Fashion companies in Italy (2010-2015) Report compiled by Mediobanca - PowerPoint PPT Presentation

Fashion companies in Italy (2010-2015) Report compiled by Mediobanca Research Area Presentation available for download free of charge from www.mbres.it Milan, International Press Association, 23 February 2016

Contents 1. Global scenario 2. Italian fashion seen by the Mediobanca Research Area 3. The Italian fashion “Top15" 4. The 143 Italian fashion companies 5. 9M 2015 6. Between luxury and Formula 1 7. The companies behind the brands 8. What are our cousins up to? 2

Global scenario Section 1 3

Fashion: big business Global fashion industry turnover (personal luxury goods) Of which: Of which: € 224bn in 2014 Europe 76bn +2% Leather goods 65bn +4%   Americas 72bn +3% Clothing 54bn +2%   Asia-Pacific 47bn +1% Jewellery and watches 52bn +1%   +2% on 2013 Japan 18bn +2% Beauty products and perfumes   45bn +2% Growth estimates for 2015: +13% (1-2% at constant exchange rates), and € 253bn turnover. Source: Bain & C. Fondazione Altagamma, Worldwide Luxury Market Monitor, October 2014 and 2015 4

Travel shopping: what happens when tourists fill their suitcases Europe is the continent most reliant on tourist shopping, followed by the Americas. In Europe , the decrease in purchases by residents was offset by the continuing expansion of Tax-free shopping in the tourist shopping, which was more than half of the total. Chinese buyers accounted for first nine months 2015: approximately 36% of the total tax free shopping market, up 16% with respect to 2013, offsetting the decrease in spending by the Russians down 10%, still in second position with 9%. +26% in Europe Also in Italy the Chinese were the top spenders with 32% of the tax-free shopping (with Milan as +19% in Italy the favourite destination followed by Rome) ahead of the Russians (13%) and the Americans (8%). Tax-free shopping in Europe is estimated at around € 48bn in 2015 and is mainly concentrated in four Countries, i.e. France, Germany, U.K. and Italy, which represent overall 74% of the European market. Source: data compiled by Global Blue, October 2015. 5

Half the market is monobrand … Fashion retail:  Wholesale: wholesale via third-party distributors 47%  Retail: own monobrand or third-party licencees 105bn Single-brand stores accounted for 53% of the luxury market: the top players are committed to strengthening the mono- brand retail segment, including through direct sales 53% (flagship stores), in the most prestigious locations. This allows for enhanced image control and service quality and 119bn support for price positioning on the market, increasing the perception of exclusivity and aesthetic-aspirational value by the buyer. Global personal luxury goods market Monobrand Multibrand Source: Bain & C. Fondazione Altagamma, Worldwide Luxury Market Monitor, October 2014 and 2015. 6

… but the other channels are growing faster Global on-line sales in 2014 were around € 12bn: this is the sales channel expected to grow faster with the highest growth estimates for 2015, up 40% (reaching approximately 7% of the total value of the luxury market from the current 5%). Global outlet sales accounted for approximately € 19bn and they are expected to grow by another 35% in 2015, to reach approximately 10% of the total value of the market from the current 9%. Global sales in airports were approximately € 11bn and they are expected to grow by another 29% in 2015, to reach approximately 6% of the total value of the market from the current 5%. Source: Bain & C. Fondazione Altagamma, Worldwide Luxury Market Monitor, October 2014 and 2015 7

Italian fashion seen by the Mediobanca Research Area Section 2 8

Italian fashion: map and compass “Top 15 ” : economic analysis of Top15 Italian fashion Groups “ 143 Italian fashion companies (Top15 included) with sales   per sales (Clothing-Eyewear-Leather goods) between 2010 of at least € 100mln, between 2010 and 2014: and 2014 (included first nine months 2015). Sector  Who they are  59 clothing  Armani 32 leather goods   Benetton (SpA)  20 textile  Calzedonia  11 gold and jewellery  D&G  5 eyewear  Lir (Geox)  16 retailing  Luxottica  Max Mara Where   Moncler  56 North West  OTB (Diesel)  55 North East  Prada  32 Rest of Italy  Safilo  Salvatore Ferragamo  Ownership  Tod’s 99 Italian   Valentino  44 non-Italian (18 French)  Zegna  Seven are listed on the stock market  Sixteen are listed on the stock market  Two are international-owned: Valentino (Qatar) and Safilo  (Dutch holding company) “I’m here but you can’t see me”: Gucci and Bottega Veneta  (Kering Group) 9

Fashion: the elixir for growth … Kpi (key performance indicators): Top15, Italian fashion companies and manufacturing companies Italian fashion companies grow more than manufacturing. Top15 and fashion companies better than manufacturing for sales, margins and employment. % sales 2014-10 34.2 30.8 27.7 26.0 25.1 22.7 16.3 14.1 14.0 Net sales Ebit Employees Top15 Italian fashion Italian fashion companies Large Italian manufacturing a (net of Chrysler's effect) 10

… and to become more robust KPIs (key performance indicators): Top15, Italian fashion companies and manufacturing companies What most clearly distinguishes fashion companies from large Italian manufacturing companies is their financial structure. They are more capitalized and “liquid”. 12.3 140.4 118.2 9.3 73.7 6.0 50.8 36.8 23.4 Top15 Italian fashion Italian fashion companies Large Italian manufacturing EBIT margin (2014 %) Borrowings/equity (2014 %) Liquidity/borrowings (2014 %) 11

The Italian fashion “Top 15" Section 3 12

The fashion "top 15 ": figures … Net sales 2014 ( € m) Aggregate turnover € 27.8bn (up 5.6% on 7,652 2013 and up 30.8% on 2010) Gucci (net sales 2014: € 3,497m) and Bottega Veneta (net sales 2014: € 1,131m), Kering Group. 3,552 Benetton Group: € 1,633m 2,535 1,847 1,536 1,321 1,310 1,296 1,210 1,179 1,045 966 934 721 694 Luxottica Prada Armani Calzedonia OTB (Diesel) Ferragamo Max Mara Benetton Zegna Safilo D&G Tod's Lir (Geox) Valentino Moncler (SpA) 13

… and sectors Net sales 2014 ( € bn e % of total) 46% 12.7 32% 8.8 11% 10% 2.9 2.8 1% 0.6 Clothing Eyewear Leather goods Shoes Royalities and other revenues 14

The Italian fashion industry’s creative hands: lots of them, and growing Employees (average number) in 2014 75,575 Aggregate labour force: 176,887 staff (up 9% on 2013 and up 34.2% on 2010) Gucci (labour force 2014: 9,623 staff) and Bottega Veneta (labour force 2014: 3,212 staff), Kering Group. 30,705 Benetton Group: 9,429 staff 11,962 8,112 7,663 7,609 6,286 5,670 4,294 4,239 4,113 3,764 3,011 2,477 1,407 Luxottica Calzedonia Prada Armani Zegna Safilo OTB (Diesel) Max Mara D&G Tod's Lir (Geox) Ferragamo Benetton (SpA) Valentino Moncler 15

Eleven on the pitch and four on the bench: strong team away from home % non-Europe net sales, 2014 Top15: European net sales € 12.1bn, non-European € 15.7bn 80.3 European net sales: up 4.6% on 2013 and up 14.9% on 2010 73.1 72.6 Non-European net sales: up 6.4% on 2013 and up 46.4% on 2010 63.6 58.7 57.7 56.3 55.7 55.2 48.5 47.7 44.9 34.0 22.9 9.0 1.1 Luxottica Ferragamo Zegna Prada Safilo Valentino Armani D&G OTB (Diesel) Moncler Tod's Max Mara Lir (Geox) Benetton (SpA) Calzedonia Top15 16

ebit margin, 2010 and 2014 Margins are “luxury” too 20.7 Moncler 29.8 20.8 Prada 19.9 11.3 Ferragamo 18.6 15.9 Armani 16.3 20.3 In 2010 Prada, Moncler and Tod’s ranked first, with EBIT more than 20%. Ferragamo, which ranked Tod's 15.6 12.6 Luxottica 15.3 8.9 Boom in ebit margin in 2010-14: Moncler, Valentino and Ferragamo. Zegna 10.1 9.3 Max Mara 8.1 17.0 third in 2014, had come in eighth in 2010. 2010 Calzedonia 7.6 17 6.3 Safilo 2014 6.8 18.1 D&G 6.5 -3.0 Valentino 5.4 6.9 OTB (Diesel) 2.3 9.6 Lir (Geox) 0.9 8.9 Benetton (SpA) -6.0 12.8 Top15 12.3 9.5 Fashion companies 9.3

Return on capital invested (ROI) and equity (ROE) 37.8 Ferragamo 50.6 31.6 Moncler 45.1 26.0 Armani 20.1 20.0 Prada 17.7 17.8 Tod's 13.6 16.0 Luxottica 15.0 10.5 Zegna 7.8 9.3 Ferragamo and Moncler the best for ROI and ROE. Calzedonia 7.3 Roi 2014 Top15 better than Italian fashion companies. 6.4 Max Mara 4.6 Armani third, Prada fourth. 18 6.4 Safilo 4.2 Roe 2014 5.9 D&G 3.4 5.4 Valentino 5.5 3.0 OTB (Diesel) 0.5 1.7 Lir (Geox) 0.6 -1.5 Benetton (SpA) -1.4 13.1 Top15 13.0 12.7 Fashion companies 10.0

The fashion “ top 15” is “out of fashion”: low borrowings and … % borrowings on equity, 2014 55.8 The financial structure of the Top15 was even more solid than the 143 fashion companies, with financial debt in 2014 representing just 23.4% of equity (down 50.0 from 35.3% in 2010). Best of all: Armani, Max Mara and Tod’s . 36.8 28.0 28.1 25.8 23.6 23.4 18.7 17.3 15.1 12.3 12.2 11.9 4.4 1.9 2.0 Armani Max Mara Tod's OTB (Diesel) D&G Benetton (SpA) Lir (Geox) Prada Valentino Calzedonia Safilo Ferragamo Zegna Luxottica Moncler Top15 companies Fashion 19