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YOOX S.p.A. – Company Profile, SWOT & Financial Report

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YOOX S.p.A.

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TABLE OF CONTENTS

YOOX S.p.A. ......................................................................................................................................................... 6

1 YOOX S.p.A. - Key Employees .................................................................................................................... 7

2 YOOX S.p.A. - Key Employee Biographies................................................................................................. 8

3 YOOX S.p.A. - Major Products and Services .............................................................................................. 9

4 YOOX S.p.A. - History ................................................................................................................................ 10

5 YOOX S.p.A. - Company Statement .......................................................................................................... 12

6 YOOX S.p.A. - Locations and Subsidiaries .............................................................................................. 13

6.1 YOOX S.p.A. - Head Office ..................................................................................................................................... 13

6.2 YOOX S.p.A. - Other Locations and Subsidiaries ................................................................................................... 13

7 YOOX S.p.A. - Business Analysis ............................................................................................................. 14

7.1 YOOX S.p.A. - Company Overview ........................................................................................................................ 14

7.2 YOOX S.p.A. - Business Description ...................................................................................................................... 15

8 YOOX S.p.A. - SWOT Analysis .................................................................................................................. 16

8.1 YOOX S.p.A. - SWOT Analysis - Overview ............................................................................................................ 16

8.2 YOOX S.p.A. - Strengths ........................................................................................................................................ 16

8.2.1 Strength - Wide geographic presence ................................................................................................................ 16

8.2.2 Strength - Strong brand portfolio ........................................................................................................................ 16

8.2.3 Strength - Significant orders ............................................................................................................................... 16

8.3 YOOX S.p.A. - Weaknesses ................................................................................................................................... 17

8.3.1 Weakness - Lawsuits .......................................................................................................................................... 17

8.4 YOOX S.p.A. - Opportunities .................................................................................................................................. 17

8.4.1 Opportunity - Positive outlook of e-retail in Europe ............................................................................................ 17

8.4.2 Opportunity - Strategic initiatives ........................................................................................................................ 17

8.4.3 Opportunity - Marketing initiatives ...................................................................................................................... 17

8.5 YOOX S.p.A. - Threats ............................................................................................................................................ 18

8.5.1 Threat - Economic instability in Europe .............................................................................................................. 18

8.5.2 Threat - Foreign exchange risk ........................................................................................................................... 18

8.5.3 Threat - Changes in fashion trends .................................................................................................................... 18

9 YOOX S.p.A. - Company Financial Analysis ............................................................................................ 19

9.1 YOOX S.p.A. - Five Year Snapshot: Overview of Financial and Operational Performance Indicators .................. 19

9.1.1 YOOX S.p.A. - Financial ratios: Annual ratios .................................................................................................... 19

9.1.2 YOOX S.p.A. - Financial ratios: Interim ratios .................................................................................................... 21

9.1.3 YOOX S.p.A. - Financial ratios: Capital Market Ratios ....................................................................................... 21

9.2 YOOX S.p.A. - Financial Performance and Ratio Charts ........................................................................................ 22

9.2.1 YOOX S.p.A. - Revenue and Operating Profit .................................................................................................... 22

9.2.2 YOOX S.p.A. - Asset and Liabilities .................................................................................................................... 23

9.2.3 YOOX S.p.A. - Net Debt vs. Gearing Ratio ........................................................................................................ 24

9.2.4 YOOX S.p.A. - Operational Efficiency ................................................................................................................ 25

9.2.5 YOOX S.p.A. - Solvency ..................................................................................................................................... 26

9.2.6 YOOX S.p.A. - Valuation..................................................................................................................................... 27

9.3 YOOX S.p.A. - Competitive Benchmarking ............................................................................................................. 28

9.3.1 YOOX S.p.A. - Market Capitalization .................................................................................................................. 29

9.3.2 YOOX S.p.A. - Efficiency .................................................................................................................................... 30

9.3.3 YOOX S.p.A. - Turnover: Inventory and Asset ................................................................................................... 31


YOOX S.p.A.

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10 Appendix .................................................................................................................................................... 32

10.1 Methodology ............................................................................................................................................................ 32

10.2 Ratio Definitions ...................................................................................................................................................... 32

10.3 Disclaimer ................................................................................................................................................................ 37


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List of Tables

Table 1: YOOX S.p.A. - Key Employees ................................................................................................................................... 7

Table 2: YOOX S.p.A. - Key Employee Biographies ................................................................................................................. 8

Table 3: YOOX S.p.A. - Major Products and Services .............................................................................................................. 9

Table 4: YOOX S.p.A. - History ............................................................................................................................................... 10

Table 5: YOOX S.p.A. - Subsidiaries ....................................................................................................................................... 13

Table 6: YOOX S.p.A. - Financial ratios: Annual ratios ........................................................................................................... 19

Table 7: YOOX S.p.A. - Financial ratios: Interim ratios ........................................................................................................... 21

Table 8: YOOX S.p.A. - Financial ratios: Capital Market Ratios ............................................................................................. 21


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List of Figures

Figure 1: YOOX S.p.A. - Revenue and Operating Profit ......................................................................................................... 22

Figure 2: YOOX S.p.A. - Financial Position ............................................................................................................................. 23

Figure 3: YOOX S.p.A. - Net Debt vs. Gearing Ratio .............................................................................................................. 24

Figure 4: YOOX S.p.A. - Operational Efficiency ...................................................................................................................... 25

Figure 5: YOOX S.p.A. - Solvency .......................................................................................................................................... 26

Figure 6: YOOX S.p.A. - Valuation .......................................................................................................................................... 27

Figure 7: YOOX S.p.A. - Market Capitalization ....................................................................................................................... 29

Figure 8: YOOX S.p.A. - Efficiency .......................................................................................................................................... 30

Figure 9: YOOX S.p.A. - Turnover: Inventory and Asset......................................................................................................... 31


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YOOX S.p.A.

Fast Facts

Headquarters Address Via Nannetti 1, zola predosa, 40069,Italy

Telephone + 541143613176

Fax + 541143613695

Website www.yooxgroup.com

Ticker Symbol, Stock Exchange YOOX, Italian SE (Mercato Continuo Italia)

Number of Employees 594

Fiscal Year End December

Revenue (in US$ million) 488

SWOT Analysis

Strengths Weaknesses

Significant orders Lawsuits

Strong brand portfolio

Wide geographic presence

Opportunities Threats

Marketing initiatives Changes in fashion trends

Positive outlook of e-retail in Europe Economic instability in Europe

Strategic initiatives Foreign exchange risk

Share Data

Share price (US$) as on 15 Oct 2013 Share price (US$) as on

29.7142857142857

EPS (US$) 0.22

Market Capitalization (US$ million) 1,718

Enterprise Value (US$ million) 1,719

Shares outstanding (million) 58

Financial Snapshot

Operating Performance

The company reported revenue of US$488 million

during the fiscal year 2012 (2012). The company's

revenue grew at a CAGR of 34.50% during 2008–

2012, with an annual growth of 20.72% over 2011. In

2012, the company recorded an operating margin of

5.03%, as against 5.64% in 2011.

Revenue and Margins

Return on Equity

The company recorded a return on equity (ROE) of

10.01% for 2012, as compared to its peers, Salvatore

Ferragamo Italia S.p.A. (Ticker: SFER), H & M Hennes

& Mauritz AB (Ticker: HMB) and The Gap, Inc. (Ticker:

GPS), which recorded ROEs of 39.49%, 38.48% and

30.24% respectively. The company reported an

operating margin of 5.03% in 2012.

Return on Equity

Liquidity Position

The company reported a current ratio of 1.45 in 2012,

as compared to its peers, Salvatore Ferragamo Italia

S.p.A., H & M Hennes & Mauritz AB and The Gap, Inc.,

which recorded current ratios of 1.28, 2.66 and 2.02

respectively. As of December 2012, the company

recorded cash and short-term investments of worth

US$46 million, against US$16 million current debt. The

company reported a debt to equity ratio of 0.27 in 2012

as compared to its peers, Salvatore Ferragamo Italia

S.p.A., H & M Hennes.


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1 YOOX S.p.A. - Key Employees

Table 1: YOOX S.p.A. - Key Employees

Name Job Title Board Level Since Age

Federico Marchetti Chairman, Chief Executive Officer Executive Board 2009 44

Francesco Guidotti Chief Financial Officer, Financial Reporting

Officer Senior Management 2010 44

Gabriele Tazzari Director - Strategy Senior Management 2012

Alberto Grignolo General Manager Senior Management 2011

Alessandra Rossi Commercial Director Multi-brand Senior Management 2012

Alessandro Montanari Director - Human Resources and

Organization Senior Management 2011

Davide Di Dario Director - Demand Planning Senior Management 2012

Giuseppe Guillot Chief Operating Officer Senior Management 2012

Silvia Scagnelli Investor Relations Manager Senior Management 2009

Clement Kwan Director - North America Senior Management 2012

Luca Martines Director - Asia Pacific Senior Management 2012

Paolo Mascio Commercial Director Online Stores Senior Management 2009

Catherine Gerardin-Vautrin Director Non Executive Board 2009

Elserino Mario Piol Director Non Executive Board 80

Mark Evans Director Non Executive Board 2003

Massimo Giaconia Director Non Executive Board 2009

Raffaello Napoleone Director Non Executive Board 2010

Stefano Valerio Vice Chairman Non Executive Board 2010 43

Source: Canadean


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2 YOOX S.p.A. - Key Employee Biographies

Table 2: YOOX S.p.A. - Key Employee Biographies

Federico Marchetti

Job Title : Chairman, Chief Executive Officer

Since : 2009

Age : 44

Mr. Marchetti has been the Chairman and the Chief Executive Officer

of the company since 2009. Previously, he served as the Chief

Executive Officer and Executive Director of the company. He has been

the Chief Executive Officer of the company since 2000. Mr. Marchetti

began his professional career in 1994 as an Investment Banking

Analyst, first in London and then in Milan. In 1999, he worked with Bain

& Co as a Consultant.

Francesco Guidotti

Job Title : Chief Financial Officer, Financial Reporting Officer

Since : 2010

Age : 44

Mr. Guidotti has been the Chief Financial Officer and the Financial

Reporting Officer of the company since 2010. Previously, from April

2008 to June 2010, he was associated with TAS Group as the Chief

Financial Officer. He served as the Chief Financial Officer of the

PINKO Group from 2006 to 2008. During 2001-2003, he served as the

Financial Controller for the Bulgari Group in Neuchatel, Switzerland. In

October 2000, Mr. Guidotti served as the Chief Financial Officer at

Zenith Italia S.p.A. (Milan) and OMAS S.r.l. (Bologna). In 1997, he

joined TAG Heuer Italia S.p.A., a subsidiary of the Louis Vuitton Moet

Hennessy Group, where he held the position of the Chief Financial

Officer for the Italian subsidiary in 1999. In 1996, he became the

Financial Manager of Ethicon Endo-Surgery, a subsidiary of Johnson &

Johnson.

Giuseppe Guillot

Job Title : Chief Operating Officer

Since : 2012

Mr. Guillot has been the Chief Operating Officer of the company since

2012. Previously, he served as Interim Human Resources Director and

Director, Technology of the company. Mr. Guillot joined the company in

2007 as the Business Process Re-engineering Manager. He also

worked as the company's Quality Assurance Manager and Manager of

the Office of the Chief Executive Officer. Proir to that, in 1999, he

joined Zeborg in New York (formerly the Mitchell Madison Group) as

an associate and Director. During 2005-2007, Mr. Guillot worked as a

B2B e-Sourcing consultant for Swedish multinationals in partnership

with IBX of Stockholm.

Source: Canadean


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3 YOOX S.p.A. - Major Products and Services

YOOX S.p.A. is an internet retailing partner for fashion and design brands based in Italy. The key products and

services offered by the company include the following:

Table 3: YOOX S.p.A. - Major Products and Services

Products:

Clothing

Fashion and lifestyle accessories

Footwear

Services:

Consulting

Web marketing

Source: Canadean


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4 YOOX S.p.A. - History

Table 4: YOOX S.p.A. - History

Year Event type Description

2012

Corporate Changes/Expansions

The company launched a new Chinese version of yoox.com.

2012


The company launched several Mono-brand online stores in Asia Pacific, Europe and the US,

which includes

barbarabui.com, pringlescotland.com, pomellato.com, alexanderwang.com, moncler.com,

trussardi.com, bikkembergs.com and missoni.com.

2012

Contracts/Agreements

The company signed a new five-year contract with Staff International S.p.A for ‘Just Cavalli’

brand license.

2012


The company renewed its brand license with Sportswear S.p.A. and Diesel S.p.A.

2012


The company launched shoescribe.com, a multi-brand online footwear store.

2012


The company renovated the online store yoox.com with user-friendly features such as ‘Speak

& Shop’, a voice recognition and text-based search feature.

2012

New Products/Services

The company launched new mobile applications for yoox.com and shorescribe.com for the

iOS mobile and android operating systems.

2012


The company signed an agreement with PPR S.A (also known as Kering) to manage the

various luxury brands of the PPR Group such as Bottega Veneta, Saint Laurent, Alexander

McQueen, Balenciaga, Sergio Rossi and Stella McCartney.

2011


The company signed contracts with Adidas and BrunelloCucinelli for the launch of y-

3store.com in Europe, the US and Japan.

2011


The company extended its Diesel online store to Japan and MarniOnline store to China.

2011

New Products/Services

The company launched trussardi.com in Europe, the US and Japan.

2010


The company established a wholly-owned subsidiary - Mishang Trading (Shanghai) Co. Ltd to

manage sales in China.

2010


The company entered China with an online flagship store, emporioarmani.cn.

2009

Stock Listings/IPO

The company went public and shares started trading on the Milan Stock Exchange.


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Table 4: YOOX S.p.A. - History

Year Event type Description

2009

Corporate Awards

The company’s web store, yoox.com won an ‘International Stevie Award’ for e-commerce.

2009


The company launched coccinelle.com, giuseppezanottidesign.com, napapijri.com,

albertaferretti.com, zeishouse.com, maisonmartinmargiela.com and zegna.com.

2008


The company launched cpcompany.com, stoneisland.com, valentino.com, misssixty.com,

costumenational.com, energie.it and emiliopucci.com.

2007


The company launched emporioarmani.com and diesel.com.

2007


The company established a subsidiary, Y Services, to manage the US sales.

2006


The company launched first online store for Marni brand, marni.com.

2005

Corporate Awards

The company received ‘Interactive key’ award in e-commerce consumer service & support

and consumer oriented category subsequently for the second time.

2004


The company received ‘Interactive key’ award in e-commerce consumer service & support

and consumer oriented category.

2003

Corporate Awards

The company’s yoox.com was recognized with ‘Standard of Excellence’ award.

2002


The company established a subsidiary, YOOX Corporation in the US.

2001

Corporate Awards

The company was awarded the best e-commerce platform award out of 100 fashion sites.

2000

Incorporation/Establishment

YOOX S.p.A. was established.

Source: Canadean


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5 YOOX S.p.A. - Company Statement A statement by Mr. Federico Marchetti, the Chairman and the Chief Executive Officer of Yoox S.p.A. is given below. The

statement has been taken from the company’s 2012 annual report.

Dear Shareholders,

2012 was a year in which our Company achieved strong results: net revenues amounted to Euro 376 million, up 29% on

2011, net income increased to Euro 10.2 million, and our net financial position further improved. We achieved these results

thanks to the extraordinary efforts of our entire team across both business lines. We have an outstanding organization,

which worked with great passion in all our key markets. YOOX is an increasingly global company, with its heart in Italy and

84% of its revenues generated abroad. In 2012 the US remained our number 1 market, with extremely satisfactory results

also coming from Italy, the rest of Europe and Japan. In 2012, our Multi-brand business line continued along its path of

sustained growth. Many important projects were launched during the year.

Amongst the most significant, we must certainly highlight the launch of shoescribe.com, our new Multi-brand site dedicated

to the world of women’s shoes, which is proving to be a destination of choice in the market, thanks mainly to the luxury

services introduced for the first time in the ecommerce sector. Equally important was the development of the new yoox.com,

which was launched on a global level - including China, a strategic market for the Group - in autumn 2012, with a completely

revised, more effective version including significant innovations. During the year, we continued to work alongside our

partners in the Mono-brand business line with the persistent aim of offering them continued excellent service.

In 2012, we also established a joint venture with PPR, with the ultimate goal of enhancing the existing e-commerce websites

of six PPR luxury brands and accelerating the development of their global digital presence. Technology and innovation are

key success factors for YOOX and investment in research and development during the year continued accordingly. Great

attention was paid, and will continue to be paid, to developing the multi-channel platform with the aim of anticipating trends

in the strongly expanding world of internet accessibility, in which YOOX has invested right from the start. Customers’

shopping experiences will increasingly occur across varying channels: in December alone, visits from phones and tablets

accounted for approximately 25% of our total traffic and we believe that this is just the beginning. In 2012, we also continued

investment in our global logistics platform, accelerating the completion of its automation, which will enable us to further

improve operational efficiency and will support the Group’s future growth, providing our customers and partners with a 99%

level of on-time deliveries.

I think that 2013 can be another successful year for our Company, during which we must continue both to focus on the

impeccable execution of ongoing projects with all of our partners and to be even more attentive to our loyal customers, to

whom I would like to extend my personal thanks. Our customers are our raison d’être, the driving force behind all our

activities and efforts: ensuring that they have the best shopping experience, providing reliable, customized luxury services,

surprising them, listening to them and understanding their needs - everything is aimed at satisfying our customers and

building a trusted relationship with them over the long term. It is to them that we dedicate our passion and innovation, which

have always characterized YOOX and which are the foundations for ensuring the future sustained growth of our Company.


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6 YOOX S.p.A. - Locations and Subsidiaries

6.1 YOOX S.p.A. - Head Office

YOOX S.p.A.

Via Nannetti 1

zola predosa

Zip: 40069

Italy

Tel: + 541143613176

Fax: + 541143613695

6.2 YOOX S.p.A. - Other Locations and Subsidiaries

Table 5: YOOX S.p.A. - Subsidiaries

Y Services

1220 Market St. Ste 806

Wilmington

Zip: 19801

United States of America

Tel: + 13146337100

YOOX Japan

Grande Maison Daikanyama No. 1001 150 0022 Shibuya-ku

Tokyo

Japan

YOOX Corporation

15 East North Dover

Zip: 19901

United States of America

Mishang Trading (Shanghai) Co. Ltd

Floor 6, Donglong Building

No.223 Xikang Road

Shanghai

Zip: 200050

China

YOOX Asia Limited

16 Floor Western Plaza

3 San On Street

Hong Kong

Source: Canadean


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7 YOOX S.p.A. - Business Analysis

7.1 YOOX S.p.A. - Company Overview

YOOX S.p.A. (YOOX) is an online retailer of fashion apparel and accessories based in Italy. The company offers a

comprehensive range of clothing, footwear, vintage garments, fashion accessories, art books, capsule collections, and

special editions from fashionable designers. The company markets its products through three multi-brand stores: yoox.com,

thecorner.com and shoescribe.com, and with 34 mono-brand online stores such as zegna.com, valentine.com, missoni.com

and diesel.com. In addition, it provides consulting and web marketing investment management services to its mono-brand

partners. The company has operations in the US, Europe, Japan and China and markets products in more than 100

countries. YOOX is headquartered in Bologna, Italy.


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7.2 YOOX S.p.A. - Business Description

YOOX is leading online fashion retailer based in Italy. The company offers a range of fashion and design products of

popular, niche and emerging brands in the fashion industry. The company offers fashion apparel, and designer accessories

for men and women.

The company classifies business operations under two segments: Multi-Brand and Mono-Brand.

The Multi-Brand segment comprises three online stores: yoox.com, thecorner.com and shoescribe.com. The online store,

yoox.com has been operational since June 2000. Through this store, the company distributes and sells a wide range of

fashion and design products such as apparel, footwear and fashion accessories in over 100 countries. Its products belt

buckles, bow ties, checkbook holders, coin purses, books, children's toys, coats and jackets, glasses, bags, containers,

jewelry, luggage, pants, pet’s accessories, watches and lingerie, among others. Additionally, it markets special occasional

collection from major designers, collection of art work, vintage garments, web magazines on special editions and design

objects. These products are offered under more than 1000 popular brands.

The thecorner.com is an online luxury boutique launched in February 2008. Through this store, the company sells apparel

and accessories under a collection of current season’s trends. It offers a wide range of clothing, footwear and accessories

for women and men. The web store consists of mini-shops dedicated to each brand and category. The shoescribe.com is

new Multi-Brand online store launched in March 2012. Through this store, the company offers a complete range of women

footwear. It offers a range of footwear such as ballerinas and flats, boots, espadrilles, homewear, loafers and lace-ups,

pumps and heels, sandals and clogs, sneakers and sportswear. These are sold under more than 100 established brands. In

2012, these multi-brand stores recorded a monthly average of 5.70 million unique visitors. During FY2012, the Multi-Brand

segment contributed 69.70% towards the total revenue.

Under the Mono-Brand segment, the company designs and manages mono-brand online stores for popular fashion brands

and designers. The company manages the entire online shopping process for these partners, with a tagline ‘powered by

YOOX Group’ displayed on these mono-brand online stores. The tagline ‘powered by YOOX Group’ represents guaranteed

service quality offered by YOOX. As of December 31, 2012, the segment managed 33 mono-brand online stores for its

partners. These stores include marni.com, emporiorarmani.com, diesel.com, cpcompany.com, stoneisland.com,

valentine.com, misssixty.com, costumentational.com, energie.it, emiliopucci.com, moschino.com, bally.com,

dolcegabanna.com, dsquared2.com, jilsander.com and robertocavalli.com, coccinelle.com, giuseppezanottidesign.com,

napapijri.com, missoni.com and among others. In 2012, the mono-brand stores recorded a monthly average of 7.30 million

unique visitors. During FY2012, the segment contributed 30.30% towards the total revenue.

The company manages a distribution center at Interporto in Bologna, Italy. Additionally, YOOX has outsourced its logistics

services to Geodis Logistics for six years starting from 2011. Geodis Logistics manages national and international supply

chain of the company including the handling and shipping activities, inventory management and return management phases.

YOOX classifies geographic operations under six segments: Italy, Rest of Europe, North America, Japan, other countries

and not country related. During FY2012, Italy contributed 15.70% towards the total revenue, followed by Rest of Europe with

47.90%, North America with 21.70%, Japan with 8.30%, other countries with 3.90% and 2.50% revenue from ‘not country

related’ activities that include revenue from set-up and maintenance activities, media partnership projects, web marketing

services and web design services.

In May 2013, yoox.com launched a unique collection of jewelry created by Osanna Visconti di Modrone.

In March 2013, the company launched Jerome C. Rousseau’s collection of shoes inspired by the Disney’s Oz The Great and

Powerful movie. During the same month, yoox.com launched John Malkovich’s exclusive collection of men’s beachwear

under the brand, Technobohemian.


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8 YOOX S.p.A. - SWOT Analysis

8.1 YOOX S.p.A. - SWOT Analysis - Overview

YOOX S.p.A. is a global internet retailing partner for fashion and design brands. Wide geographic presence, strong brand

image and significant orders are the key strengths of the company, whereas lawsuits remain a major concern area. Going

forward, changes in fashion trends, foreign exchange risk and economic instability of the European nations may affect its

business operations. However, marketing initiatives, strategic initiatives and positive outlook of e-retail in Europe may offer

growth opportunities for the company.

8.2 YOOX S.p.A. - Strengths

8.2.1 Strength - Wide geographic presence

Geographically diverse operations helps the company mitigate various risks associated with the dependence on a particular

market. YOOX, an online fashion retailer, offers a range of fashion and design products of popular, niche and emerging

brands in the fashion industry. YOOX has offices and operations in the US, Europe, Japan, China and Hong Kong and

delivers products to more than 100 countries. During FY2012, the company generated 15.70% of total revenue from Italy,

47.90% from Rest of Europe, 21.70% from North America, 8.30% from Japan and 3.90% from other countries. Wide

geographic presence enabled the company to register monthly average of 5.70 million unique visitors for its Multi-Brand

business and 7.30 million unique visitors for Mono-Brand business. Wide geographic presence coupled with strong

customer base provides a competitive edge over its peers.

8.2.2 Strength - Strong brand portfolio

Strong brand portfolio helps the company to serve a wide range of customers. The company principally offers apparel,

footwear and fashion accessories through its established brands under the Multi-Brand segment. Some of its key brands

include products from renowned designers and their brands such as American Retro, American Vintage, Amina Rubinacci,

Alexander Wang, Christian Dior, Hugh Parsons, Hugo Boss, Lauren Ralph Lauren, Laurence Dacade, Burberry, Victoria

Beckham Denims, Kors Michael Kors, Gucci, Dolce & Gabbana and Dolcevita, among others. In addition, the company,

through Mono-Brand business involves in the design, setting up and exclusive management of Mono-brand Online Stores

for some of the world’s leading fashion brands. At December 31, 2012, it had global strategic partnerships with 33 leading

online fashion brands. Some of these partners include marni.com, diesel.com, stoneisland.com, emiliopucci.com, bally.com,

coccinelle.com, zeishouse.com, y-3store.com, trussardi.com, sergiorossi.com and stellamccartney.com, among others.

Strong portfolio of brands helps the company to maintain its position in the market.

8.2.3 Strength - Significant orders

Significant order volume increased the company’s top line performance. During FY2012, it registered a total order volume of

2,330,000, an increase of 13.38% from 2,055,000 in FY2011. This increase in volume increased average order value by

14.44% in FY2012 over FY2011. This growth in order volume and order value increased the company’s total revenue by

9.09% to EUR376 million (US$483 million) in FY2012 over FY2011. The increase in top line performance enhances

investors’ confidence on the company, apart from helping it to maintain its position in the market.


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8.3 YOOX S.p.A. - Weaknesses

8.3.1 Weakness - Lawsuits

Lawsuits may add additional cost to the company, which in turn may affect its bottom line performance. The company is

defendant in two labor lawsuits filed at the Court of Bologna by former employees, and these lawsuits are pending. YOOX is

also subjected to a lawsuit filed by The Humane Society of the US (The HSUS). In 2008, the HSUS filed a petition with

Federal Trade Commission (FTC) alleging the fake advertisements of Fur against the retailers, which includes YOOX.

Furthermore, in October 2009, the HSUS filed Supplemental Petition to the FTC to investigate the advertisements of the

retailers in the period between 2005 and 2007. The petition alleges that the Fur trimmed garments were falsely advertised

as faux fur or genuine raccoon or coyote fur by the company and other retailers. Such litigations and proceedings affect the

company's results of operations, apart from tarnishing its brand image.

8.4 YOOX S.p.A. - Opportunities

8.4.1 Opportunity - Positive outlook of e-retail in Europe

The company stands to benefit from growing trend of e-retail in Europe, which provides the consumers with convenience of

shopping from home. According to an in-house research, the online retail channel is expected to expand at the rate of

19.96% during 2011-16 contributing to the total European retail sales segment. The channel is forecasted to register retail

sales of EUR7 billion (US$10 billion) by the end of 2016. Being a leading on-line retailer through yoox.com, thecorner.com

and shoescribe.com, YOOX may capture the growing e-retail trend.

8.4.2 Opportunity - Strategic initiatives

Recent strategic initiatives may enhance the company market reach by strengthening its brand portfolio. In July 2013, the

company signed a five-year deal with Kartell S.p.A. for a Web boutique in Europe from the first quarter of 2014. In August

2012, the company signed an agreement with PPR S.A to form a joint venture, in which PPR has 51.00% and YOOX has

49.00% stake. This joint venture is dedicated to the management of the Mono-Brand online stores of various PPR Group

luxury brands such as Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga, Sergio Rossi and Stella McCartney.

This initiative leverages the leadership positions of YOOX and PPR in their respective sectors. This partnership further

strengthens the company’s presence in luxury goods market in emerging nations such as China.

8.4.3 Opportunity - Marketing initiatives

The marketing initiatives undertaken by the company may enhance its top line performance. The company’s marketing

activities include three main policies: the acquisition of new customers, increasing the retention rate of customers acquired

through CRM and direct marketing operations and increasing brand awareness. It focuses on ‘Search Engine Marketing’

activities that involve promoting websites by increasing their visibility in the main search engines used by the customers.

These initiatives enabled the company to design and promote web campaigns in 40,000 sites in more than 50 countries, and

over 258 million newsletters translated into the languages managed by the company, were sent to subscribers for the Multi-

Brand line. In addition, over 32 media partnership projects were set up to enhance its visibility. Furthermore, the company

has plans invest in the innovation and consolidation of multi-channel technology to capture the expected growth in mobile

channel. Such marketing initiatives may further strengthen its business operations.


YOOX S.p.A.

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8.5 YOOX S.p.A. - Threats

8.5.1 Threat - Economic instability in Europe

The unstable economic condition in EU region is posing challenges for companies dependent on such regions. In 2010, the

16-member euro region was struck by debt crisis. As a repercussion of which, euro fell by 16.00% against the dollar and the

governments from Spain to Germany slashed budget costs to decrease deficits. The International Monetary Fund (IMF) and

the member nations of EU announced a EUR750 billion (US$1,042 billion) rescue package to bailout the debt struck

countries such as Greece, Italy and Ireland. In 2012, Europe and EU27 countries recorded a negative growth rate of 0.60%

and 0.30%, respectively, with a significant rise in deficit and fall in consumer spending. Going forward, for the year 2013, the

IMF anticipates a negative outlook of 0.20% growth rate for the Euro zone. IMF also expects the Italian economy to contract

by 1.80% in 2013. As YOOX derives 63.60% of the total revenue from Europe, economic instability of EU nations may affect

the company’s results of operations.

8.5.2 Threat - Foreign exchange risk

YOOX operates in various parts of the world and exposed to the fluctuations in foreign exchange rates. The company

reports financials in the Euros and therefore its revenue is exposed to volatility against other functional currencies such as

the US dollar, British pound, Canadian dollar, Chinese yuan, Euro and Japanese yen, among others. During FY2012, the

company reported a loss of EUR0.7 million (US$0.8 million) due to foreign currency translation adjustment as compared to a

gain of EUR0.6 million (US$0.7 million) in FY2011. The company also involves in foreign exchange hedging activities by

entering into foreign exchange forward contracts to minimize the risk associated with currency translation. However, there

may be no assurance that such hedging activities or measures limit the impact of movements in exchange rates on the

company’s results of operations.

8.5.3 Threat - Changes in fashion trends

Frequent evolution in the fashion trends may affect the company’s performance. The rate of change in fashion trends has

been increasing over the years, thereby forcing companies such as YOOX to update its product offerings with the latest

market trends. To adopt the latest fashion trends, customers often shift their loyalties to those brands that offer these trendy

merchandises. Inability of the company to change or update its collection, according to the fashion trends and varying

customer preferences may negatively affect its brand image.


YOOX S.p.A.

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9 YOOX S.p.A. - Company Financial Analysis

9.1 YOOX S.p.A. - Five Year Snapshot: Overview of Financial and Operational Performance

Indicators

The company reported revenue of US$488 million during the fiscal year 2012 (2012). The company's revenue grew at a

CAGR of 34.50% during 2008–2012, with an annual growth of 20.72% over 2011. During 2012, operating margin of the

company was 5.03% in comparison with operating margin of 5.64% in 2011. In 2012, the company recorded a net profit

margin of 2.71% compared to a net profit margin of 3.43% in 2011.

9.1.1 YOOX S.p.A. - Financial ratios: Annual ratios

Table 6: YOOX S.p.A. - Financial ratios: Annual ratios

Key Ratios Unit/Currency 2012 2011 2010 2009 2008

Equity Ratios

EPS (Earnings per Share) EUR 0.17 0.18 0.17 0.08 0.06

Book Value per Share EUR 1.78 1.50 1.31 1.07 0.39

Cash Value per Share EUR 0.69 0.21

Profitability Ratios

Gross Margin % 20.85 21.71 9.60 29.16 27.47

Operating Margin % 5.03 5.64 7.00 5.81 4.72

Net Profit Margin % 2.71 3.43 4.25 2.69 2.37

Profit Markup % 26.35 27.74 10.62 41.16 37.88

PBT Margin (Profit Before Tax) % 4.41 5.65 6.97 4.85 3.52

Return on Equity % 10.01 12.11 13.27 7.58 14.62

Return on Capital Employed % 16.14 17.40 21.46 15.97 13.36

Return on Assets % 4.01 5.56 6.34 3.98 3.71

Return on Fixed Assets % 34.09 44.49 69.84 81.23 57.00

Return on Working Capital % 30.64 28.58 30.97 19.88 17.46

Growth Ratios

Sales Growth % 29.10 35.89 40.78 50.04 47.51

Operating Income Growth % 15.14 9.43 69.77 84.59 837.18

EBITDA Growth % 23.35 32.64 98.91 82.94 934.16

Net Income Growth % 1.83 9.69 122.47 70.61

EPS Growth % -5.56 4.11 35.26 114.98 1836.81

Working Capital Growth % 7.43 18.58 8.99 62.05 276.51

Cost Ratios

Operating Costs (% of Sales) % 94.97 94.36 93.00 94.19 95.28

Administration Costs (% of Sales) % 11.93 13.32 0.86 18.95 20.31

Liquidity Ratios

Current Ratio Absolute 1.45 1.67 1.66 1.93 1.95

Quick Ratio Absolute 0.44 0.48 0.62 0.95 0.61

Cash Ratio Absolute 0.26 0.27 0.33 0.74 0.31

Leverage Ratios

Debt to Equity Ratio Absolute 0.27 0.17 0.09 0.02 1.39


YOOX S.p.A.

20

Table 6: YOOX S.p.A. - Financial ratios: Annual ratios

Key Ratios Unit/Currency 2012 2011 2010 2009 2008

Net Debt to Equity Absolute 0.62 0.45 0.45 -0.63 0.84

Debt to Capital Ratio Absolute 0.23 0.15 0.09 0.02 0.64

Efficiency Ratios

Asset Turnover Absolute 1.48 1.62 1.49 1.48 1.57

Fixed Asset Turnover Absolute 12.95 15.08 25.52 43.39 29.14

Inventory Turnover Absolute 2.15 2.24 2.54 2.29 1.90

Current Asset Turnover Absolute 1.90 2.04 1.75 1.65 1.80

Capital Employed Turnover Absolute 3.69 3.53 3.12 2.81 6.17

Working Capital Turnover Absolute 6.09 5.07 4.42 3.42 3.70

Revenue per Employee EUR 550,401.00

Net Income per Employee EUR 14,909.00

Capex to Sales % 5.11 3.64 5.34 1.90 3.56

Source: Canadean


YOOX S.p.A.

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9.1.2 YOOX S.p.A. - Financial ratios: Interim ratios

Table 7: YOOX S.p.A. - Financial ratios: Interim ratios

Key Ratios Unit/Currency Jun-2013 Mar-2013 Dec-2012 Sep-2012

Equity Ratios

Interim EPS (Earnings per Share) EUR 0.02 0.11 0.11 0.04

Book Value per Share EUR 1.86 1.83 1.78 1.65


Gross Margin % 28.12 23.12 32.98 24.17

Operating Margin % 2.29 1.69 10.82 3.05

Net Profit Margin % 1.06 0.96 6.17 1.32

Profit Markup % 39.13 30.07 49.21 31.87

PBT Margin (Profit Before Tax) % 1.66 1.50 9.62 2.51

Cost Ratios

Operating Costs (% of Sales) % 97.71 98.31 89.18 96.95

Administration Costs (% of Sales) % 20.72 21.01 21.93 20.75

Liquidity Ratios

Current Ratio Absolute 1.34 1.42 1.45 1.58

Quick Ratio Absolute 0.34 0.43 0.44 0.41

Leverage Ratios

Debt to Equity Ratio Absolute 0.22 0.23 0.27 0.23

Net Debt to Equity Absolute 0.43 -0.06 -0.09

Debt to Capital Ratio Absolute 0.19 0.20 0.23 0.19

Source: Canadean

9.1.3 YOOX S.p.A. - Financial ratios: Capital Market Ratios

Table 8: YOOX S.p.A. - Financial ratios: Capital Market Ratios

Key Ratios 15-Oct-2013

P/E (Price/Earnings) Ratio 134.59

EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 44.51

Enterprise Value/Sales 3.52

Enterprise Value/Operating Profit 70.00

Enterprise Value/Total Assets 5.22

Note: Above ratios are based on share price as of 15-Oct-2013. The above ratios are absolute numbers.

Source: Canadean


YOOX S.p.A.

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9.2 YOOX S.p.A. - Financial Performance and Ratio Charts

9.2.1 YOOX S.p.A. - Revenue and Operating Profit

The consolidated group revenue of the company for 2012 stood at US$488 million, which corresponds to a growth rate of 20.71%

over the previous year. The operating margin of the company was 5.03% in 2012, a decrease of 61.00 basis points over the

previous year.

Figure 1: YOOX S.p.A. - Revenue and Operating Profit

Source: Canadean


YOOX S.p.A.

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9.2.2 YOOX S.p.A. - Asset and Liabilities

The company's assets grew 31.82% over the previous year to US$329 million in 2012. The company's liabilities grew 45.86%

over the previous year to US$197 million in 2012. The company's asset to liability ratio reduced from 1.85 in 2011 to 1.67 in 2012.

Figure 2: YOOX S.p.A. - Financial Position

Source: Canadean


YOOX S.p.A.

24

9.2.3 YOOX S.p.A. - Net Debt vs. Gearing Ratio

The company recorded higher net debt of US$35 million at the end of fiscal year 2012 when compared to the previous year's net

debt of US$20 million. The company's gearing ratio for the year 2012 was 0.15, which was higher when compared to the previous

year's gearing ratio of 0.14. The gearing ratio remained higher in 2012 due to higher debt funding activities over equity.

Figure 3: YOOX S.p.A. - Net Debt vs. Gearing Ratio

Source: Canadean


YOOX S.p.A.

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9.2.4 YOOX S.p.A. - Operational Efficiency

The company's working capital turnover for 2012 grew to 6.09, from the previous year's working capital turnover of 5.07. In 2012,

the company's asset turnover declined to 1.48 from the previous year's asset turnover of 1.62.

Figure 4: YOOX S.p.A. - Operational Efficiency

Source: Canadean


YOOX S.p.A.

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9.2.5 YOOX S.p.A. - Solvency

In 2012, the company's current ratio declined to 1.45 from the previous year's current ratio of 1.67. The company’s quick ra tio

declined to 0.44 in 2012 from the previous year's quick ratio of 0.48. In 2012, the company’s debt ratio increased to 0.11 from the

previous year's debt ratio of 0.08.

Figure 5: YOOX S.p.A. - Solvency

Source: Canadean


YOOX S.p.A.

27

9.2.6 YOOX S.p.A. - Valuation

As of 15-Oct-2013, the company recorded an EV/EBIT of 70.00, EV/Total Assets of 5.22 and EV/Sales of 3.52.

Figure 6: YOOX S.p.A. - Valuation

Source: Canadean


YOOX S.p.A.

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9.3 YOOX S.p.A. - Competitive Benchmarking

The following companies are the major competitors of YOOX S.p.A.: Aeffe S.p.A. (Ticker: AEF)

Benetton Group S.p.A. (Ticker: BEN)

Gruppo Coin S.p.A.

H & M Hennes & Mauritz AB (Ticker: HMB)

Salvatore Ferragamo Italia S.p.A. (Ticker: SFER)

Stefanel S.p.A. (Ticker: STEF)

The Gap, Inc. (Ticker: GPS)


YOOX S.p.A.

29

For competitive benchmarking, latest financial results are considered. Following are the key performance indicators against

which the companies have been benchmarked:

9.3.1 YOOX S.p.A. - Market Capitalization

As of 15-Oct-2013, the company recorded a market capitalization of US$1,718 million, lower than its close competitors The Gap,

Inc. (Ticker: GPS) and H & M Hennes & Mauritz AB (Ticker: HMB) which recorded market capitalizations of US$19,953 million

and US$66,716 million respectively. The company recorded earnings per share of US$0.22 in 2012, which has led to a

price/earnings ratio (P/E ratio) of 134.59. This was higher than the P/E ratios of its peers The Gap, Inc. (Ticker: GPS), H & M

Hennes & Mauritz AB (Ticker: HMB) and Salvatore Ferragamo Italia S.p.A. (Ticker: SFER), which recorded P/E ratio of 27.31,

26.78 and 0.00 respectively.

Figure 7: YOOX S.p.A. - Market Capitalization

Source: Canadean

Note: Company names are represented by ticker symbols

Bubble size represents Market Capitalization US$ Million

For those data points with negative values, bubbles will not be displayed.

Where the market cap is disproportionately smaller, a bubble may not be displayed.


YOOX S.p.A.

30

9.3.2 YOOX S.p.A. - Efficiency

The company recorded an operating margin of 5.03% in 2012. This was lower than the operating margin of its peers, The Gap,

Inc. (Ticker: GPS), H & M Hennes & Mauritz AB (Ticker: HMB) and Salvatore Ferragamo Italia S.p.A. (Ticker: SFER), which

recorded the margins of 9.88%, 18.01% and 16.85% respectively. In terms of revenues, the company is 0.03 times of The Gap,

Inc. (Ticker: GPS), 0.03 times of H & M Hennes & Mauritz AB (Ticker: HMB), and 0.33 times of Salvatore Ferragamo Italia S.p.A.

(Ticker: SFER).

Figure 8: YOOX S.p.A. - Efficiency

Source: Canadean



YOOX S.p.A.

31

9.3.3 YOOX S.p.A. - Turnover: Inventory and Asset

In 2012, the company reported an inventory turnover of 2.15, lower than that of its peers: during the same period, The Gap, Inc.

(Ticker: GPS) and H & M Hennes & Mauritz AB (Ticker: HMB) recorded inventory turnovers of 5.74 and 3.22 respectively The

company’s asset turnover in 2012 was 1.48, lower than that of its peers: during the same period, The Gap, Inc. (Ticker: GPS), H &

M Hennes & Mauritz AB (Ticker: HMB) and Salvatore Ferragamo Italia S.p.A. (Ticker: SFER) recorded asset turnovers of 1.96,

2.01 and 1.51 respectively.

Figure 9: YOOX S.p.A. - Turnover: Inventory and Asset

Source: Canadean



YOOX S.p.A.

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10 Appendix

10.1 Methodology

Canadean company reports are based on a core set of research techniques which ensure the best possible level of quality

and accuracy of data. The key sources used include:

Company Websites

Company Annual Reports

SEC Filings

Press Releases

Proprietary Databases

Notes

Financial information of the company is taken from the most recently published annual reports or SEC filings

The financial and operational data reported for the company is as per the industry defined standards

Revenue converted to US$ at average annual conversion rate as of fiscal year end

10.2 Ratio Definitions

Capital Market Ratios

Capital Market Ratios measure investor response to owning a company's stock and also the cost

of issuing stock.

Price/Earnings Ratio (P/E)

Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual income

earned per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors

are paying more for each unit of income, so the stock is more expensive compared to one with

lower P/E ratio. A high P/E suggests that investors are expecting higher earnings growth in the

future compared to companies with a lower P/E. Price per share is as of previous business

close, and EPS is from latest annual report.

Formula: Price per Share / Earnings per Share

Enterprise Value/Earnings

before Interest, Tax,

Depreciation & Amortization

(EV/EBITDA)

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with,

or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE ratio is that

it is unaffected by a company's capital structure. It compares the value of a business, free of

debt, to earnings before interest. Price per share is as of previous business close, and shares

outstanding last reported. Other items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net Income + Interest + Tax + Depreciation + Amortization)

Enterprise Value/Sales

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy

the company's sales. EV/Sales is seen as more accurate than Price/Sales because market

capitalization does not take into account the amount of debt a company has, which needs to be

paid back at some point. Price per share is as of previous business close, and shares

outstanding last reported. Other items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales

Enterprise Value/Operating

Profit


YOOX S.p.A.

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Enterprise Value/Operating Profit measures the company's enterprise value to the operating

profit. Price per share is as of previous business close, and shares outstanding last reported.

Other items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating Income

Enterprise Value/Total

Assets

Enterprise Value/Total Assets measures the company's enterprise value to the total assets.

Price per share is as of previous business close, and shares outstanding last reported. Other

items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total Assets

Dividend Yield

Dividend Yield shows how much a company pays out in dividends each year relative to its share

price. In the absence of any capital gains, the dividend yield is the return on investment for a

stock.

Formula: Annual Dividend per Share / Price per Share

Equity Ratios

These ratios are based on per share value.

Earnings per Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding

share of common stock. EPS serves as an indicator of a company's profitability.

Formula: Net Income / Weighted Average Shares

Dividend per Share

Dividend is the distribution of a portion of a company's earnings, decided by the board of

directors, to a class of its shareholders.

Dividend Cover

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to

shareholders.

Formula: Earnings per share / Dividend per share

Book Value per Share

Book Value per Share measure used by owners of common shares in a firm to determine the

level of safety associated with each individual share after all debts are paid accordingly.

Formula: (Shareholders Equity - Preferred Equity) / Outstanding Shares

Cash Value per Share

Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance

sheet) that is determined by dividing cash & equivalents by the total shares outstanding.

Formula: Cash & equivalents / Outstanding Shares


Profitability Ratios are used to assess a company's ability to generate earnings, based on

revenues generated or resources used. For most of these ratios, having a higher value relative

to a competitor's ratio or the same ratio from a previous period is indicative that the company is

doing well.

Gross Margin

Gross margin is the amount of contribution to the business enterprise, after paying for direct-

fixed and direct variable unit costs.

Formula: {(Revenue-Cost of revenue) / Revenue}*100

Operating Margin

Operating Margin is a ratio used to measure a company's pricing strategy and operating


YOOX S.p.A.

34

efficiency.

Formula: (Operating Income / Revenues) *100

Net Profit Margin

Net Profit Margin is the ratio of net profits to revenues for a company or business segment - that

shows how much of each dollar earned by the company is translated into profits.

Formula: (Net Profit / Revenues) *100

Profit Markup

Profit Markup measures the company's gross profitability, as compared to the cost of revenue.

Formula: Gross Income / Cost of Revenue

PBIT Margin (Profit Before

Interest & Tax)

Profit Before Interest & Tax Margin shows the profitability of the company before interest

expense & taxation.

Formula: {(Net Profit + Interest + Tax) / Revenue} *100

PBT Margin (Profit Before

Tax)

Profit Before Tax Margin measures the pre-tax income over revenues.

Formula: {Income Before Tax / Revenues} *100

Return on Equity

Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of

the common stock owners.

Formula: (Net Income / Shareholders Equity)*100

Return on Capital Employed

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a

company's capital investments. ROCE should always be higher than the rate at which the

company borrows; otherwise any increase in borrowing will reduce shareholders' earnings.

Formula: EBIT / (Total Assets – Current Liabilities)*100

Return on Assets

Return on Assets is an indicator of how profitable a company is relative to its total assets, the

ratio measures how efficient management is at using its assets to generate earnings.

Formula: (Net Income / Total Assets)*100

Return on Fixed Assets

Return on Fixed Assets measures the company's profitability to its fixed assets (property, plant &

equipment).

Formula: (Net Income / Fixed Assets) *100

Return on Working Capital

Return on Working Capital measures the company's profitability to its working capital.

Formula: (Net Income / Working Capital) *100

Cost Ratios

Cost ratios help to understand the costs the company is incurring as a percentage of sales.

Operating costs (% of Sales)

Operating costs as percentage of total revenues measures the operating costs that a company

incurs compared to the revenues.

Formula: (Operating Expenses / Revenues) *100

Administration costs (% of

Sales)

Administration costs as percentage of total revenue measures the selling, general and

administrative expenses that a company incurs compared to the revenues.


YOOX S.p.A.

35

Formula: (Administrative Expenses / Revenues) *100

Interest costs (% of Sales)

Interest costs as percentage of total revenues measures the interest expense that a company

incurs compared to the revenues.

Formula: (Interest Expenses / Revenues) *100

Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company to get an idea of the

company's methods of financing or to measure its ability to meet financial obligations. There are

several different ratios, but the main factors looked at include debt, equity, assets and interest

expenses.

Debt to Equity Ratio

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio also

depends on the industry in which the company operates. For example, capital-intensive

industries tend to have a higher debt equity ratio.

Formula: Total Liabilities / Shareholders Equity

Debt to Capital Ratio

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing its

operations, along with some insight into its financial strength. The higher the debt-to-capital ratio,

the more debt the company has compared to its equity. This indicates to investors whether a

company is more prone to using debt financing or equity financing. A company with high debt-to-

capital ratios, compared to a general or industry average, may show weak financial strength

because the cost of these debts may weigh on the company and increase its default risk.

Formula: {Total Debt / (Total assets - Current Liabilities)}

Interest Coverage Ratio

Interest Coverage Ratio is used to determine how easily a company can pay interest on

outstanding debt, calculated as earnings before interest & tax by interest expense.

Formula: EBIT / Interest Expense

Liquidity Ratios

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts

obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the

company possesses to cover short-term debts. A company's ability to turn short-term assets into

cash to cover debts is of the utmost importance when creditors are seeking payment.

Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine

whether a company will be able to continue as a going concern.

Current Ratio

Current Ratio measures a company's ability to pay its short-term obligations. The ratio gives an

idea of the company's ability to pay back its short-term liabilities (debt and payables) with its

short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable

the company is of paying its obligations. A ratio under 1 suggests that the company would be

unable to pay off its obligations if they came due at that point.

Formula: Current Assets / Current Liabilities

Quick Ratio

Quick ratio measures a company's ability to meet its short-term obligations with its most liquid

assets.

Formula: (Current Assets - Inventories) / Current Liabilities

Cash Ratio

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It only

looks at the most liquid short-term assets of the company, which are those that can be most

easily used to pay off current obligations. It also ignores inventory and receivables, as there are


YOOX S.p.A.

36

no assurances that these two accounts can be converted to cash in a timely matter to meet

current liabilities.

Formula: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

Efficiency Ratios

Efficiency ratios measure a company's effectiveness in various areas of its operations,

essentially looking at maximizing its use of resources.

Fixed Asset Turnover

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to generate

sales. A higher ratio indicates the business has less money tied up in fixed assets for each

currency unit of sales revenue. A declining ratio may indicate that the business is over-invested

in plant, equipment, or other fixed assets.

Formula: Net Sales / Fixed Assets

Asset Turnover

Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales

revenue to the company. A higher asset turnover ratio shows that the company has been more

effective in using its assets to generate revenues.

Formula: Net Sales / Total Assets

Current Asset Turnover

Current Asset Turnover indicates how efficiently the business uses its current assets to generate

sales.

Formula: Net Sales / Current Assets

Inventory Turnover

Inventory Turnover ratio shows how many times a company's inventory is sold and replaced

over a period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio

implies either strong sales or ineffective buying.

Formula: Cost of Goods Sold / Inventory

Working Capital Turnover

Working Capital Turnover is a measurement to compare the depletion of working capital to the

generation of sales. This provides some useful information as to how effectively a company is

using its working capital to generate sales.

Formula: Net Sales / Working Capital

Capital Employed Turnover

Capital employed turnover ratio measures the efficiency of a company's use of its equity in

generating sales revenue to the company.

Formula: Net Sales / Shareholders Equity

Capex to sales

Capex to Sales ratio measures the company's expenditure (investments) on fixed and related

assets' effectiveness when compared to the sales generated.

Formula: (Capital Expenditure / Sales) *100

Net income per Employee

Net income per Employee looks at a company's net income in relation to the number of

employees they have. Ideally, a company wants a higher profit per employee possible, as it

denotes higher productivity.

Formula: Net Income / No. of Employees

Revenue per Employee

Revenue per Employee measures the average revenue generated per employee of a company.

This ratio is most useful when compared against other companies in the same industry.


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37

Generally, a company seeks the highest revenue per employee.

Formula: Revenue / No. of Employees

Efficiency Ratio

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company is

losing a larger percentage of its income to expenses. If the efficiency ratio is getting lower, it is

good for the bank and its shareholders.

Formula: Non-interest expense / Total Interest Income Source : Canadean

10.3 Disclaimer

All Rights Reserved

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,

electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Canadean.

The data and analysis within this report is driven by Canadean from its own primary and secondary research of public and

proprietary sources and does not necessarily represent the views of the company profiled.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the

findings, conclusions and recommendations that Canadean delivers will be based on information gathered in good faith from

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