Eurazeo 2014 03 18 desigual

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Eurazeo 2014 03 18 desigual

  1. 1. EURAZEO TO PARTNER WITH March 18, 2014
  2. 2. Desigual, an investment offering significant growth potential 2 • Desigual is an emerging global fashion brand, which has been experiencing an explosive growth… •….and achieving outstanding margins thanks to its efficient business model, a unique positioning with upper high-end mass market pricing and a bulk of customers with strong affective relationship with the brand • Global brands are a key sector for Eurazeo and Desigual is a top performer ► offering significant growth potential ► through new geographies and new categories ► enjoying high brand awareness •Eurazeo enters into a partnership with Desigual ► €285 million capital increase to obtain 10% of the share capital ► governance rights corresponding to a true partnership ► protection of Eurazeo‘s investment
  3. 3. What we love about Desigual 3 Potential to grow and create a new global player • A combination of explosive and very profitable growth over the last 11 years ► +29% Sales CAGR 2009-2013 ► 10x from 2007 ► 100x in 11 years ► Best in class EBITDA margin (29% in 2013) ► Strong cash flow generation • Ambition to grow the brand in North America, Latin America and Asia, where Desigual is still under-penetrated • Unique product and vision, with a strong brand DNA and the potential to grow globally • Smart business model: 2 main collections per year; multi-channel, multi-category, multi-gender; cost conscious and highly reactive, leveraging on state of the art management/IT tools and centralized supply chain • Visionary, highly dedicated and experienced management team led by its founder Thomas Meyer • The founder and top management team remain invested and fully involved in the business
  4. 4. Desigual vision: “La vida es chula!” 4 • Inspire and create positive emotions through original clothing • Share happiness, passion and a non-conventional spirit Vision
  5. 5. Desigual brand 5 Respect Positivism Fun&Profit Constant improvement Commitment
  6. 6. Desigual history 6 Store openings People Collections (1986) Ibiza (1997) Barcelona 1983 1988 1993 1998 (1983) Creation of Desigual by Thomas Meyer (1991) Outstanding success of “Feel You Sexy” (2002) Manel Adell joins the company (2006) Singapore (2009) NYC 20132003 2008 (2010) 1st store Japan Madrid Paris (2013) Brazil (2004) First Kids collection (2007) London (2004) Manel Jadraque joins the company (2012) Flagship Tokyo (2013) Launch of Living, Shoes & Beauty (2011) Collaboration with Christian Lacroix Desigual today 4,200 FTEs c. 2,000 FTEs at the PoS 86 nationalities 29 years-old on average (2011) Online store (2013) New Desigual HQ
  7. 7. Increasing brand awareness 7 • Strongly building brand awareness, image and consideration in Europe ► Aided awareness* – 94% Spain – 83% Italy – 77% France ► Consideration to buy* – 40% Spain – 38% Italy ► Favorite brand* – 19% Spain – 16% Italy – 12% France • Main brand marketing drivers include ► Impactful TV campaigns in 6 countries in Europe ► Special events in stores: Friends & Family– Sales Seminaked event - Sixties event ► International catwalks: New York Fashion Week - 080 Barcelona Fashion - Singapore Fashion Festival ► Strong social media with high consumer engagement rate: Facebook 2,5M - Twitter 60k – Instagram 108k . Top engagement rate with consumers in fashion industry. • E-commerce site www.desigual.com with huge growth since 2010 launch: ► 33 million visits in 2013 ► 20 countries presence ► 80% of sales outside of Spain (France 33%) ► Positive like for like vs. 2012: +55% sales / +60% traffic / +20% conversion rate Potential to grow increasing the current low marketing spend Desigual creates the buzz & consumer engagement *Brand Health Research 2013. Women 20-50 yars old.
  8. 8. Provocative communication & festive events such as Semi naked or Kiss Tour 8
  9. 9. Desigual catwalk 9
  10. 10. Desigual image: Original and arty stores 10 NYC 5th Ave MADRID Preciados NYC Herald Square TOKYO Harajuku PARIS Aeroville
  11. 11. Desigual growth strategy: multi-channel, multi-category and multi-geography 11 categories geographies channels 1098 17 • Women • Men • Kids • Accessories • Shoes • Sportswear • Living • Beauty The largest being: • Retail • Wholesale core • Department Stores • Franchise • E-commerce • Specialized wholesale
  12. 12. Multi-geography and multi-category 12 (*) Including Shoes, Beauty, Sportswear and Living Sales by geography 33% 18% 41% 8% Total: €566m 2011 RoW Spain & Portugal France RoE 23% 19%49% 9% Total: €828m 2013 • Spain still important • France as a solid second pillar • Fast development of the rest of Europe, especially Italy and Germany (respectively 15% and 12% of Group sales) Meaningful geographic diversification Sales by category • Woman, Accessories, Man, Kids are the categories in order of importance. Women represent over 50% of total revenues. •Accessories strong performance in last years with high growth potential (+5 pts. between 2011and 2013) • Launch of 4 new categories in last two years: shoes – living – beauty – sports. New opportunities to expand distribution and to get new consumers in the brand.
  13. 13. Multi-channels 13 • Retail represented c.57% both in 2011 and 2013 • 2011-2013 retail network development: - mainly top European countries such as France, Germany and Italy - c. 200 cumulated net openings • Management expects to double the size of the retail network in the mid-term (60 new openings already signed as of today) - new geographies - increasing penetration in existing countries • E-business, growing fast, represents 10% of sales : - Sales are mostly made in Europe - e-commerce sales through owned on-line stores - e-Tailers: multibrand on-line stores (such as Zalando, Amazon, Vente Privée) Balance between retail and other channels •Fall/Winter: ~55% •Spring/Summer: ~45% Sales by channel 2011 2013 57% 25% 5% 13% 57% 22% 10% 11% Total: €566m Total: €828m Retail Wholesale Online Balanced mix by season: Department stores
  14. 14. 14,208 points of sale in 2013 14 US & CANADA Retail stores 13 Franchises 0 Department stores 5 E-tailers 13 Travel retail 8 Big wholesale 1,285 B2C 1 SOUTH AMERICA, CARIBBEAN Retail stores 1 Franchises 14 Department stores 32 E-tailers 1 Travel retail 9 Big wholesale 155 B2C 0 EUROPE, MIDDLE-EAST & AFRICA Retail stores 291 Franchises 62 Department stores 2.441 E-tailers 126 Travel retail 60 Big wholesale 9,215 B2C 172 ASIA & OCEANIA Retail stores 20 Franchises 4 Department stores 36 E-tailers 7 Travel retail 4 Big wholesale 386 B2C 2
  15. 15. All retail points of sale in Europe in 2013 France 52|20% Belgium 16 | 5% NL 6 | 2% UK 2 | 2% Germany 38 | 13% SWI 9 | 3% Italy 51 | 15% Austria 11 | 5% Poland 3 | 0% Portugal 9 | 2% Spain 94 | 31% Nº of PoS %/total retail sales Europe&Middle East 353 87% Asia 24 6% North America 13 3% Latam 15 4% TOTAL 405 100% Nº PoS Europe 291, %/ total retail sales: 72%
  16. 16. 8 12 19 30 49 85 162 304 440 566 701 828 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Strong topline growth since 2002 16 Turnover evolution In €m +18%+25% +24%+45%+89% +87%+76%+60% +63%+56%+47%Growth 828566 701440162 3048530 4919128Sales 26m garments sold in 2013 +29% CAGR
  17. 17. Financials 17 (€m) 2013 2012 Change Net sales 828 701 +18% EBITDA 242 169 +43% Margin 29% 24% - EBIT 194 127 +53% Margin 23% 18% - Net profit 129 74 +76%
  18. 18. Our ambitions for the future: becoming a Global Brand 18 Developing new geographies •Continue its geographic expansion in Europe and consolidate its recent international development, particularly in the United States, Latin America and Japan Regularly launching new categories, leveraging on a multi- channel approach •Shoes, with European production •Sportswear, technical products with a Desigual touch •Living, mainly textile products •Beauty
  19. 19. Transaction highlights 19 Valuation •€2.7Bn Enterprise Value •10.2x LTM EBITDA estimate as of March 31 •Eurazeo subscribes €285m capital increase for 10% stake in Desigual •Closing is expected before Summer depending on anti-trust clearance •Strong net cash position above €150 m proforma of the investment Governance framework • Thomas Meyer keeps the Executive Chairmanship and 90% of the share capital • Board of Directors composition, 6 to 7 members - Thomas Meyer appoints 4 and 1 Independent director - Eurazeo appoints 2 directors • Certain reserved matters to be approved with supermajority rule • Economic protection of Eurazeo’s investment through up to 4% additional stake to secure Eurazeo’s return • A very detailed contractual agreement on Eurazeo exit alternatives
  20. 20. Desigual fits our investment strategy 20 Eurazeo investment criteria Desigual’s proposition Barriers to entry Unique positioning, unique image, differentiated pricing: Desigual is playing in its own arena Profitability and growth profile Best-in-class historical top line growth, coupled with a very high operating efficiency, and a well-taylored distribution strategy, delivering an impressive operating profitability (29% EBITDA margin achieved in 2013) Long term sustainability of cash flows Sustainable cash flow generation supported by solid growth prospects, profitability and high cash conversion (operating FCF conversion 60-70%) after €60-90m annual capex over the last two years Strong transformation potential / equity story A young company with numerous growth levers: new geographies, new categories, wider product offering with more basics A 30-year old brand, with still many identifiable and actionable growth levers High quality management team A young and talented management team, with international experience led by Thomas Meyer, Founder and Executive Chairman
  21. 21. Conclusion 21 Eurazeo is fully supportive of the Desigual team and will assist it in accelerating its transformation to maximize growth and company’s value Desigual is a unique brand with values and product that give it global potential The company is led by top quality management that has a unique track record of growth and profitability over the past ten years Desigual today presents strong growth prospects both by building on its existing strengths and expanding to new geographies and product categories
  22. 22. APPENDIX 22
  23. 23. Talented management team led by Manel Jadraque 23 The Steering Committee of Desigual is formed by a team of 22 professionals. Profile and composition: • 17 men and 5 women (23%). • Young team – the average age is 43. • Members are mainly originally from Europe (86%). • International experience, either because of professional background or education. 80% of the members have lived abroad. • 86% are university graduates. 68% are educated to a Postgraduate or Master’s Degree level and have attended international business schools. Professional background: • The executives from the Product areas have worked in international companies and first- class brands from the textile-fashion sector (Inditex, Levi’s); accessories or jewellery (Parfois, Tous, Uno de 50); or beauty and cosmetics (Antonio Puig, The Body Shop, Natura Bissé). • The executives from the Business areas all have a wide experience, which has been acquired in reference brands and within each one of the selling channels. They have carried out international expansion projects in brands such as Furla, Buffetti, Geox, Oysho, Armand Basi, Sita Murt or Burberry’s, among others. • The executives from the Support areas (support challenge) bring an extremely diverse expertise, which has been built up in international companies, where their roles were noteworthy. Among them there are professionals coming from large corporations (General Cable, IBM), from mass market retailers (Cadbury Schweppes, Danone, Damm, Henkel) and prominent fashion retailers (Inditex, Pepe Jeans, Pronovias).

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