel expansion

DEFINED STRATEGY AND

OPERATING MODEL

We have a clearly defined value proposition for the online store and have defined how the online channel fits into our overall business strategy

The objectives and goals are based on the potential in each market along with a road map, organisation and processes to get there


ACQUISITION AND

RETENTION

The customer acquisition investment is optimised across channels and we have detailed understanding of the economics to deliver to the objectives

There is a defined programme aligned to the customer lifecycle along with tactics to engage each customer type based on customer insight

ENGAGING CUSTOMER

EXPERIENCE

The look & feel embodies all aspects of the brand identity. The site planning and feature selection helps and inspires the customer to buy and complete the tasks the user wants to perform

We are actively updating and maintaining our product categories, landing/category pages to keep the store fresh and relevant

WORLD-CLASS MULTI-

CHANNEL INTEGRATION



KEY LEVERS

EXCELLENT OPERATIONS

Our Buying & Replenishment are based on the brand strategy and aligned to the customers online purchase behaviour

We closely monitor our inventory position and react quickly to changes in demand

We plan and execute promotions which deliver to the objective and serve up high-quality content which is relevant and on-brand

2

Retail/Franchise Vision

Vision

Outstanding and highly profitable retail concepts with potential for expansion

DEFINED STRATEGY

AND OPERATING MODEL


ACQUISITION & RETENTION Our stores are well known and highly active in the local community

We focus on building strong customer relationships through a defined retention programme

EXCELLENT OPERATIONS

Our operational principles for store operation, buying, VM and staff planning are

defined and based on best practice

Our ability to implement is effective at all levels (HQ, Area management, Store)

We monitor our cost base closely and take corrective actions to ensure maximum profitability at all times

ENGAGING CUSTOMER

EXPERIENCE

WORLD-CLASS MULTI-

CHANNEL INTEGRATION

New markets are chosen based on growth potential, competitor analysis and the overall market attractiveness

We have an ambitious growth plan where goals and objectives are based on the potential in each market along with a road map for execution

We have a clear perspective on as well as rationale for which locatons should be retail and franchise

Our organizational set-up, roles and responsibilities are aligned with our strategy and effectively contribute to our profitability

KEY LEVERS

Our customers see our stores as an experience standing out in the retail landscape

The customer experience captures the brand identity through an inspiring approach to assortment, store design and customer service




Shared Services functions are based on value creation and deliver services based on brands’ needs

7Corporate Shared Services


AN EFFICIENT SERVICE PLATFORM

• From 55% of total cost and 1,800 employees…

• …to 15% of total cost and 400 employees


WE SUPPORT THE 10 PRINCIPLES

OF THE UN GLOBAL COMPACT

• Based on internationally adopted declarations and conventions

on human rights, labour rights (People), environmental protection

(Planet) and anti-corruption (Profit)

INTEGRATED THROUGHOUT THE ORGANISATION

• Responsibility for issues and targets are assigned to the relevant

internal functions for them to take action

We believe in integrating corporate responsibility in all parts of our organisation

8Corporate responsibility

PEOPLE PLANET PROFIT


REVENUE AND PROFIT IN 2011/12

• Revenue of DKK 3.8b and EBIT of DKK 130m

CYCLIC EARNINGS BUT STEADY CASH FLOW

• Strong operating cash flow averaging DKK 308m last five years

• Investments to be kept around 3% of annual revenue

WORKING CAPITAL IN CONTROL

• Expected not to exceed 12% of annual revenue

STRONG FINANCIAL POSITION WITH LOW NET DEBT

• Net debt of DKK 248m corresponding to 1 times EBITDA in

2011/12

• Net debt target of zero and limit of 3 times EBITDA

CONTINUED DIVIDENDS TO OUR SHAREHOLDERS

• 30% of the net profit to be distributed as dividend

A financially strong company with solid cash flow

9Financials


Financial guidelines to secure steady high cash flowsFinancials

ASSET LIGHT

• Maximises strategic manoeuvrability and

secures a steady high cash flow

FROM FIXED TO VARIABLE COSTS

• Secures stable profitability in a volatile

economic environment

PRIORITISING INVESTMENTS

• Maximises returns securing future access to

capital

HIGH INVENTORY TURNOVER

• Reduces costs by freeing up capital for other

purposes and ensuring continuous flow of in-

season products

STRICT CREDIT CONTROL

• Frees up capital for other purposes and

ensures a healthy customer base



Financial performance H1 2012/13

2012/13 2011/12

Revenue down by 3% to DKK 2,036m DKK 2,105m

Gross Margin up by 1.4pp to 57.9% 56.5%

Costs down by 3% to DKK 1.018m DKK 1.044m

EBIT up by 10% to DKK 160m DKK 146m

Free cash flow up by DKK 23m to DKK 95m DKK 72m

Financials


Guidance FY 2012/13

CHALLENGING MARKET CONDITIONS EXPECTED TO CONTINUE

Difficult market conditions primarily impact the Mid Market segment

Abating gross margin pressure due to normalised industry discounting and positive

impact from sourcing project

Cost reductions to continue

REVENUE OF DKK 3,700 – 3,750m

Previous guidance: Lower than 2011/12

EBIT OF DKK 140 – 170m

Previous guidance: On the same level or better than 2011/12

INVESTMENTS ON THE SAME LEVEL AS 2011/12

Primarily for expansion of distribution in the Premium segment

Guidance unchanged

Guidance is subject to one-off effects from strategic initiatives

Financials

to be among the best developers of sports and fashion...

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