Benetton Group - 2011 Preliminary Highlights


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January 31st, 2012

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Benetton Group - 2011 Preliminary Highlights

  1. 1. FY 2011Preliminary Hi hli htP li i Highlights
  2. 2. Revenues &Business A l iB i Analysis 2
  3. 3. Revenues€M 2010 2011 Ch. % Ch. % Prel. C.N. Revenues 2,053 2,031 -1.1% -0.4% Performance reported: -1.1%. Performance currency neutral: -0.4%. Negative impact from currency: -14€ mio. Developing and Fast Growth Countries: double digit growth. 3
  4. 4. Geographical Revenues €M 2010 2011 Prel. Total Revenues 2,053 2 053 2,031 2 031 Developing and Fast Growth Reported C.N. Countries 26% (24%) ( ) Overall Performance -1.1% -0.4% Traditional Developing and +7% +10% Western Fast Growth Countries Economies 74% (76%) Traditional Western Economies -4% -4% Note: ( ) FY 10 dataBruxelles, Rue Neuve Santiago, Av. Goyenechea Slovenia, Ljubljana 4
  5. 5. Revenues - Europe€M % on total Others Russia & Revenues Revenues 26% ex-USSR / EU 6%Europe 1,606 79% Spain & Reported C.N. Portugal Italy 11% 57%Performance -2% -2%The Mediterranean Russia & ex-USSR / EUItaly: narrow decrease, in line with European Amazing growth in Russia (+25%) and ex-USSR / EUperformance. Trend improvement in the last quarter. countries (+20%).Iberian Peninsula: sales decrease (-4%), driven by ( ), y Extensive presence, supported from initial development p , pp plimited decline in Spain (-3%) and notable shrink in in Tier II Cities. Total store network accounting morePortugal (-10%). than 170 stores.Greece: significant fall in revenues (-16%); less Commercial proposals development, targeting highnegative trend in the last few months. potential segments: initiatives dedicated to kids and man.Continental Europe Door-to-door Project: delivery improvement, thanks toSales up in Germany (+6%) and Austria, highlightening new merchandise shipments organization.increasing trend performance Positive results in UK performance. UK.C.N. performances reported. 5
  6. 6. Revenues - Asia€M % on total ex USSR Asia 3% Others 11% Revenues Revenues India Japan 10% 20%Asia 333 16% Greater China Reported C.N. 9% Turkey South KoreaPerformance +2% +5% 16% 31%Outstanding double digit revenues’ increase in India India(+11%), South Korea (+11%), ex-USSR Asian Countries Network: extensive presence with ~480 stores in over(+20%) and Middle East. 100 towns across the nation, both in Tier I, II and IIIILFL growth in Greater China, driven by double digit g , y g cities. More than 90 openings in 2011, mainly in p g , yincrease in China and positive results in Hong Kong and secondary cities and South-East Area.Taiwan. Largely completed DOS transfer to third parties’Negative performance in Japan and on-going management: ~ 150 stores from Q1 10.decreasing results in South East Asia. Store traffic and average ticket increase, driven by totalTurkey look offer and dedicated collections.LFL increase, showing double digit growth in the 2nd half Market opportunity and potential of Kids and Sisley:2011. ~ 50 dedicated stores already opened.Dedicated collection approach introduced in A/W 11 andlocal sourcing raise, to offset increasing duties.C.N. performances reported. 6
  7. 7. Revenues - Americas€M % on total Others 10% Revenues Mexico Revenues South 24%Americas 80 4% America 21% Reported C.N. Canada USA 6% 39%Performance +2% +6%USA & Canada MexicoRevenues decrease: negative impact from refocusingactivities and stores closing. Network: more than 25 DOS and over 230 corners inComparable sales improvement in the last part of 2011. p p p Department Stores, including more than 30 openings in p , g p g 2011.South America Healthy growth, showing a performance up over 20%.Performance up +30%, driven by stores network Comparable sales: double digit increase.development and new openings in malls and Local partnership renewed and extended in Marchdepartment stores. 2011.C.N. performances reported. * Rest of the World : 12€ mln of revenues in 2011 (preliminary results) 7
  8. 8. Revenues by channel€M 2010 Prel. Ch. % Ch. % 2011 CN Total Revenues 2,053 2,031 -1.1% -0.4% Apparel 1,948 1,912 -1.9% -1.1% Wholesale 1,475 1,458 -1.1% -0.6% Directly Operated Sales 473 454 -4 0% 4.0% -2 8% 2.8% Textile 105 119 +14% +14% 8
  9. 9. Apparel Revenues Collections Trend Apparel Revenues by channelPositive os e Directly ~ +2% flat OperatedFlat Sales ~ (4%) 24% ~ (4%) WholesaleNegative 76% S/S 12 A/W 10 A/W 11 S/S 11 expectedPerformance WholesaleA/W 11: positive collections performance (+2%). Revenues in line with previous year, on the back of collectionsS/S 12: collections performance expected to be flat; trend; results affected by S/S shipments.improved trend compared with previous S/S 11 (-4%).New in-season product initiatives: positive impact on2011 collections, supporting trend expected in next Directly Operated Salesproposals. LFL: flat performance in Q4 11, showing an improvement p trend compared with 9M 11 results.Drivers FY 11 comparable results: slight decrease (-2%), supportedSlight price/mix improvement and resilient volumes by positive performance in emerging markets.performance: S/S 12 drivers are confirming previous FY 11 channel results: excluding currency impact and DOSt e dstrends. transfer in India to third parties management, the 2011 p g , performance is slightly positive. 9
  10. 10. Brands & Collections UCB 50% Sisley 16% (52%) (16%) UCB Kids & Sisley Young Kids 32% Playlife 2% (30%) (2%)Note: ( ) FY 10 data 10
  11. 11. Brands: initiativesBrand & Values Brand & Product Brand & StoreUnited CColors of Benetton f United Colors of Benetton United Colors of BenettonUNHATE: New worldwide institutional Special Collections proposals. New openings and refurbishmentcommunication campaign in Fall 11. Dedicated collection development. of existing stores with the newLana Sutra: Communication of Product innovation and research. concept “Lissoni”.Benetton Values through the dialoguewith the world of art from September UCB Kids Sisley & Playlife2011. Updated collection structure. Introduction of new store concept Product line and offer increase. at the end of 2011.SisleyDefinition of the new Independent Sisleylife-style philosophy, supported by a Fashion content & affordable piecesnew communication campaign. increase in collection proposals. New communication vehicles, approaching New Media and Digital applications. 11
  12. 12. Brands & ValuesUnited Colors of BenettonUNHATE - The new worldwide communication campaign, with the aim of Lana Sutra - Dialogue with the world ofcontrasting the culture of hatred and p g promote brand values, as tolerance and , art, proposing targeted communicationpeace, through ironic and provocative images. initiatives.In the first days of the UNHATE campaign, global participation placed it among 15 art pieces installation in selectedthe top five topic trends worldwide on both Twitter and Google, with Facebook flagship, conceived as a homage to love, g p gfan numbers increasing by 60%; over 3000 articles published and more than covered by coloured wool threads,600 television reports in 60 countries around the world. emphasizing two key elements of the brand DNA.UNHATE Foundation: new Benetton Group foundation strengthening the foundation,group’s social responsibility strategy, through on-going initiatives. 12
  13. 13. Brands & ProductUCB Sisley UCB KidsManagement strengthening , adding Collections offer renewal adopted Reviewed offering structure,new roles and people in creative and from S/S 12, segmenting product starting from S/S 12.merchandising structure. offer by function and style.Offering Structure: Special Collections Launch of targeted product Cosmopolitan mood for collectionadopted starting from S/S 11. initiatives, supporting brand values proposals.On-going roll-out and new total look g g and improving brand identity. p g y Remarkable growth driven by g ydeliveries in S/S 12 collections. product offer and initiatives adopted in international markets.Product innovation and research: Identification of the key productnew exclusive knitwear proposals, p p , categories, highlighted in new store g , g grepresentative of Group heritage. concept. 13
  14. 14. Brands & StoreUnited Colors of Benetton Sisley PlaylifeOn-going roll-out of “Lissoni” concept, Introduction of the new concept “Welcome Home”: development ofspread in over 30 Countries. store: first opening in September. the new innovative store conceptNew display approach proposed. New format adopted for openings and shopping experience, based and refurbishments. refurbishments on a multi-brand store approach multi brand approach. 14
  15. 15. Innovation & ExperimentationLive WindowsCreation of innovative sales spaces, supported bycontinuous experimentation with new technologies:“Benetton Live Windows project.” p jUse of the latest technologies, introduced in themain flagship stores, creating an innovativeconsumer experience.The “Studios”New area in the headquarter, dedicated to development activities related to the Store: q , pNew concept development. Visual merchandising activities.Innovative selling space project project. Catwalk & Products Presentation. Presentation 15
  16. 16. Brands & Multiple Digital InitiativesProduct websites ApplicationsComplete restyling of the product Launch of the new-look Launch of product and corporatewebsites for all Group brands - United, a portal applications for iPhone, iPad,Colors of Benetton, Sisley and Playlife. , y y for all institutional areas and y BlackBerry and Android. innovative Investor RelationsCreation of two international blogs : section, entirely revised and Facebook: more than 1.000.000United Blogs of Benetton & enhanced with new sections fans at year end, compared withIndependentPeople for Sisley. & functions functions. 250.000 at the beginning of 2011. 16
  17. 17. g gFinancial Highlights 17
  18. 18. 2011 Prel. – Highlights €MRevenues % Ordinary Ebit on Sales 2,031 2011 prel. ~7.5% 2011 prel. 2,053 2010 8.6% 2010 Performance reported: -1.1%. Costs pressure: large negative impact (~100€ Performance currency neutral: -0 4% -0.4%. mio) mio). Negative impact from currency: -14€ mio. Operating expenses actions: remarkable SG&A Emerging markets: double digit growth. reduction. Negative one-time costs and positive impact currency. from currencyNet Income Net Debt > 70 2011 prel. ~ 550 2011 prel. 102 2010 486 2010 Negative impact from currency hedging (in the Net Debt increase. range of -10€ mio), compared with positive impact Q4 11: NWC improvement. last year (+12€ mio) Commercial investments dedicated to the Lower tax rate (~35%) vs. last year (38.6%). network. 18
  19. 19. Net Debt €M 749 589 2010 556 645 543 ~550 2011 Net Debt Increase. 534 486 508 - On-going investments. 486 - NWC increase. - Shares buy-back Initial Q1 H1 9M Year End Net Debt Net Debt programme. N t debt and Cash Flow Generation: Net d bt d C h Fl G ti 31.12.2011 (~550) ~200 4th quarter analysis. 30.09.2011 (749) Cash Flow Q4 Cash flow improvement in the last part of 2011 vs. 2010, including NWC control and reduction 31.12.2010 (486) +159 30.09.2010 (645) 19
  20. 20. gLooking forward 20
  21. 21. Looking forwardMacroeconomic assumption Strategic Focus Risky environment and challenging scenario; Strengthening growth stimulation activities, focusing weaking outlook for the euro area and slower trend on three cornerstones: for the Mediterranean Countries. Focus on brand building. Enhancing and improving product. Downside household consumption in consolidated p Continuous renewal of store network. countries and tight credit access. Raise the appeal of the point of sales, creating an Emerging market outperforming again other markets innovative consumer experience and focusing on 0 in 2012. sell-out performance and store’s profitability.New Initiatives Profitability Development and introduction of new initiatives, Cost inflation: raw material pressure, mostly in the supporting on-going growth stimulation. first part of 2012, as cotton and wool level at product order placement. Focus on increasing brands’ visibility in most Labour cost pressure in selected Group Sourcing important and trendiest cities worldwide. Regions. Sourcing flexibility, facing cost pressure, and Set-up of markets priority and leverage on new increasing efficiency through product category channel opportunities. allocation. allocation On-going initiatives related to cost control. 21
  22. 22. This presentation contains forward lookingstatements which reflect Management’scurrent views and estimates. The forwardlooking statements involve certain risksand uncertainties that could cause actualresults to differ materially from thosecontained in the forward lookingstatements. Potential risks anduncertainties include such factors asgeneral economic conditions, foreignexchange fluctuations, competitive productand pricing pressures and regulatorydevelopments. 22