Sima case history coin 18 marzo 2015

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CASE HISTORY COIN

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• 1916 Vittorio Coin starts the Gruppo Coin activities

• 1926 First Coin Store (Mirano, Venice)

• 1965 Coin P.za 5 Giornate opens (Milan)

• 1972 First “Organizzazione Vendite Speciali” (Oviesse) store

• 1986 Coin is the first retailer to develop a fidelity card program in Italy

• 1995 Oviesse become an apparel retailer

• 1998 Acquisition of La Standa

• 1999 Listing of Gruppo Coin on the Milan Stock Exchange

• 2005 PAI equity fund becomes Gruppo Coin majority shareholder

• 2008 Acquisition of Melablu

• 2010 Acquisition of UPIM

• 2011 BC Partners becomes Gruppo Coin majority shareholder

• 2011 Excelsior opens in Milan

• 2012 Acquisition of IANA

• 2013 Excelsior opens in Verona

• 2014 Coin Excelsior opens in Rome

COIN: one hundred years of history

Established in 1926, Coin is the largest Italian department store €413,2 m net sales in 2014 77 stores in Italy and 20 abroad, located downtown in the most important Italian cities and shopping areas Portfolio of 800 brands 46 million visitors every year 21,6 million items sold and 12 million receipts

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Coin in a snapshot

● NET SALES

● SQM BUILDING

2012

43%

22%

35%

SQM: 91.335

2012

33%

17%

50%

NET SALES (€/1000): 276.158

2010

41%

24%

35%

NET SALES (€/1000): 273.814

2010

48%

26%

26%

SQM: 82.010

2008

57%

32%

11%

hb

ws

concession

NET SALES (€/1000): 232.935

2008

61%

31%

8%

hb

ws

concession

SQM: 74.100

Where we come from: Net Sales and Sqm building 2008–2010–2012

TOTAL CATEGORY (Beauty and Home not included)

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Where we come from: Trend 2007-2011

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*Capex 2007-2011: 61,7 mio € (Italian new openings, conversions and refurbishing)

Bridge Ebitda (2007-2011)

Ebitda trend (2007 – 2011 ) is positive thanks to network development otherwise

is offset because of division costs and the decrease of LfL Ebitda Store

∆ Division Costs ∆ HQ costs ∆ Ebitda Coin 2011Ebitda Coin 2007 ∆ Store Ebitda ∆ Store Ebitda

LfL New opening/closure

Store Ebitda ∆ GM ∆ Personnel ∆ Rent ∆ Space ∆ Operating ∆ Rent Store Ebitda ∆

2007 costs costs costs income 2011 2007-2011

Partners 0,6 0,0 -6,5 -8,0 -2,6 -4,2 41,4 20,7 20,1

Wholesales 7,5 -11,8 2,4 1,4 0,6 0,9 0,0 1,0 -6,5

Housebrand 31,4 -34,0 8,2 4,2 1,9 2,9 0,0 14,6 -16,8

Total 39,5 -45,8 4,1 -2,4 -0,1 -0,4 41,4 36,3 -3,2 M€

Space Impact: -36,1M€

Sales Density: -7,7M€

Gm Impact: -2,0M€

Network

2007

Bridge Ebitda of the same dos from 2007 to 2011

Ebitda trend is negative because of the Gross Margin decrease is higher than rent

incomes increase

Where we come from: Trend 2007-2011

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1. WHAT WORKED AND WE FURTHER IMPROVE:

• Concession Model

• Cost control

• Format Coin (customer experience)

Going Forward

2. WHAT HAS NOT WORKED AND WE ADDRESS:

• Wholesales man/woman/ accessories: reduction of sales

density and Ebitda

• House brand: fall of sales density

• Upim conversion and new opening underperforming

3. WHAT WE “ TURN AROUND”

• Customer Experience

“consumer have to dream while walking”

“memorability and uniqueness of the experience”

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The market share of department stores in Italy is the lowest in Europe but…

% share men/women/kids clothing market in terms of value per sales channel

Source:

European Customer Panel 2012

# Monobrand POP breakdown by channel of distribution: Based on 21 brands

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38,7 41,2 44,0

3,23,6

4,09,0 7,57,1

34,7 32,7 29,7

3,5 3,4 3,37,1 7,0 6,53,0 3,0 3,0

0,8 1,5 2,4

2011 2012 2013

Other Channels (w/o Outlets&E-Commerce)

Market

Hyper+Super

Independent stores

E-Commerce

Large Surface retailers

Department Store

Specialized retail channels

Multibrand

Channels

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…showing significant growth opportunities vs. independent multibrand

-3,0% -5,0% -6,5% Market Share

3,2 3,6 4,0

Department stores

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Italian Market Concentration

sport

5,5%children

14,1%

leather

2,5% underwear

4,4%

apparel

54,9%

footwear

18,6%

In 2013, over 7.000 independent apparel stores

went out of business; (1°quarter 2014 -3.000)

Multibrand apparel

channel 51.000 (without

footwear)

Source : Fashion Bank

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Apparel/accessories consumption according to price range

BRIDGE /

BEST

MASS

MODERA

TE

GOOD

BETTER

-3,3

-5,0

-10,0

-8,6

-4,6

-6,6 Total Var

VAR % 13/12

CORR. VALUE

Source: Fashion Consumer Panel

and internal elaboration

50

98

141

204

310

Price index numbers

2012 2013

49

95

141

209

323 Luxury

Accessible

luxury

Medium

price

Low

price

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WHAT WE HAVE DONE: Coin Strategy

CONSOLIDATE THE MARKET, CREATING A PREMIUM DEPARTMENT STORE

NETWORK:

•Increase the space allocated to brands in concession (33%) with a positive impact on

the business profitability and working capital (stock/sqm -29% in the last 4 years),

limiting the presence of housebrands/wholesale to the minimum

•Trading up brand mix, leveraging concession model with accessible luxury brands,

growing average ticket.

• Progressive conversion of the most relevant stores in the Coin Excelsior format

(premium contemporary) following Coin Excelsior Rome extremely positive results.

• Optimizing sales people kpi efficiency (sales/eft, sqm/eft), improving performance

via selection training and incentive plans

EBITDA

+ +

CASH FLOW

++++

BRAND

POSITIONING

UPGRADE

+++

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Sales and sqm per commercial mix

TOTAL CATEGORIES (Perfurmery and Home escluded)

● NET SALES

● SQM BUILDING

2013

43%

19%

38%

SQM: 90.797

2013

30%

15%

55%

NET SALES (€/1000): 268.215

2010

41%

24%

35%

NET SALES (€/1000): 273.814

2010

48%

26%

26%

SQM: 82.010

2008

57%

32%

11%

hb

ws

partner

NET SALES (€/1000): 232.935

2008

61%

31%

8%

hb

ws

partner

SQM: 74.100

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Italian Market Share: upgrade evolution

.

Luxury

0%

Accessible

luxury High

0,8%

Accessible luxury

medium low

1,9%

Medium price

1,9%

Low price

0%

Market share

2013

Coin Italy

LV,

Chanel,

Dior,

Cucinelli,

Gucci,

Lanvin,

Prada….

Ralph

Lauren,

Moncler

MaxMara,

Zegna, Fay

Twin Set, Liu

Jo, M. Kors,

MbyM, Paul

Smith, …

Seventy,

Longcha

mp,

Furla,

Boggi,…

Upim, Piazza Italia, Terranova,

Iper, mercatini OVS, H&M

Zara,

Mango, Motivi..

Marlboro

Classics

Marina

Yacthing

Miss Siixtiy

Stefanel,

THilfiger,

Esprit

Benetton

2013 Market share

2013

Luxury

12-13%

Accessible

luxury High

38-45

Fast fashion

Medium price

32-38%

Low price

11-13%

Coin MKt Share:

2012 1,36%

2013 1,49%

Luxury

Over 400%

of leverage price

More 200% of leverage price Accessible Luxury From 125 to 200% of leverage price

From 75 to 125% of leverage price Fast Fashion Medium Price From 50 to 75% of leverage price

Low Price

Up to 50%

of leverage price

?

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Italian Market Share: upgrade evolution

.

Luxury

0%

Accessible

luxury High

0,8%

Accessible luxury

medium low

1,9%

Medium price

1,9%

Low price

0%

Market share

2013

Coin Italy

LV,

Chanel,

Dior,

Cucinelli,

Gucci,

Lanvin,

Prada….

Ralph

Lauren,

Moncler

MaxMara,

Zegna, Fay

Twin Set, Liu

Jo, M. Kors,

MbyM, Paul

Smith, …

Seventy,

Longcha

mp,

Furla,

Boggi,…

Upim, Piazza Italia, Terranova,

Iper, mercatini OVS, H&M

Zara,

Mango, Motivi..

Marlboro

Classics

Marina

Yacthing

Miss Siixtiy

Stefanel,

THilfiger,

Esprit

Benetton

2013 Market share

2013

Luxury

12-13%

Accessible

luxury High

38-45

Fast fashion

Medium price

32-38%

Low price

11-13%

Coin MKt Share:

2012 1,36%

2013 1,49%

2014 1,62%

Luxury

Over 400%

of leverage price

More 200% of leverage price Accessible Luxury From 125 to 200% of leverage price

From 75 to 125% of leverage price Fast Fashion Medium Price From 50 to 75% of leverage price

Low Price

Up to 50%

of leverage price

LOW PRICE

CLASSIC CONTEMPORARY

.

TRADITIONAL NEO TRADITIONAL CONTEMPORARY TRENDY

en

try p

ric

e

me

diu

m

hg

h

HIGH PRICE

lu

xu

ry

Brand Mix Evolution

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Stores and Brand Mix Evolution

2005 / 2008 2009 / 2013 2014

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COIN EXCELSIOR - Roma Cola di Rienzo

2014 2012

(K/€)

Building Sqm 3.140 4.240* (+35%)

Concession Sqm 1.232 2.320 * (+88%)

Building Sales 27.816 45.790 (+65%)

Sales Density 8.858 10.800 (+22%)

Average Ticket 49,16 70,26 (+43%)

*with food market

** current rent

***calculated on building net sales

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Store Clusters – Clusterization Criteria AMBASSADOR (12):• Market > 500 mln €

• Population > 1 mln

• Average market income > 100

• Sales/sqm > 4.500

• % of total Building Sales Coin: 42%

• % of total Store EBITDA Coin: 48%

• Central locations

• High quality stores

CITY BOUTIQUE (28):

• % of total Building Sales Coin : 40%


SHOPPING CENTER (5)



COIN FACTORY STORE (8):

• Size < 2.000 mq


• Rent ≈ 10%

• Popular areas in large cities or central areas in small cities

AMBASSADOR (12, of which 5 potential Coin Excelsior)

• Market> 500 mln euro

• Population> 1 mln

• Average market income > 100

• Sales/sqm > 4.500

• % of totale Builiding Sales Coin: 42%


• Central locations

• High quality store

CITY BOUTIQUE (11)



SHOPPING CENTER (7)



OTHERS (24)

• Size < 2,000


• Rent 10%

• Popular areas in large cities or central areas in small

cities

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Direct Store Network - 2014

Becoming a Total Retailer

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ON LINE

• Email

• Web Site

• Social Network

• Ecommerce

OFF LINE

• In Store Windows

• Video Wall

• Digital Totem

• Radio

• TV

• Leaflet

BETWEEN ON & OFF LINE

• SMS

• Push Notification

• App

Becoming a real omnichannel retailer:CRM to enhance the Customer Experience

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CRM : the Key for Omnichanneling

CRM is the Bridge between the Customer and the Brand channels.

CRM is the key to obtain a omni-channel retail strategy to promote your brand,

improve the consumer experience and increase revenues.

Customer Omnichannel Experience

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In-Store TV

250 monitors located on the ground floor of

33 stores

Digital Communication – In-Store TV

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Radio & Digital Totems

•

Coin Music Design is present in all stores

with a radio station broadcasting the best of

international pop, electro dance and R’n’B

music.

Digital Communication – Radio & Digital Totem

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Digital Showcase

Innovative Digital Windows: a backdrop

comprising FullHD screens to combine digital

contents

and product display

Digital Communication – Digital Windows

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iBeacons & Proximity marketing

•

Innovative Third Parties APP to start using

iBeacons tecnology in the Store

Digital Communication – Proximity Marketing

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In Store Event, using Video Wall

Blogger Engagement

Coin FaceBook Page

Google Glass test in store

Digital Communication – Events combining Online & Offline

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Digital Communication – Google Hangout

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Digital Communication – Google Virtual Tour

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Coin.it

200,000 unique visitors per month // 1 million page views

per month // 11 millions DEM sent per year //

Social Networks with a high level of fan activities

Twitter // Facebook // Google Plus //

Andorid & IOS App

Launch in March 2015

Coincasa.it

Launched in November 2014, the first

Coin E-commerce.

From April 2015 Click & Collect will be

available

Digital Communication – Digital Assets

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Coincard

Large database (over 2 millions people)

862,000 active consumer (84% women, 16% men)

47% of Coin sales

Virtual Coincard

From March 2015 even on your Smartphone for existing users and new ones

Customer Omnichannel Experience – The role of COINCARD

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