BRANDHOUSE Retails Limited March 2009
Section 1 : Corporate Overview
The Story so far Year Activity Rationale 2004 Reid & Taylor Retails Pvt. Ltd. established 2006 Rechristened as Brandhouse Retails Ltd. Global Luxury brands (dunhill & Escada) choose BHRL as their exclusive India Franchisee 2008 BHRL is demerged by mirroring the SKNL shareholding pattern. For every 5 shares, SKNL shareholders get 1 BHRL share 2009 Brandhouse inks JV with Italy s No. 1 fashion brand Brandhouse Retails listed in March 2009 To develop the EBO retail network for the brand Scope extended to include retailing of other SKNL brands A strong retail team & systems puts BHRL in the radar of international brands entering India Retailing dynamics requires a special focus The company is looking at brands other than SKNL Unlocking shareholder value Offering true Italian fashion at Indian Prices for Indian youth Post all mandatory clearances from SEBI, BSE & NSE
The Shareholding Structure
THE GROUP SKNL 75 % 25 % GIC Brandhouse Retails Ltd. Reid & Taylor (India) Ltd. SKNL Divisions SKNL International EBOs SKNL Brands EBOs Int. Brands Pvt. Label Joint Venture SKNL UK Ltd. SKNL Italy SpA
The Strategy behind Brandhouse Institutional Sales Export Sales Large Format Stores SKNL Business Opportunity for Brandhouse Trade Channels Multibrand/ 3 rd Party Retailers Retailers Margin The Customer
Section 2 : The Business Dynamics
Vision & Mission The Retail Gateway of India for Fashion & Lifestyle Provide a distinct competitive edge to our brands by creating an International Retail Experience for addressing the booming Indian Consumerism
The Business Model Brand A Brand B Produce & Sell @WSP MRP WSP = Margin Sell @ MRP Consumer Brand N
The Customer-Centric Best Model Easiest (Accessible & Approachable) Latest (Contemporary & Socially correct) The Desired Store Perception Friendliest (Courtesy & Service) Widest (Range & Choice of offering) Honest (Price guarantee & Trust)
BHRL s Key Strengths 1 Human Resource 2 Systems Driven Approach 3 Integration with SKNL 4 Strong Brand Mix
1 Human Resource A strong, experienced team of retail professionals create the cutting edge in a very competitive scenario
The Functional Division CEO Business Development Retail Operations COO Business Development COO Operations Scouting New Stores Commercial feasibility Legal Clearances Architect Coordination Setting up stores Hiring Staff Managing Stores Analyzing Performance Buying & Merchandising Staff Training/Incentive Visual Merchandizing Advertising/Promotions
The Organogram MD & CEO COO Business Development CFO COO Operations VP Acquisition VP Projects (Real Estate) (Store Implementation) GM Accounts GM Commercial Company Secretary & Legal GM IT GM HR VP 1 VP 2 VP Buying & Merchandising GM Luxury Managers, Executives & Support Staff Regional managers and executives in the 4 regions of India
Thumbnails of our Key People Tarun Joshi M.D. & CEO Surjit Singh COO Development Ashok Dalal COO Oviesse Paritosh Jain COO Operations 45 years old with over 23 years of experience in marketing, communications & Retail. Has worked with leading multinationals 43 years old with over 20 years of experience in marketing & Retail. Has worked with Crossroads, ZEE TV & Akbarallys 42 years old with over 18 years of experience in Advertising & Retail. Has worked with Tata Exports, Westside & Pyramid Retails 45 years old, with over 20 years of experience in Retail. He has worked with Bata, Raymonds & Wills Lifestyle Indraneell Basu V.P. Operations 35 years old with over 12 years of experience in Retail. Has worked with Benetton, Wills Lifestyle & Titan Amit Chopra V.P. Operations Sameer Sikka V.P. Real Estate 34years old with over 14 years of experience in Retail. Has worked with Wills Lifestyle, Pizza Corner, Nirulas. 34 years old with over 10 years of experience in Retail. Has worked with Raymond s, Shopper s Stop & Weekender
2 Systems Driven Approach Objective, systematic approach that maximizes productivity & efficiencies
Integrated, Systems-Driven Retail footprint Business Development Marketing Human Resource Development Finance Shoppers IT Software SAP Store Operations Logistics & Supply Chain Information Technology Buying & Merchandising
The Holistic Approach to Retailing Brand Comprehension The Tangibles Product attributes Range & Seasonality Pricing strategy The Intangibles Brand Positioning Brand Identity Brand Values Consumer Comprehension Demographics Geographic Spread Affluence Levels Wallet Monitor Psychographics Usage & Attitudes Needs & Wants Aspirations & Desires Retail Comprehension External Environment Location Aspects Commercial Viability Long-term Outlook Internal Environment Visual Merchandising Inventory Management Service & CRM
Operational Strengths Highlights Area Challenges BHRL s Strengths Real Estate Projects Operations Knowledge Bank Limited supply Very high Rentals Quality, Time & Cost management pan India Skilled Manpower Quality Standards Inventory Management Competitor performance Industry Information Consumer track Dedicated team of professionals with constant mapping of Indian market. Early information & action enable early entry into new projects at better costs Collective bargaining (all brands) for better rentals In-house team of architects & related specialists Regional tie-ups with contractors Collective bargaining with vendors Regular training & career development opportunities programs to attract & retain quality manpower Innovative incentive packages for added motivation S.O.P. manual implemented through national / regional teams. SAP (I.S. Retails) under implementation for better systems with special focus on Merchandise Planning. Data collection by regional teams (monthly) Subscription to various industry reports Regular research & surveys
3 Integration with SKNL Group The advantages of being a part of a large group with over six decades of experience in textiles & fashion
The Overall Picture SKNL Group Captive Business Retail Support BRANDHOUSE R E T A I L S Retail Expertise Business Avenues International Brands Outsourcing / Manufacturing
The Other Advantages Marketing Buying & Merchandising Sourcing & Manufacturing SKNL Group Logistics & Supply Chain
4 Strong Brand Mix The advantages of having a strong portfolio of brands with strong equity & a well- established track record
Solid Brands with Strong Brand Equities Brand Profile Reid & Taylor Belmonte A 165 year old heritage brand from Langholm, Scotland, Reid & Taylor was launched in India in 1999. Today it is a premium suiting and apparel brand with a very high brand equity. As on Mar 08, it has 158 EBOs across the country. A unique combination of Fabric & Apparel in the mid-price segment, Belmonte has grown into a well-recognized brand in two years, since launch. As on Mar 2008, Belmonte has 103 EBOs across the country Carmichael House A mid-premium home textiles brand Carmichael House has become the No. 2 brand in the country in less than two years. As on Mar 08, it has 113 EBOs across the country Stephens Brothers A Super-Premium Brand SB is a JV between SKNL and Austin Reed, UK. It offers formal wear for men & women. As on Mar 08 it has 19 EBOs in India dunhill A leading Luxury brand for men, dunhill has 3 boutiques in India. In a nascent Luxury market in India dunhill is already a leading name for men s apparel & accessories within one year of launch
Section 3 : Performance & Projections
Financial Overview 2007-08 Audited 2008-09 Audited 2009-10 Projected No. of Stores 398 683 909 Area (Sq.ft.) 4,18,415 666,575 911,100 Revenues (Rs. Cr.) 313.79 552.35 812.72 EBIDTA (Rs. Cr.) 31.22 41.18 78.84 EBIDTA % 9.95% 7.45% 9.7% PBT (Rs. Cr.) 22.63 24.12 33.40 PBT % 7.2% 4.4% 4.1% PAT (Rs. Cr.) 13.31 13.39 22.15 PAT % 4.2% 2.4% 2.70%
Rental matrix Own Stores Rent/PSF month Metro Tier 1 Tier 2 Reid & Taylor 225 175 125 Carmichael House 175 125 80 Stephens Brothers 300 200 - Belmonte 160 125 90 Luxury 800 - -
Growth Plan in terms of Sales/Sq ft/ Day (PSFPD) Sales/PSFPD 2008-09 Reid & Taylor 27.06 Carmichael House 16.41 Stephens Brothers 31.88 Belmonte 19.15 Luxury 53.33 TOTAL 22.69 All PSFPD figures in INR All PSFPD is calculated on carpet area
Section 4 : The Indian Retail Industry & Fashion
Indian Economy & Retail GDP USD 804 Bn Private Consumption USD 482 Bn ( 60%) Public spending & Gross Capital formation USD 322 Bn ( 40%) Non - Retail USD 182 Bn ( 38%) Retail USD 300 Bn ( 62%) Retail is a key driver in the Indian economy (37% 0f GDP) Source : Central statistical Organization & Technopak Analysis
Growth of Organized Retail in India 2002 2007 2011 (Projected) Total Retail Organized (1.8%) Total Retail Organized (4.6%) Total Retail Organized (11%) USD Bn 194 3.5 300 14 527 58 INR Cr 8,25,000 14,850 12,78,100 59,000 22,39,800 2,46,378 Growth of Organized retailing is a huge business opportunity Source : Cygnus Research, Images & Technopak Analysis
Share of Categories in Organized Retailing Clothing, Textile & Fashion Accessories take a clear lead in Organized retailing Source : KSA Technopak
Category-wise split of Clothing & Textile Industry Menswear is clearly the leader by value Source : Images F&R Study
. And Menswear will continue to dominate Consumption trends in 2015 Source : McKinsey Analysis
Category pie in Menswear Formal Wear & Fabric constitute about half the pie. Casual Wear is catching up fast Source : The Knowledge Company
Structure of the Indian Menswear Market Louis Vuitton, Chanel, Gucci, Zegna, dunhill, Escada Luxury (5000+)? Nautica, Lacoste, Manzoni, Gant, Espirit, Tommy, Stephens Brothers Super Premium (3000-5000) 1,500 Cr. (YOY 36%) Louis Philippe, Wills Lifestyle, Van Heusen, Raymonds, Zodiac, Reid & Taylor Premium (1200-3000) 6800 Cr. (YOY 24%) Peter England, Koutons, Excalibre, Belmonte Mid Price (600-1200) 8800 Cr.. (YOY 17 %) Regional Brands Economy (250-600) 8100 Cr.. (YOY 11 %) Unbranded Lower Mass Market Lower Mass Market (Upto 250) 500) 18100 Cr. (YOY 7 %) Total Menswear Market is INR 43,300 Cr. YOY Growth % reflects Value growth Figures in brackets are price per shirt in INR Source : Images F&R Study
The Global Luxury Fashion brands Market (USD 80 Bn.) US 24% Asia 37% Others 4% Europe 35% Source : The Cult of The Luxury Brand
The Asian Contribution ( USD 29.6 Bn.) Indian Market = USD 296 Mn. Or INR1258 Cr. Source : The Cult of The Luxury Brand
Evolution of the Luxury Market (Asia) SUBJUGATION Authoritarian rule Poverty & Deprivation START OF MONEY Economic growth Masses buy white goods Elite start buying Luxe SHOW OFF Acquire symbols of wealth Display economic status FIT IN Larger scale adoption of Luxe Fuelled by need to conform WAY OF LIFE Locked into Luxe habit Confident, discerning buyers India China HK/S pore Japan Indian growth Estimates 0 5 Years 6 10 years 11 20 years In the next 5 years, Indian market is projected to grow around 10 times its current size SOURCE : The Cult of Luxury Brand, Industry estimates
Section 5 : Looking Ahead (Future Plans)
1. Additions to our EBO Portfolio SKNL BRANDS New Brands Being Launched in Garments by SKNL Premium Formalwear Premium Casualwear NON-SKNL BRANDS New Brands seeking BHRL as a Pan-India Retail Partner Leading MNC based in India (for a Youth Brand) International Luxury Brands
2. Introduction of the JV
Analyzing The Indian Population Age Bracket % Population 0 17 years 40.1 % 18 35 years 30.2 % 36 49 years 17.1 % Fashion Conscious Propensity to spend Decision makers Key Influencers 50 years + 12.6 %
Developing the Business Proposition Fast Fashion (Global) Affordable Price Family Store Total Wardrobe Solution Core Target (18 35 yrs) College student Working singles Working married no kids Working married very young kids The Proposition Large stores of 8-10,000 Sq.ft. Attractive Locations
Aspirational Position in Value Priced Fashion Apparel Luxury Affordable Price Super - Premium Premium Quality Fashion Products Family Store Core Target Segment 18 35 years Mid-Price Economy Unbranded Italian Fast Fashion At Indian Prices
Our Partner Oviesse The Leader in Italian Fast Fashion Part of Gruppo Coin, Italy s leading fashion retailer with sales of over 1.1 billion Euros Oviesse, the benchmark in Italian Fast Fashion Over 11 million customers in Italy every year Over 100 million garments sold every year Sales of over 820 million Euros A favorite with Italian shoppers 9% of the share of the wallet of Italian Consumers 1in every 5 Italians shop at Oviesse every year 1 in every 3 Italian Kids wear Oviesse apparel Spreading beyond Italy Over 340 stores in Italy & abroad
The Business Structure BRANDHOUSE RETAILS LIMITED Master Franchise Joint Venture Subsidiary SKNL Brands Other Premium / Super-Premium Brands Oviesse Joint Venture Luxury Brands
The Business Model 62.5 % 37.5 % JOINT VENTURE Trend Forecasting Design & Development Manufacturing/ Sourcing Distribution & Logistics Brand Building Retail Stores Margin = MRP - Cost Sell @ MRP Consumer
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