Update of the 2020 Group Business Plan August 3, 2018
DISCLAIMER This presentation may contain forward looking statements based on current expectations and proj ects of the Group in relation to future events. Due to their specific nature, these statements are subj ect to inherent risks and uncertainties, as they depend on certain circumstances and facts, most of which being beyond the control of the Group. Therefore actual results could differ, even to a significant extent, with respect to those reported in the statements. 1
TODAY AGENDA • An Attractive Eyewear Industry • What S afilo stands for • S afilo in context • Key S trategies • Financial Targets 2
TODAY AGENDA • An Attractive Eyewear Industry • What S afilo stands for • S afilo in context • Key S trategies • Financial Targets 3
AN ATTRACTIVE EYEWEAR INDUSTRY • The share of t he world’ s population aged 45+ will Healthy Eyewear Industry increase significantly Demographics EUR bn, Wholesale value • >2bn people in need of Increasing wealth in emerging markets will result in Developed Emerging more people gaining access to eyecare eyecare solution CAGR ‘17 - ’20 • Health & wellness trends will cont inue to generate ~+3% -4% 21 interest in preventive/ prot ect ive eyecare +4% ~+2% • 18 Consumers are increasingly willing to pay for brands that 16 offer distinguishing value . Traditional brand Consumer behavior segmentation may lose relevance Impact of millennials • Millennials will be 45% of consumers in 2025 and will influence consumption attitudes also for eyewear ~+5% • Eyewear dist ribut ion is fragmented , with a large part of business in independent opticians Channels • Digital channels currently represent ̴ 5% sales, growing Digital growing 2014 2017 2020E fast , wit h online plat forms/ mult i brand websit es and specialist players leading the growt h. Omni-channe l becomes more and more important S OURCE: Management estimates 4
TODAY AGENDA • An Attractive Eyewear Industry • What Safilo stands for • S afilo in context • Key S trategies • Financial Targets 5
WHAT SAFILO STANDS FOR • 2nd Biggest Global Player • Distinctive and recognized product design, creation and innovation capabilities, supported by strong communication in reaching key influencers • 140 years of eyewear manufacturing: Made in Italy capacity and craftmanship, recently enhanced by smart automat ion and the latest technologies • Know-how in licenses' management and ideal partner for high potential brands within a multi-segment brand portfolio • Four own core brands representing 25% of the Group’s business • Direct distribution in 40 countries and wide network of global partners worldwide, reaching ~100.000 points of sales 6
WHAT SAFILO STANDS FOR: Product Design and Manufacturing Footprint • A new Product Creation Dep. was created in late 2014 with the purpose to drive t he creat ion, development and innovation of t he most unique eyewear collections , operating from a network of international design studios • Our products are manufactured bot h in-house, in our own plants in Italy, China, S lovenia and the Unit ed S tat es and t hrough a network of third-party manufacturers in Italy and Asia • We tailor production to each brand and market segment, from t he value-for-money t o the highest end atelier • Design studios: Padua, Milan, New York, Portland, Hong Kong In 2017, we produced 40% of our sale volumes in-house Plants: Europe North America Far East • Longarone (Italy) • S • S alt Lake City uzhou (RPC) • S .Maria di S ala (Italy) • Martignacco (Italy) • Bergamo (Italy) • Ormoz (S lovenia) 7
WHAT SAFILO STANDS FOR: Global Distribution Network • We sell our products wit h an extensive subsidiary network in 40 countries in North and Latin America, Europe, Middle East and Africa, Asia Pacific and China • We have a net work of more than 50 independent distribution partners covering the other countries. • We reach nearly 100,000 points of sale all over t he world including opt icians, optometrists, opht halmologists, distribution chains, department stores, specialised retailers, licensors’ own stores, duty free shops and sports shops : Direct Distribution : Indirect Distribution : Not covered 8
WHAT SAFILO STANDS FOR: Multi-segment Brand Portfolio Fashion Luxury 3 bn€ Retail price*: >200€ Premium, Contemporary & Lifestyle 10 bn€ Retail price*: 80€ to 200€ Mass/cool (branded) 2 bn€ Retail price*: 30€ to 80€ Private label 3 bn€ Retail price*: <30 € S OURCE: Management estimates 9 * Recommended ret ail price
TODAY AGENDA • An Attractive Eyewear Industry • What S afilo stands for • Safilo in context • Key S trategies • Financial Targets 10
SAFILO IN CONTEXT Key business drivers 1 • S trong and historical position in Developed Markets 43% M A RKET 57% Geographic • Opportunity to accelerate growth in Emerging Markets mix 18% 82% SA F I L O 2 Product Developed Markets Emer ging Markets mix 3 Cost structure S OURCE: S afilo’ s data in % on 2017 sales and management estimates 11
SAFILO IN CONTEXT Key business drivers 1 Geographic mix 2 M A RKET 33% 67% • S trong position in the S unglasses business Product • Opportunity to recover a stronghold in Prescription frames mix 65% 35% SA F I L O 3 S un & Ot her Pr escript ion frames Cost structure S OURCE: S afilo’ s data in % on 2017 sales and management estimates 12
SAFILO IN CONTEXT Key business drivers 1 Geographic mix 2 Product mix I N D U ST RY 40% 43% 9% BEN CH M ARKS 3 • Higher cost structure Cost • Opportunity to significantly reduce costs and structure improve profitability SA F I L O 50% 40% 15% COGS S elling G&A S OURCE: S afilo’ s data in % on 2017 sales and management estimates 13
TODAY AGENDA 1 – An Attractive Eyewear Industry 2 – What S afilo stands for 3 – S afilo in context 4 – Key Strategies 5 – Financial Targets 14
KEY STRATEGIES 1 REIGNITE SALES GROWTH with FOCUS on Key Brands, Geographies and Channels Leveraging world-class Putting the Embedding PRODUCT CREATION AND CONSUMER & CUSTOMER DIGITAL AND E-COMMERCE INNOVATION at the heart of what we do into our way of work and sell 2 RECOVER OPERATING PERFORMANCE S ignificantly REDUCE THE GROUP COS T S TRUCTURE • Gross margin improvement from COGS savings • Overheads reduction … with a Culture of AGILITY & SPEED 15
KEY STRATEGIES AND IMPACTS Growth 2019-2020 (EUR Mio) Sales EBITDA 1 • Play multi-segment with core licensed/ own brands Multi-segment portfolio • Accelerate Growth in Premium and Contemporary • Catch growth in Emerging markets Geographies and • Recover growth in Developed markets channels REIGNITE • ca +2% CAGR +10 +20 S tart an omni-channel strategy ca +4% CAGR* SALES GROWTH • Reconquer the Optical business Product categories • Guaranteed volumes to halve starting from Gucci business Jan.’ 19 as per contract 2 COGS • +30 COGS and Obsolescence savings to improve Gross Margin +10 REDUCE THE COST Obsolescence STRUCTURE • +30 Extra program of Overhead savings to allow Overheads significant recovery of operating profitability Total impact +80 +90 Restructuring costs -25 CAGR*: excl. Gucci business 16
TODAY AGENDA • An Attractive Eyewear Industry • What S afilo stands for • S afilo in context • Key Strategies • Reignite Sales Growth • Financial Targets 17
1.1 Play our multi-segment portfolio REIGNITE SALES GROWTH LICENSED BRAND PORTFOLIO Expect ed t o grow MID-SINGLE DIGIT in the next 2Y Key drivers • Fashion Luxury as our stronghold , behind the Group renowned product creation skills, Made in Italy capacity and tailored-made selective distribution • Accelerated growth in the Premium, Contemporary and Lifestyle segments : • biggest part of today business • attractive segment trends and profitability • capabilities in Fashion Luxury to support growth of Premium • clear success cases and potent ial in the licensed portfolio 18
1.1 Play our multi-segment portfolio REIGNITE SALES GROWTH OWN CORE BRAND PORTFOLIO Expect ed t o grow MID-SINGLE DIGIT in the next 2Y Key drivers • Carrera & Polaroid: • Clear design language and collection architecture, back to the DNA of the brands • Improve current in-store execution • Attract millennials through our brand authenticity, empowered by a new integrated digital strategy (e-commerce and communication) • Focused investments in key geographies • Smith: • Expand market leadership in NA core snow business, with product innovation • Expand sunglasses in NA, leveraging on ChromaPop™ lenses • S elective expansion of snow business in Europe 19 • Accelerate e-commerce in NA and Europe
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