Q4 and FY14 results and Strategy Update. Kurt Staelens CEO Jeroen Seyger CFO a.i. Eric Coorens COO

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(1)

Q4 and FY14 results

and Strategy Update

Kurt Staelens CEO

Jeroen Seyger CFO a.i.

(2)

2014

Highlights

Kurt Staelens

Financial

Review

Jeroen Seyger

Strategy

Update

Kurt Staelens

Q&A

Kurt Staelens,

Jeroen Seyger,

Eric Coorens

2014

Highlights

Kurt Staelens

(3)

Strong growth in Fashion under difficult market conditions further

strengthened leading Benelux position

Gain of market shares both offline and online

Re-defined brand identity for all formats

Successful new Manfield and Young Fashion formats implemented

3D Perfect Fit and loyalty 'passport' fully integrated in Belgium

Closure of 52 non-core shops

Cumulative overhead savings of €2 mln in rent, savings in

headcount more than offset by establishment of in-house

X-channel skill-set

Sale of Kwantum initiated

(4)

2014

Highlights

Financial

Strong sales growth in Fashion

Core +8% and in Living +6%

Gross margin decline Fashion

Core from 52.6% in 2013 to 51.2%

in 2014

Full year underlying EBIT nearly

stable at €-15million

(FY13: €-14million)

Impairment of €55million in

Fashion NL and €11million in

Fashion Belgium

Operational cash flow of

€-33million, mostly from

investments in stock, capex and

non-core disposals

Completion equity raise of €20m

and refinancing of €160 million in

debt facilities in November 2014

(5)

2014 Highlights – Market share won in all markets

Sales fashion core vs market

Sales Fashion core vs market

Shoes, excluding clothes, accessories etc.

-5.8 12.1 21.9 39.5 -4.2 -0.5 42.5 28.5 -0.4 5 8.7 29.6

Netherlands

Offline Online

Belgium

Offline Online

UK

Offline Online

(6)

2014

Highlights

Kurt Staelens

Financial

Review

Jeroen Seyger

Strategy

Update

Kurt Staelens

Q&A

Kurt Staelens,

Jeroen Seyger,

Eric Coorens

Financial

Review

Jeroen Seyger

(7)

Operating performance

(in € million)

Net sales 793.4 77.2 870.6 737.9 84.2 822.1 55.6 -7.0 48.6 Cost of sales -391.9 -42.5 -434.3 -358.5 -44.0 -402.5 -33.4 1.5 -31.8 Gross margin 401.6 34.7 436.3 379.3 40.2 419.6 22.2 -5.5 16.7 Selling Expenses -311.8 -40.4 -352.3 -292.7 -45.9 -338.6 -19.1 5.5 -13.6 Logistic expenses -32.4 -0.3 -32.7 -30.1 -0.4 -30.5 -2.3 0.1 -2.2 Overhead expenses -66.0 -0.6 -66.6 -63.0 -0.9 -63.9 -3.1 0.3 -2.8

Other operating income /

expenses -64.3 -11.4 -75.7 6.8 1.1 7.9 -71.1 -12.5 -83.6

Total expenses -474.5 -52.8 -527.3 -378.9 -46.1 -425.1 -95.6 -6.6 -102.2

Operating result -73.0 -18.0 -91.0 0.4 -5.9 -5.5 -73.4 -12.1 -85.5

Full Year

2014 2013 ∆

(8)

Operating performance

(in € million)

Sales 613.5 568.7 44.8

Gross margin% 51.2% 52.6% -1.4%

Underlying operating income -4.5 0.9 -5.4

Full Year

2014 2013 ∆

Fashion Core

Sales 65.3 71.6 -6.3

Gross margin% 45.0% 48.5% -3.5%

Underlying operating income -7.6 -7.0 -0.6

Fashion Non-Core

Sales 191.9 181.8 10.1

Gross margin% 48.4% 47.1% 1.3%

Underlying operating income 3.5 -0.1 3.6

Living

Sales 870.6 822.1 48.6

Gross margin% 50.1% 51.0% -1.0%

Operating Income -91.0 -5.5 -85.5

Underlying operating Income -15.4 -13.7 -1.7

Group

(9)

Reported to underlying operating income

(in € million)

Fashion -10.3 -0.7 7.8 -1.3 -4.5 -5.4 0.9 -2.9 2.8 -3.5 4.3 Living 4.9 0.0 0.0 -2.1 2.9 3.0 -0.1 -2.5 0.0 0.0 2.4 -5.4 -0.6 7.8 -3.4 -1.6 -2.3 0.8 -5.4 2.8 -3.5 6.7 Fashion -19.9 -0.5 13.5 -0.7 -7.6 -0.6 -7.0 0.1 0.0 -1.2 -5.9 Living 1.8 -0.0 -1.2 0.0 0.6 0.6 0.0 0.0 0.0 0.0 0.0 -18.0 -0.6 12.3 -0.7 -7.0 0.0 -7.0 0.1 0.0 -1.2 -5.9 Other -67.6 1.1 60.5 -0.8 -6.8 0.7 -7.5 -0.4 1.7 -2.5 -6.3 Non-allocated 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -91.0 -0.1 80.6 -4.9 -15.4 -1.7 -13.7 -5.6 4.5 -7.1 -5.5 2014 2013

Consolidated Asset Deals

Restructuring / Adj to lease

provision

Other

non-recurring Underlying Variance (€) Underlying

Other non-recurring

Restructuring / Adj to lease

provision

Asset Deals Consolidated

Core

Non-Core*

Total

*Non-core consolidated operating income and underlying EBIT includes a release from Non-core provisions of €8,2 m in 2014 and €9,8 m in 2013

(10)

Fashion NL 51 24 -11 64 Fashion BeLux 6 23 -27 2 Fashion UK 30 8 -9 29 Fashion Other 3 0 -2 1 Fashion 90 55 -49 96 Living 13 0 -3 10 Total 103 55 -52 106

Non-Core shop development

(in number of shops)

2013 Added Closed 2014

(11)

Free Cash Flow

(in € million)

2014

2013

Δ

EBIT

-91.0

-5.5

-85.5

D&A

91.2

21.5

69.8

EBITDA

0.2

15.9

-15.7

Δ Working Capital

-13.0

4.1

-17.1*

Δ provision

-5.1

-11.8

6.7

Capex

-16.5

-12.4

-4.1

Operational Cash

Flow

-34.4

-4.2

-30.2

Net Debt

69.8

45.6

24.2

(12)

2014

Highlights

Kurt Staelens

Financial

Review

Jeroen Seyger

Strategy

Update

Kurt Staelens

Q&A

Kurt Staelens,

Jeroen Seyger,

Eric Coorens

Strategy

Update

Kurt Staelens

(13)

Sharpening of Rebalancing for Profitable Growth

Transformation pillars

Profit decline after worsening

trading conditions Cost cutting in marketing

Product quality

Stock availability and capex. Rebalancing for profitable growth

(RfPG) defined

Improve stock availability Upgrade product quality

Test shop concepts Increase (digital) marketing

spend

Improve X-channel capabilities Recruit and train new purchasers

Higher profitability and cash flows

Strategy up to 2014

► RfPG programme launched in H1 2014

► Initial results and market share growth confirm validity of RfPG

Strategy Going Forward

► RfPG confirmed and sharpened in 4

transformation pillars

► Focus on ‘Benelux Fashion Only’ as

leading market positions and full country coverage are essential for

(14)

X-Sharpening of Rebalancing for Profitable Growth

Transformation pillars

X-channel

Shop formats

Processes

Focus on

Fashion BNL

(15)

Sharpening of Rebalancing for Profitable Growth

Transformation pillars

► New Format rebranding Above-the-line pillars ► +10€ shop concept Brantano BE, Scapino,

Manfield, Dolcis

► ‘International brands’ layer

► High performance shop program

X-channel

Shop formats

Processes

Focus on

(16)

New Format Rebranding Above-the-Line Pillars

Brantano Belgium

What a shoe can do…for you

The X-channel USP’s of Brantano

Contemporary

Affordable qualitative

choice

FRUN Family ‘Local Village embeddeded’ store

experience cli ck -and -c oll ect ck -and -del iv er

erf

ect

Fit

The shoe FRUN –

shopping experience the

whole family will love

Existing

(17)

New above-the-line format pillars

Netherlands

A-brand quality at the lowest price

• Steve Madden, Ecco, Birckenstock @ lowest price guarantee

• Dr Visser kids

• Strong private labels & sport brands

(MountainPeak, Osaga)

• Niche: diabetic, obese 3h

FREE click -and -collect 6h click -and -deliv

er • Mix of A brands and

private labels

• 65% leather = quality

New International Brands

• ‘Almost’ Mono brand (Manfield private label)

• Up-stretch the

• Steve Madden • Own invito label • Catwalk themes

• Trendy sneakers of TOP A-brands

Shoe shopping experience the whole family will love

Affordable, Timeless style & quality Affordable ‘Trendy’ ‘Trendy Sneakers’

3D P erf ect Fit 3h FREE click -and -collect 6h click -and -deliv er cli ck -and -t and -deliver E clic k-and - k-and -er E clic k-and - k-and -er 3D P erf ect Fit erf ect Fit

(18)

+ €10 Store Concept – Initial Pilot Results

Stock

New Manfield shop format piloted in Amsterdam

and Rotterdam

Results initial pilot period are very promising

Next 10 shops rolled out in Q1 2015 and further

shops in remainder of 2015-2017

Sales

+41%

Net Margin

+34%

Visitors

+53%

Conversions

-1%

#Transactions

+28%

Ticket amount

+11%

(19)

+ €10 Store Concept

Concept launch in 15Q3 with initial

pilot during 2015

Roll out planned in 2016 - 2017

Shop concept will include full

X-channel facilities with

(20)

Sharpening of Rebalancing for Profitable Growth

Transformation pillars

► New Format rebranding Above-the-line pillars ► +10€ shop concept Brantano BE, Scapino,

Manfield, Dolcis

► ‘International brands’ layer

► High performance shop program

► Real time total (online and in-store) stock

view

► 3h free Click-and-collect ► 6h Click-and-deliver ► 3D Perfect Fit

► Multi-channel CRM (and smarter markdown)

X-channel

Shop formats

Processes

Focus on

(21)

Rebalancing for Profitable Growth

Transformation Pillars

Best Product

Younger “X-channel” model superior than “online-only” model

proven by 2014 market share trends

0€ extra-cost-possibility for return, size exchange, delivery via

‘click-and-collect’

Easier return, size exchange, pay-after-you-fit in 500-600

Benelux stores

X-Channel

Online only

(22)

3D Perfect Fit fully operational in Belgium, and rolled-out in NL in

2016-2017

80% of children wear inappropriate shoes

3D Perfect Fit is the main CRM vehicle to capture data in a ‘foot passport’

The ‘foot passport’ is the basis for customized promotions

‘Perfect fit’ data will provide input for ‘product development’ of private labels with

optimized fit

(23)

Sharpening of Rebalancing for Profitable Growth

Transformation pillars

► New Format rebranding Above-the-line pillars ► +10€ shop concept Brantano BE, Scapino,

Manfield, Dolcis

► ‘International brands’ layer

► High performance shop program

► Real time total (online and in-store) stock

view

► 3h free Click-and-collect ► 6h Click-and-deliver ► 3D Perfect Fit

► Multi-channel CRM (and smarter markdown)

► Own product development and

concentration of manufacturers

► Implementation of UK E2E product

process in Benelux

► Rent renegotiations ► Supplier renegotiations

► Synergies in Benelux distribution centers

X-channel

Shop formats

Processes

Focus on

(24)

Best practice E2E processes bring margin improvement of up to

2-3%

Mark- down

Intake margin

Stock as % revenue

+1%

-7%

-7%

(25)

Sharpening of Rebalancing for Profitable Growth

Transformation pillars

► New Format rebranding Above-the-line pillars ► +10€ shop concept Brantano BE, Scapino,

Manfield, Dolcis

► ‘International brands’ layer

► High performance shop program

► Real time total (online and in-store) stock

view

► 3h free Click-and-collect ► 6h Click-and-deliver ► 3D Perfect Fit

► Multi-channel CRM (and smarter markdown)

► Own product development and

concentration of manufacturers

► Implementation of UK E2E product

process in Benelux

► Rent renegotiations ► Supplier renegotiations

► Synergies in Benelux distribution centers

► Sale of Kwantum

► Sale of Nea

► Sale of Fashion UK

► 'Manage for cash' of 108 remaining non-core shops

► Investigate options for cooperation and/or consolidation

X-channel

Shop formats

Processes

Focus on

Fashion BNL

(26)

Focus on Fashion Benelux

Retail landscape is toughening in all countries

Shake out in the market ongoing

Focus on leading market positions and full country coverage are essential for X-channel transformation and

provides best value

Enables strategic cooperation and consolidations

Macintosh shop concepts are underinvested in for years

Divestments allow for accelerated investments as it frees up resources which can be allocated to a smaller

base

Investments to upgrade Benelux shop formats

(27)

2014

Highlights

Kurt Staelens

Financial

Review

Jeroen Seyger

Strategy

Update

Kurt Staelens

Q&A

Kurt Staelens/

Jeroen Seyger

Q&A

Kurt Staelens,

Jeroen Seyger,

Eric Coorens

(28)
(29)

Reported to underlying operating income – Core and Non Core

(in € million)

-5.3 -0.7 1.0 0.0 -1.4 -6.3 -1.3 -5.0 -6.8 0.0 2.7 -3.5 2.6 4.9 0.0 0.0 0.0 -2.1 2.9 3.0 -0.1 -2.5 0.0 0.0 0.0 2.4 Other -72.6 1.1 67.3 0.0 -0.8 -5.0 -3.4 -1.6 3.6 0.0 1.8 -2.5 -4.6 Non-allocated 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total -73.0 0.5 68.3 0.0 -4.2 -8.4 -1.7 -6.7 -5.7 0.0 4.5 -5.9 0.4 -20.4 -0.5 13.8 -6.3 -0.3 -13.6 0.8 -14.5 0.1 -7.8 0.0 -1.2 -5.6 Other 1.8 0.0 -1.2 -1.6 0.0 -1.0 0.6 -1.7 0.0 -1.7 0.0 0.0 0.0 Other 0.5 0.0 -0.3 -0.3 -0.4 -0.6 0.1 -0.6 0.0 -0.3 0.0 0.0 -0.3 Non-allocated 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total -18.0 -0.6 12.3 -8.2 -0.7 -15.2 1.6 -16.8 0.1 -9.8 0.0 -1.2 -5.9 -91.0 -0.1 80.6 -8.2 -4.9 -23.6 -0.1 -23.5 -5.6 -9.8 4.5 -7.1 -5.5 Non-core Provision 0.0 0.0 0.0 8.2 0.0 8.2 -1.6 9.8 0.0 9.8 0.0 0.0 0.0 -91.0 -0.1 80.6 0.0 -4.9 -15.4 -1.7 -13.7 -5.6 0.0 4.5 -7.1 -5.5 Core Fashion Non-Core Living 2014 2013 Consolidat-ed Asset Deals Other operating cost Provision

Release Other Underlying

Variance (€) Underlying Other Provision Release Other operating cost

Asset Deals

Consolidat-ed

Fashion Living

Total Total

Figure

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References

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