9. Investment Plan Company Structure 100 % owned by Richemont. 20 years initial agreement 5 member Board of Directors 1 representative from Tom Ford company HO costs sharing from 3 rd year No dividends for Richemont in the initial years 10% of Revenue >> Tom Ford ’s fees No major debt financing Launch into Accessible luxury segment Evaluate moving into luxury segment @ Year 3 Launch Men ’s range of watches Introduce women’s range in the 3 rd yr of operation Year 3 Year 2 Year 5 Year 4 Year 1 25 M
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13. 1.Skeleton dial sapphire crystal case back with automatic mechanical movement 2. Basic silver titanium color 3. Strap – spido textile material Collection plan -Lifestyle-
14. Collection plan -Elegant- Both elegant and lifestyle lines are starting lines The portfolio will be diversified with time and extended into ladies watches after year three
15. Collection plan -Elegant- Both elegant and sports lines are starting lines; The portfolio will be diversified with time and extended into ladies watches after year three
22. P&L Realistic P&L Statement 2013 2014 2015 2016 2017 Comments for 2013 Comments for 2014 Comments for 2015 Comments for 2016 Comments for 2017 Revenues 119 216 309 409 498 COGS 33% of Rev 39 32% of Rev 69 31% of Rev 96 30% of Rev 123 30% of Rev 149 Gross Profit 80 147 213 286 348 Selling and Distribution Expenses 23% of Rev 27 23% of Rev 50 22% of Rev 68 21% of Rev 86 20% of Rev 100 Communication Expenses 8% of Rev 10 8% of Rev 17 7.5% of Rev 23 7.5% of Rev 31 7% of Rev 35 Administrative Expenses 9% of Rev 11 9% of Rev 19 8% of Rev 25 8% of Rev 33 7% of Rev 35 Other Operating (expense ) / Income 3 5 7 9 13 Operating Profit 29 56 90 128 166 Tom Ford % Payout 10% of Rev 12 10% of Rev 22 10% of Rev 31 10% of Rev 41 10% of Rev 50 Profit before Taxation 17 34 59 87 116 HO Costs Fixed 25 Fixed 25 Fixed 25 Taxes 13% of Net Profits 2 13% of Net Profits 4 13% of Net Profits 4 13% of Net Profits 8 13% of Net Profits 12 Net Profit 15 30 30 54 79 Dividends 0 0 0 0 0 Transfer to Balance Sheet 15 30 0 30 0 54 0 79
23. Distribution Highlights Scenario 2 Multi-Brand Shops by Region - 2017 Revenue by Region - 2017 Realistic Pessimistic Realistic Pessimistic -31 -18 -11 -53 -98 -9 -42 -22
24. P&L Pessimistic P&L Statement 2013 2014 2015 2016 2017 Comments for 2013 Comments for 2014 Comments for 2015 Comments for 2016 Comments for 2017 Revenues 78 141 202 268 326 COGS 33% of Rev 26 32% of Rev 45 31% of Rev 63 30% of Rev 80 30% of Rev 98 Gross Profit 52 96 139 187 228 Selling and Distribution Expenses 23% of Rev 18 23% of Rev 32 22% of Rev 44 21% of Rev 56 20% of Rev 65 Communication Expenses 8% of Rev 6 8% of Rev 11 7.5% of Rev 15 7.5% of Rev 20 7% of Rev 23 Administrative Expenses 9% of Rev 7 9% of Rev 13 8% of Rev 16 8% of Rev 21 7% of Rev 23 Other Operating (expense ) / Income 3 5 7 9 13 Operating Profit 18 35 57 81 104 Tom Ford % Payout 10% of Rev 8 10% of Rev 14 10% of Rev 20 10% of Rev 27 10% of Rev 33 Profit before Taxation 10 20 36 54 72 HO Costs Fixed 25 Fixed 25 Fixed 25 Taxes 13% of Net Profits 1 13% of Net Profits 3 13% of Net Profits 1 13% of Net Profits 4 13% of Net Profits 6 Net Profit 9 18 10 25 41 Dividends 0 0 0 0 0 Transfer to Balance Sheet 9 18 0 10 0 25 0 41
-Biggest presence of dpt stores in Europe -slow growth -DOS…start off in Namerica & Europe -both channels end up at 24 doors
-TFR will grow mainly through Multi-Brand shops and in Asia -MB ’s make up 89% of total sales and --Total stores will grow from 167 to 428 by yr 5…at a rate of 27% -Fastest growing dist meth...Multi-Brand stores will grow at a rate of 27%/yr -Fastest growing region is Asia with 31%/ yr…all other segments are 23-25% -Multi-Brand shops make up 89% of ttl dist in 2017 similar % of sales
-Asia, only sector where % of sales outperform % of stores -heavily dependent on Asia -Asia % of sls outperforming & of shops b/c its revenue per store is the highest -
-Oper Income will be 67-70% during the 5yr period -Net Income will be in the range of 10-16% in the 5yr period -Ford will get 10% Payout for the use of his name -HO costs wil taken into account in Yr3..in order to let the business grow intiallly without incurring that expense -TFR will pay out dividends to Richemont after yr 5 when the company is stable -TFR will grow from a $119M to $498M by Yr 5, growing 43% per yr -Net Income will grow to $80M by Yr 5 TFR is an investment worth making..Richemont wont have to wait long to see TFR B-even in yr 1
-Stores drop 35% & sales drop by 30% -Drops 114 stores for 171M in revenue -Asia had the biggest drop, lowering dependency on Asia
-Sales drop by 171M -Net Profit profits drop to 41 from 79
-Stores drop 35% & sales drop by 30% -Drops 114 stores for 171M in revenue -Asia had the biggest drop, lowering dependency on Asia