Presentation

Kinnevik Capital Markets Day
Global Fashion Group | 18 September 2014
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1
GLOBAL FASHION GROUP (“GFG”) AT A GLANCE
Latin America
Russia & CIS
Asia Pacific
India
Middle East
3
8
1
6
5
420m+
353M
Unique
Visitors
(H1 2014)
1
2
285m+
4.6M1
Active
Customers
(as of
30/06/14)
Excluding Jabong as active customer number not available
Excluding Zalora as financials for 2012 not available
570m+
1,240m+
50m+
8.4M
+165%
+149%2
+61pp2
Total
Orders
GMV
Growth
Revenue
Growth in
EBIT Margin
Improvement
(H1 2014)
(H1 2014)
FY2013
FY2013
Population
Number of countries
2
COMBINATION OF 5 BRANDS UNDER GFG MARKS 3RD
PHASE OF DEVELOPMENT
2015/2016
Global Integration
2013/2014
Scale & Stabilization
2011/2012
Foundation
businesses founded in
 5distinct
regions
 Built local brands
 Set up local operations
2011
2011
2012
2012



Geographic expansion into
adjacent markets
In-house logistics and
fulfilment



Sourcing and private
label integration
Leverage global scale
Best practice sharing
Private label launch
2011
3
BENEFITS OF COMBINING 5 COMPANIES UNDER GFG
Economies of scale in sourcing
Global development of exclusive
private label brands
Global best practice sharing
Global agreements for marketing
and logistics
Shared technology platform
infrastructure and development
Improved ability to attract and
retain top talent
More flexible capital allocation
Simplified group structure and
aligned shareholder base
Implementation of best-in-class
governance
GFG set up to establish a leadership position in growth market fashion e-commerce
4
GFG’S MARKETS OFFER TREMENDOUS OPPORTUNITY
Population (m)
Fashion Market (€bn)
Russia
Ukraine
Kazakhstan
Online Fashion
(% Penetration)
285m
€75bn
4.2%
Brazil
Mexico
Colombia
Chile
Argentina
420m+
€131bn
1.4%
UAE
Oman
Bahrain
Qatar
Kuwait
Saudi Arabia
50m+
€23bn
0.1%
India
1,240m+
€42bn
0.6%
Indonesia
Vietnam
Philippines
Singapore
Malaysia
Thailand
Australia
New Zealand
570m
€62bn
3.1%
Source: Euromonitor; USD/EUR of 1.3131
5
LACK OF RETAIL INFRASTRUCTURE IN GFG’S MARKETS
1,150
11,801
18,496
28,272
US
Middle East
Latin America
Russia & CIS
90,537
Asia Pacific1
100,012
Africa
Consumers in GFG Markets are Leapfrogging Brick and Mortar Retail
People per Retail Outlet in 2013
Source: Planet Retail, IMF
1 Excludes China, Japan, South Korea
6
STRONG INTERNET AND SMARTPHONE PENETRATION
GROWTH IN GFG’S MARKETS
GFG
2009
14%
2014
29%
China
2018
36%
2009
27%
2014
47%
US
2018
56%
2009
2014
2018
66%
80%
85%
203
255
279
18%
63%
77%
204
257
957
Internet
Users
(m)
731
638
364
337
3%
777
24%
54%
3%
38%
50%
1,426
Smartphone
Connections
(m)
621
61
513
34
695
56
% Penetration (Internet users / Smartphone connections as % of population)
Source: Euromonitor, WCIS
7
SCALE OF THE GFG OPPORTUNITY
Europe: Zalando
Emerging Markets2: Lamoda, Dafiti, Jabong, Namshi, Zalora
Emerging Markets (excl. China)2:
Total Fashion Market
~€635bn in 2016E
14-16 CAGR: 8.4%
Europe1:
Total Fashion Market
~€348bn in 2016E
14-16 CAGR: 2.1%
Europe1: Online Fashion
~€41bn in 2016E
14-16 CAGR: 11.3%
Zalando
GFG
2013 Rev:
~€1.8bn
2013 Rev:
~€0.4bn
EM (excl. China)2:
Online Fashion
~€30bn in 2016E
14-16 CAGR: 15.2%
GFG is targeting a massive & fragmented market opportunity in emerging markets
Source: Euromonitor International, Sep 2014, 2013 fixed exchange rates
Note: Charts are illustrative and not to scale. Data for Europe and Emerging Markets includes apparel and footwear, bags and luggage, jewellery and watches. All figures inclusive of sales tax
1 Europe includes all countries in Western Europe
2 World excluding North America, Western Europe and China
8
ASPIRATIONAL AND DIFFERENTIATED ASSORTMENT OF GFG
GLOBAL BRANDS
Relevant &
inspirational content
FAST FASHION
Freshness & risk management
LOCAL BRANDS
Localization differentiation
PRIVATE LABELS
Attractive margins
9
WE ARE PRESENT IN THE THREE BIGGEST CIS MARKETS
Russia
Active
Plan
GDP p. capita (000 EUR)
10.43
2011
12.16
2013
15.02
44%



2016
> 285m people
4.7 times of area of EU
Population density per km2
Kazakhstan
GDP p. capita (000 EUR)
8.29
9.69
12.70
53%
Russia
8.3
EU
117
USA
2011
2013
2016

Ukraine
Belarus
GDP p. capita (000 EUR)
2.79
2011
3.10
2013
3.93
2016
Internet users
GDP p. capita (000 EUR)
41% 4.84
2011
5.90
2013
6.88
2016
32
Average temperature in
January, ⁰C
Percent
42% 45%
2011
56%
2013
68%
Novosibirsk -16.5
Moscow
-9.1
Berlin
0.7
2016
NOTE: Official GDP values indicated here, only to be used as indicator – GDP p.c. is underestimated due to significant share of grey economy/income
Source: World bank, Ministry of Telecom and Mass Communications of the Russian Federation, ITU estimate, State Service of Special Communications and
Information Protection of Ukraine, National Statistical Committee of the Republic of Belarus
11
OUR CUSTOMERS ARE VERY DEMANDING!
Confirmation of order by phone
Cash payment on delivery
Try-on and partial rejection on
delivery
Fast courier delivery
12
CONFIRMATION CALLS HELP TO BREAK THE PSYCHOLOGICAL BARRIER
BETWEEN THE CUSTOMER AND E-COMMERCE
Consumer Specific
Market Specific
Call-center agent hourly gross salary
USD, Average
33%
of consumers have at least once
refused to make a purchase
online because they needed to
consult with store personnel1
28%
have at least once encountered
an item to be “out of stock”
after they have placed an order1
USA²
UK³
Russia⁴
1 GfK
2 US
3 UK
Bureau of Labor Statistics
National Career Service
13
PAYMENT ON DELIVERY OVERCOMES LACK OF DEVELOPMENT IN
ONLINE PAYMENT AND DISTRUST IN INTERNET SHOPS
Consumer Specific
Market Specific
Payment method for online shopping
Percent
Cash on Delivery
Card on Delivery
Card Prepayment
E-wallet
Bank Transfer
Other
102%
51%
was penetration of active bank
cards in 2013 2, still…
94%
17%
4%
16%
2%
80%
of Bank Card transactions value
were cash withdrawals 3 and…
35%
of online shoppers have at least
once refused to make a
purchase because they did not
want to pay in advance1
13%
0%
2%
0%
1%
0%
Preference Based on Survey¹
Lamoda Experience
1
GfK
VESTI finance
3 The Central Bank of Russia
2
14
TRY-ON AND PARTIAL DELIVERY OVERCOME DISTRUST IN GOODS’
QUALITY AND RELIEVE CONSUMERS FROM PAINFUL RETURN PROCESS
Consumer Specific
Market Specific
Reasons for offline purchase instead of online1
Time the goods take to travel back from customer to a
warehouse in Central Russia2
Days
Percent
Wanted to See the
Good Before
Purchasing
68%
Had no Time to Wait
Cheaper Offline
1
2
16
64%
Needed Consultation
Wider Choice Offline
21
13
13
Central Russia
Urals
33%
25%
23%
Siberia
Far East
GfK
Russian Post
15
COURIER DELIVERY IS INEVITABLE IN A MARKET WHERE POSTAL SERVICES
ARE NOT DEVELOPED AND CONSUMERS APPRECIATE SPEED
Consumer Specific
Market Specific
Fast Delivery for me is..1
25
Same Day
20%
of parcels are delivered with
violation of promised terms2
22%
of Post clients are not satisfied
with level of service3
14%
of Post clients or their friends faced
lost or damaged parcels3
47%
of customers spend 30 or more
minutes in lines at post office to
pick up their order4
9
44
Next Day
19
21
3 Days
32
8
Week
29
2 Weeks
3
9
Moscow
1
2
3
4
Synovate research
RIA Novosti
Public Opinion Foundation
East-West Diginal News
Regions
16
ILLUSTRATION – RUSSIAN POST OFFICE
17
LAMODA EXPRESS (LME) IS A PROFESSIONAL SALES FORCE
Lamoda approach to delivery with strong focus on sales force development
Successful Sales Start with Professional Attitude
Positive and helpful attitude
Trained and incentivized on customer
Better Connection
with the Client
service
Neat and professional uniform
All the required equipment
Higher Sales Conversion
 Portable cash register
 Portable payment terminal
Upselling Opportunities
 Bag, pen, notepad
 Calculator
 Try-on aid equipment
Customer Insights
COURIER
SALES REPRESENTATIVE
 Tablet solution in Q4!
18
MASTERING THE LOGISTIC CHALLENGE
Russia & CIS Case Study
~90
Cities
50x
>70%
Purchasing
Power
2x
DE
CN
770
Salesmen
22
# Orders
per Route
Split of Orders Shipped1
Ext. Pickup
4%
Ext. Courier
16%
450
Own Cars
1 As
10min
Client
Interaction
>40%
Population
Post
18%
LM Express
62%
of Sep-2014.
19
FULL CONTROL OF GOODS IN TRANSIT ENABLES FASTER
CYCLE TIME
Full Delivery and Return Cycle, Lead Times in Days
Order online
+
Moscow
Ø
Regions
Ø External Providers
Delivery
1
+
+
Return
2
2
2
2
4
6
On stock
9
2
=
Total
5
7
17
20
KEY THEMES GOING FORWARD
1 Progress Global Integration
2 Strengthen Private Label Initiative
3 Develop Third Party Services
4 Increase Market Place Contribution
5 Execute Path To Profitability
21

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