Projects

1. Lee Cooper in Russia
Roseleen Bakshi
25th June 2009
Steve Manners, VP Brand Development
Louise French, AVP Marketing & Business Development
Serena Sibbald AV P

2. Today we will cover….
Hard metrics versus soft data
Selecting channels for Lee Cooper for the middle
market.
Which geographies to target?
Which players to target for Lee Cooper?
Which retailers to target?
Timeline

3. Hard data is bad…
2007 2008 2009E 2010E
GDP
8.10% 7.20% 3.50% 4.50%
(UBS)
GDP
8.10% 5.60% -4.50% -2%
(Verdict)
Consumer Expenditure
12.80% 13.10% 6% 5%
(UBS)
Unemployment Rate
11.90% 13.30% 14%
(UBS)
…but it’s not all bad …
2007 2008 2009E 2010E
Interest Rate
10% 12% 13%
(Verdict)
Inflation Rate
9% 14% 10.90% 8%
(UBS)
Oil revenues make up around a quarter of Russia’s GDP.
Current Oil prices levels are low
Russia’s economic recovery will return as oil prices recover.

4. …but from the soft data:
there is hope
Do you think your country will be out of an economic recession
KPI in the next 12 months?
Percent saying yes.
60%
56%
50%
40%
32%
29%
30%
22% 23% 24% 24%
22%
19%
20% 18%
13%
11%
10%
0%
France
UK
Brazil
US
Canada
Germany
53 Country
Italy
Spain
Russia
China
India
Average
Top actions Consumers are taking to save
1 Very Strong Growth: >= +5%
2 Growth: between +1 and plus 4%
3 Neutral: between -1 and +1%
4 Negative: between -1% and -4%
5 Very Negative: <= -4%

5. Reasons for the Crisis in Russia: Oversupplies of imported
Garments during the Boom Phase from 2002 till 2007
Management Defaults hidden by the Boom Phase:
Only 40 % of independent clothing retailers monitor and evaluate through-
selling results during and after the end of retail seasons
budget- and portfolio planning still based on emotional rather than rational
indicators (vertical against horizontal portfolio planning)
Calculation of retail prices, based on“commonly practiced” mark-ups of in
between 2,8 and 3,8 and not by full cost assessments according to western
business administration standards
display of merchandise characterised by “more is better” rather than by “less
is more”
no awareness for professional visual merchandising and window decoration
shop managers not capable to teach sales personnel in service orientation
towards consumer clients

6. Clothing forecasts have been adjusted
downwards
70 60,5 (+5%)
in bn 57,6 (+10%)
US $ - 60 52,3 (+15%)
45,5 (+20%)
50
37,9* (+26%) 1/3
40
30,0 (+33%)
22,7 (+28%) 37,9 40,0
30
17,8 (+45 %) 35,1
30,3 31,9
20 12,3 (+41%)
8,7
10
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
…but on a relative basis still look good…
Country Per capita consumption of clothing $US
2007 2011
Russia 267 426
Germany 460 424
* Source: ITMM GmbH, Stuttgart

7. Lee Cooper can benefit in
present crisis
Cost of lease for retail space at Shopping Malls and Trade
Centres down by 30-50 % against Spring 2008.
Cost of building materials, shop construction and furnishings
depreciating by similar rates.
Salaries and wages put on freeze for 2009 or under negotiation
at cuts of 25 %.
Availability of skilled human resources surging at lower salaries.

8. Today we will cover….
Hard metrics versus soft data
Selecting channels for Lee Cooper for the middle
market
Which geographies to target?
Which players to target for Lee Cooper?
Which retailers to target?
Timeline

9. Projection on Market Shares of main Clothing
Retail Categories in Russia, 2008
YES
NO
YES
NO

10. Which channels do the middle
classes prefer?
Russia’s middle class consumers often frequent
modern shopping centers and boutiques:
more value focused consumers usually prefer hypermarkets
out-of-town and expanding fast fashion players like Gap, H&M
and Inditex.
A multitude of street stalls and markets also survive as they are
often the cheapest in the clothing sector.
3,000 such markets are active in Russia today, but their number
and share of total clothing sales is diminishing.
Source: Verdict Research

11. Today we will cover….
Hard metrics versus soft data
Selecting channels for Lee Cooper for the middle
market
Which geographies to target?
Which players to target for Lee Cooper?
Which retailers to target?
Timeline

12. Seven large Russian Federal Districts
to be critically observed
Northwestern Region Far East
Moscow
Central
Region Ural
Volga Siberia
Northern
Caucasus
Source:

13. Scoring Regions in regard to the
Viability of Fashion Retail Market
3.25
Northwestern Region Far East
Moscow
3.8 3.38
Central
Region Ural
Volga Siberia
4.14 4.0
Northern
4.0
Caucasus
3.29
4.0
Footnote: 1= very good viability, 6 = very bad viability
Source: UBS

14. Regional Retail Market Analysis
YES
Central Region & the Urals Far East Federal
are two Federal Districts District has the
with income per capita lowest share of
than Russia’s average of retail sales (4%) NO
$580.
in Russia.
Northwestern Region Far East
Moscow
Central
Region Ural
Volga Siberia
Northern
Caucasus
The most dynamic development
of retail sales in 2008 was
demonstrated by the South, Urals
& Volga Districts 34%, 33% and 32%
y-o-y , respectively YES

15. Today we will cover…
Hard metrics versus soft data
Selecting channels for Lee Cooper for the
middle market
Which geographies to target?
Which players to target for Lee Cooper?
Which retailers to target?
Timeline

16. Criteria of Players choice

17. VF CORPORATION www.vfc.com
VF Corporation makes branded apparel including Jeans wear, intimate
apparel, sportswear, outdoor products and workwear.
PORTFOLIO
Lee, Wrangler, Riders, Rustler, Vanity Fair, Vassarette, Bestform, Lily of
France, Nautica, John Varvatos, JanSport, Eastpak, The North Face, Vans,
Napapijri, Kipling, Lee Sport and Red Kap.
Why? YES
Key supplier of related denim brands in Russia

18. FIBA HOLDING www.fibaholding.com
Founded in 1987 Fiba Group controls an investment portfolio of high-
value brand names in both financial and non-financial lines of business.
It has 63 companies in 15 countries with $20 billion total assert & $4
billion total equity.
Group's international financial investments have increased by 35% in
2008.
PORTFOLIO
Franchising rights of Marks & Spencer Russia in 2005 with 14 stores and 512 employees in
Russia.
Gap Russia it operates with 3 stores in 2 different locations.
Banana Republic stores are expected to open for the 2009 holiday season in Russia.
Why? YES
Key supplier in our target department stores & our target independent stores

19. Jamil Co. Group
Holding company with international management and international
business standards.
JamilCo. has been active on the Russian retail market for luxury and
casual clothing and accessories of major international brands since
1993.
PORTFOLIO
JamilCo Group has represented the Levi’s® brand since 1988, opening the first Levi’s®
store Moscow in 1993.
Represent Coach brand in Russia.
Why? YES
Key supplier (long established) denim supplier in our target regions

20. PPE Group – Mail order
Founded in 1999, the PPE Group is today Russia’s leading mail order
company, operating across the entire country.
The Otto Group owns 70 percent of the cooperative venture and the
PPE Group 30 percent.
PORTFOLIO
Mail order
OTTO is aimed at women between the ages of 24 and 45 and families.
Bonprix is for the particularly price-conscious customer.
Witt International is aimed at an older and established target group, who are looking
primarily for quality in their purchases and prefer a classic dress style.
E-commerce & Logistics
The second company, “Business Service”, is building the required warehouse and
logistics center in the town of Tver, along with a call centre for order taking and customer
service.
Why? YES
Market leader in mail order / internet in Russia

21. Today we will cover….
Hard metrics versus soft data
Selecting channels for LeeCooper for the middle
market
Which geographies to target?
Which players to target for Lee Cooper?
Which retailers to target?
Timeline

22. Choosing Retailers For Lee
Cooper….

23. Which cities?
Expansion of Trade Centres and Shopping Malls as Key Driving Factors for Allocation of new
Clothing Retail Stores in the Russian Region over the Period 2002-2008
City Population Estimated
in 1.000 Number of Competitors
Map of Russian subdivisions (2006) Retail Stores
by GDP (GRP) per capita. of Clothing located
at commercial centres LEVIS
(2008) STORES
Moscow 10406 10000 26
Volgograd 991 620 4
Ekaterinburg 1,308 1,400 3
Ufa 1,030 760 3
St. Petersburg 4,581 4,560 2
Omsk 1,139 480 2
Samara 1,143 760 2
Kazan 1,113 640 1
Chelyabinsk 1,093 700 1
Perm 993 600
Novosibirsk 1,387 760
Rostov-on-Don 1,055 520
Krasnojarsk 921 440
>$10'000 Nishnij-Novogorod 1,284 970
>$5'000 Sub Total 15,763 11,620 44
>$3'000 Tumen 542 400
>$2'000 Kirov 469 360
>$638.82 Saratov 850 320
Kaliningrad 424 360
Krasnodar 710 300
Pensa 510 300
Magnitogorsk 413 240
Source: Russian Federal Service of State Statistics Tula 509 200
of the Gross Regional Product (GRP, end of 2006), Togliatti 705 200
and population (1 January 2007).
Subtotal 5,132 2,680
Total 20,895 14,300
Source: USB

24. …and which retailers?
Expansion of Trade Centres and Shopping Malls as Key Driving Factors for Allocation of new
Clothing Retail Stores in the Russian Region over the Period 2002-2008
INTERNET/CATALOGUE INDEPENDENT MULTI/MONO BRANDS DEPARTMENT STORES
JEAN
5KARMANOV STOCKMANN TOPSHOP
QUELLE RUSSIA CITY SMPHONY
Moscow 16 1
CITY
St. Petersburg 2 1 Moscow 6 5
Number of
Denim Brands
Ekaterinburg 2 1 St. Petersburg 1 3
12 Samara 1
Krasnodar 2
Likely Size of Ufa 2 1
Nishnij-Novogorod 4 Nishnij-Novogorod
Opportunity
for Lee
Kazan 1 Ekaterinburg
Cooper HIGH Chelyabinsk 1 1 Ufa
Financial Volgograd Total 7 0
Stability STABLE
Established in
Perm
1 1
Priority 2 1
Russia since 1
2,005
Novosibirsk Number of Denim
SALES (2007) 115BN
CUSTOMERS 30M Rostov-on-Don 2 1 Brands 10 9
GROWTH 40% IN 2008 1 Likely Size of
Omsk
SKUs. offering 100,000
Krasnojarsk 1
Opportunity for Lee
600-page Cooper HIGH HIGH
OTHER 10
PAGES catalogue TOTAL 43 9 Financial Stability STABLE
Priority 1 2 Established in Russia
since 1,989 2,006
Number of Denim Brands 10 25
Likely Size of Opportunity for SALES 250 M EURO
Lee Cooper HIGH HIGH
Financial Stability NA NA
Established in Russia since
NA NA
Source: SALES NA NA

25. …and which retailers?
Expansion of Trade Centres and Shopping Malls as Key Driving Factors for Allocation of new
Clothing Retail Stores in the Russian Region over the Period 2002-2008
INTERNET/CATALOGUE INDEPENDENT MULTI/MONO BRANDS DEPARTMENT STORES
YES YES YES May be YES
JEAN
5KARMANOV STOCKMANN TOPSHOP
QUELLE RUSSIA CITY SMPHONY
Moscow 16 1
CITY
St. Petersburg 2 1 Moscow 6 5
Number of
Denim Brands
Ekaterinburg 2 1 St. Petersburg 1 3
12 Samara 1
Krasnodar 2
Likely Size of Ufa 2 1
Nishnij-Novogorod 4 Nishnij-Novogorod
Opportunity
for Lee
Kazan 1 Ekaterinburg
Cooper HIGH Chelyabinsk 1 1 Ufa
Financial Volgograd Total 7 0
Stability STABLE
Established in
Perm
1 1
Priority 2 1
Russia since 1
2,005
Novosibirsk Number of Denim
SALES (2007) 115BN
CUSTOMERS 30M Rostov-on-Don 2 1 Brands 10 9
GROWTH 40% IN 2008 1 Likely Size of
Omsk
SKUs. offering 100,000
Krasnojarsk 1
Opportunity for Lee
600-page Cooper HIGH HIGH
OTHER 10
PAGES catalogue TOTAL 43 9 Financial Stability STABLE
Priority 1 2 Established in Russia
since 1,989 2,006
Number of Denim Brands 10 25
Likely Size of Opportunity for SALES 250 M EURO
Lee Cooper HIGH HIGH
Financial Stability NA NA
Established in Russia since
NA NA
Source: SALES NA NA

26. In Independent Multi-brand 5KARMANOV,
JS casual, Fashion Mart is good channel…..

27. Today we will cover….
Hard metrics versus soft data
Selecting channels for LeeCooper for the middle
market
Which players to target for Lee Cooper?
Which geographies to target?
Which retailers to target?
Timeline

28. Retail in Russia Timeline: past,
present and future 2000-2012
Source: Verdict Research

29. Lee Cooper Timeline in
Russia A/W 2010
Initial Meeting w/ Potential Brand Knowledge &
Initial Meeting w/ Potential Brand Knowledge & Review marketing & sales
Review marketing & sales
Licensees
Licensees Training sessions
Training sessions strategy AW2010
strategy AW2010
Finalization of Licensee
Finalization of Licensee Present Product
Present Product Weekly & Season
Weekly & Season
A/W 2010
A/W 2010 sales analysis
sales analysis
Deal negotiations
Deal negotiations Support w/
Support w/
& sign off
& sign off Feedback
Feedback
marketing
marketing
Loop
Loop
programmes
programmes
Initial meetings
Initial meetings
on
on
BUSINESS PLAN
BUSINESS PLAN
Launch
Launch
Business
Business
plan
plan
approval
approval
Dec ‘09
Dec ‘09 Feb ‘10
Feb ‘10 Aug ‘10
Aug ‘10

30. Lee Cooper Timeline in
Russia