Presentazione F&LI

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Fashion & Luxury Insight

FY 2010 Results

October 17, 2011

Armando Branchini - Paola Varacca CapelloG. Brandazza, E. Merlotti, B. Rovetta



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Companies in the sample (67) have been

identified according to four criteria:

1. Listed in a financial market and owners of

internationally renowned brands,

2. Consolidated sales higher than € 200 million,

SAMPLE AND METHODOLOGY



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3. Full financial and economic results available to the public,

4. Must operate in one or more of the following

businesses: Active, Apparel, Beauty,Department Store, Eyewear , Jewellery &

Watches, Fashion Retail, Leather Goods.

SAMPLE AND METHODOLOGY



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AGENDA

1. Performance (FY2010) - Total sample

2. Top performers

3. Performance by cluster

4. Highlights on selected clusters

5. A snapshot of S1 2011 (sub-sample analysis)

6. Key Findings



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KEY FINDINGS: GROWTH AND PROFITABILITY

Return to a positive trend in SALES (up to 10.9%)

Improvement in Assets Profitability (ROI up to 12.4%)

Significant improvement inROE (up to 16.5%)

Increase of EBITDA and EBIT Margin (up to 13.6% and 10.0%)

1. Performance - Total sample

(FY2010)

x

x

x

x

x



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KEY FINDINGS: FINANCIALS

NET CASH FLOW back to 2008 level (down to 8.1%)

Stable WORKING CAPITAL to SALES (down to 18.2%)

Strong growth inCORE INVESTMENT on DEPRECIATION (from 83.0% to 105.2%)


(FY2010)

x

x

x



INVESTMENTS TAKE OFF


(FY2010)

Strong turn up of

Core (tangibleand intangibleassets) and TotalInvestments



FEW RETAIL OPENINGS

Limited number of new stores (1,304: +2%)

Few new stores generate just limited additional sales


(FY2010)



RETAIL EXPOSURE BOOSTS SALES GROWTH

CAGR sales by channel

shows:

Retail sales confirm alimited but positive

growth in 2009;

registers a remarkable

growth in 2010

Wholesale sales

underperform in both

years

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(FY2010)



SIZE EFFECT STILL ON

Profitability (ROI and EBIT Margin) and cash flow performance are stronglycorrelated to company size

Growth rate becomes significantly positive in all segments, in particular in theMedium one (sales > 1 €B and < 5 €B)

Small companies show a bigger volatility in results


(FY2010)



TOP PERFORMERS:WHO?*

*Phillips Van Heusen has beenremoved as an outlier. It achieved

an increase in sales of 104% thanks

to the acquisition of Tommy Hilfiger

2. Top performers

(FY2010)



2. Top performers

(FY2010)

Double digi t growth in sales

ROI high and stable Leather Goods are the most represented cluster

High End players back in the hit list

TOP PERFORMERS:WHO?



BACK TO GROWTH!

All clusters show a substantial growth in sales

Apparel, Leather Goods and Jewels & Watches perform

significantly over the average


(FY2010)



AND BACK TOMARGINS!

Growth of ROI in allclusters

Leather Goods stillbestperformingcluster

EBITMargin isthe keydriver for ROI


(FY2010)



APPAREL: SUMMARY OF PERFORMANCE

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4. Highlights on selected

clusters – Apparel

Better EBITDA in line withSales Growth performance

A boom in Investments

An increase in Working Capital



LEATHER GOODS: SUMMARY OF PERFORMANCE

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clusters – Leather Goods

The best performing cluster

Better EBITDA in line with strong Sales Growth



APPAREL: RETAIL EXPOSURE DOES NOT GRANT HIGHER PROFIT

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Great variety in distribution structure

Great dispersion in results



LEATHER GOODS:RETAIL ORIENTED COMPANIES PERFORM BETTER

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Higher profitabili ty due to higher margins

Better sales growth Wholesale oriented companies invest in new stores



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APPAREL: PERFORMANCES IN DIFFERENT SEGMENTS



Strong improvement in sales growth for all segments

After a bad 2009, High End companies are again the leaders in profitability



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LEATHER GOODS: PERFORMANCES IN DIFFERENT SEGMENTS



High end andMedium companies are back to good results after 2009

High end companies show lower Asset turnover

Mass market lags behind in profitability



FASHION RETAILERS: SUMMARY OF PERFORMANCE

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clusters – Fashion Retailers

Negative trend since FY 2006 until 2009

Working capital slightly improving



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FASHION RETAILERS: TURNAROUND IN PERFORMANCE


clusters – Fashion Retailers

Strongimprovement inROI, from 9.8% to13.5%

Back to Sales growth

Growth drivesimprovement in EBIT

Focus on WC allows

improvement inWC/Sales



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S1 2011 PERFORMANCE: IMPROVING SCENARIO?

Positive trend of

Sales growth

Slight worsening in

Profitability Strong cut of

Investments

5. A snapshot of S1 2011

(48 players)

All clusters 1S2011

12,1%11,5%

8,3% 7,8%

5,6%

3,2%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

1S2010 1S2011

EBITDA margin EBIT margin Investment to sales

G Sales*

All clusters

1S2010 8.9%

FY2010 9.5%

1S2011 12.4%

* In CAGR 2010 Salvatore Ferragamo is missing



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S1 2010 PERFORMANCE: APPAREL


Apparel(7 players*)

G Sales

Apparel

1S2010 5.4%

FY2010 9.1%

1S2011 14.7%

Apparel 1S2011

6,6%6,9%

3,1%

3,8%

4,3%

3,9%

3,7%

3,8%

3,9%

4,0%

4,1%

4,2%

4,3%

4,4%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

1S2010 1S2011


*In the main sample Apparel companies are 11

Positive trend in

Sales growth

Slight increase in


Investments



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S1 2011 PERFORMANCE: LEATHER GOODS


Leather Goods(11 players*)

Starting drop of

Sales growth

Sensible decrease in

Profitability

Significant increase

on Investment * In the main sample Leather Goods companies are 13

Leather Goods 1S2011

14,3%

11,2%11,2%

8,5%

4,7%

8,1%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

1S2010 1S2011


G Sales

Leather G.

1S2010 13.0%

FY2010 16.7%

1S2011 14.2%



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S1 2011 PERFORMANCE: FASHION RETAILERS


Fashion Retailers(14 players*)

Positive trend of

Sales growth

Slight worsening in


Investments*In the main sample Fashion Retailers companies are 17

Fashion Retail 1S2011

12,6%

11,7%

7,9%

6,9%

3,9%

-3,0%

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

1S2010 1S2011


G Sales

Fashion R.

1S2010 5.8%

FY2010 3.9%

1S2011 6.7%

6 K Fi di



KEY FINDINGS - 1

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The Industry experienced a new phase of growth in FY2010.

Sales grew 10.9% on average in our sample, with 56 companies out of 67 showing an increase in revenues.

Sales growth was especially strong for Apparel (17.7%), Jewels &

Watches (18.9%) and Leather Goods (16.7%), while Fashion Retail(3.9%) and Financial Conglomerates (3.7%) had the lowest growth rates.

6. Key Findings

6 K Fi di



KEY FINDINGS - 2

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The Average ROI was 12.4%, up from 8.3% in FY2009.

Companies achieved such a result by combining sales growth and a reduction of

operating costs, as shown by EBITDA margin, which reached 13.6% in 2010 vs

11.1% in the previous year.Working capital was also kept under control (18.2% on sales in FY2010, vs. 18.6%

in FY2009)

The ROI of Beauty (13.2%), Fashion Retail (13.5%), Jewels and Watches

(12.6%), and Leather Goods (17.7%) was above average; the worst economicperformance was obtained by Active (5.1%) and Eyewear (6.7%).

As a whole, Leather goods sector emerges as the best performer of FY2010,

excelling both in sales growth and in profitability.

6. Key Findings

6 K Fi di



KEY FINDINGS - 3

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Company size was crucial in explaining different level of

profitability.

The largest companies (sales above 5 billion €) outperformed the

rest of the sample in terms of ROI (15.6% vs 13.6% for companies

with sales between 1 and 5 billion € and 8.0% for companies with

sales lower than 1 billion €) and EBIT margin (13.3% vs 11.7% and

5.0%), even though the largest companies lagged behind medium

companies in terms of sales growth (9.9% vs 15.0% for companies

with sales between 1 and 5 billion €)

6. Key Findings

6 K Fi di



KEY FINDINGS - 4

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Rates of investment went significantly up, reaching 6.1% in sales (thesame rate as in FY2007, the year before the crisis).Net cash flows were consequently impacted (8.1% on sales, down from

11.5% in FY2009

Retail presence remains a strong determinant of profi tabili ty in the Apparel and Leather Good businesses.Companies that focused on directly owned stores (Retail sales above 50%

of total sales) registered a 22.1% average ROI in Apparel and a 22.0% inLeather Goods, while companies focused on the wholesale channelachieved only a 13.8% ROI in Apparel and a 15.15 in Leather Goods.The growth of sales for the two groups were different (17.3% and 11.3% inApparel and 21.7% and 13.7% in Leather Goods.

6. Key Findings

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