Marketvision Luxury 2012 PDF

2012
Market Vision Luxury

Challenges and opportunities in the new luxury world: winners and strategic drivers
Table of Contents
Page 1 2 An Overview of the Luxury Market PwC Deals Advisory Strategy Team 1 16
An Overview of the Luxury Market
PwC
2012 1
Section 1 An Overview of the Luxury Market
Worldwide spending in luxury product rose by 13% in 2010 and 10% in 2011 led by Emerging Markets exceeding the previous results recorded before financial market collapsed
Worldwide Luxury Goods Market trends by geography 2007-2014E
250
191
200
225/ 230 230
170
4%
+23% -9% +16%
16 7
5%
12% 13%
-8% -8% +6%
153
+12%
172
5% 5% 11% 16%
+20% +11% -9%
9%
2012 Expected grow th rate
in billions
150
13% 11%
5% 11% 16% 31%
+3%
18%
+25%
Markets
Euro pe No rth A merica
Full Year 2012

3,75% 6,00% 1 0,00% 1 ,75% 1 6,50% 8,75% 1 0,00%
100
34%
-5%
33%
-17%
31%
+16%
+11%
31%
Latin A merica Japan A sia M iddle East
50
Ro W
38%
2007
-2%
38%
-8%
37%
+9%
37%
+11%
37%
2008 Europe
2009 Americas Asia-Pacific
2010 Japan RoW
2011
2014E
YoY Growth/ Cagr 11-14
-2%
-8%
+12 %
+11 %
+6,4% %%
Main strategic drivers Emerging Markets Growth Potential (+25% in 2011 vs 2010) Half of luxury goods sales are made to customers in Emerging markets led by China. Mature Market growth is mainly led by the increasing travelers flow Retail network consolidation and upgrading is key. Perimeter expansion is mainly driven by new openings in China
2012 2
Source: PwCs analysis Altagamma report
Market Vision Luxury Challenges and opportunities in the new luxury world: winners and strategic drivers PwC
Accessories and the rise of Mens luxury are two trends that could dominate the market in the near future
Worldwide Luxury Goods Market trends by product 2007-2014E
250
Main strategic drivers Accessories highlights the best performance over the period 2007-2011 led by the Emerging Markets customer s preferences with respect to luxury accessories Within the apparel the mens luxury sales rose by 16% in 2011 outpacing sales to woman. Men's in 2011 account for 40% of the global luxury market up from 35 % in 1995.
2012 3
230 191
200
170
4%
-2% -2%
167
4%
23%
-8%
153
173
3% 3%
-16% +11%
21%
150
in billions
4% 23%
-4%
22%
+3% +6%
24%
22% 20%
+22%
100
20%
+3%
21%
-17%
19% 21%
50
18%
26%
+3%
22%
-0,1%
25% 24%
+17%
+16%
29%
2007
-5%
28%
-12%
27%
+12%
27%
+11%
27%
2008
2009
2010
2011
2014E
Apparel
Accessories
Hard Luxury
Fragrances & Cosmetics
Other
YoY Growth/ Cagr 11-14
-2%
-8%
+12%
+11%
+6,4% %%
Absolute/Aspirational luxury market segment related only to personal luxury goods (apparel and accessories) accounts for about 53bn in 2011 (ca 30% of the total luxury market)
Breakdown luxury market value by category, 2010-2011
200 180
173
(39)
(34) (18) 82 (35) 47 53
160
140 120 100 80 60 40
20
Global market 2010 Fragrances & Cosmetics Hard Luxury Other Personal luxury goods market Accessible 2010 Absolute/aspirational (Apparel&Accessories segment
2011E Absolute/aspirational (Apparel&Accessories)
Absolute/Aspirational (apparel&accessories) market value 2007-2011

60 50 40 30 20 10 YoY Growth

53 44 45 47 42
Absolute Luxury Highest price segment (e.g. 2,000 handbag) Tightly controlled production (e.g. some handmade items) Exclusive brand distribution strategy, e.g. luxury locations, mono-brand stores, etc.
Aspirational Luxury High price segment (e.g. 650 handbag) Selective brand distribution strategy: marketed only in major locations
Acccessible Luxury
Premium prices (e.g. 200 jeans) Industrial manufacturing Wider distribution strategy: high street and wholesale presence
2007
+2%
2008
-8%
2009
+12%
2010
+13%
2011
2012 4
Chinese market for luxury goods is rapidly growing and is expected to overtake the US as the biggest luxury goods market. India and Brazil growth-to-date have been somehow hindered by regulatory issues
Luxury Market Value in China
13.000 10.000
s n 8.000 o i l l i m n i 6.000
12.900 9.200 42%
7.100 5.900 20% 30%
Chinese GDP is rapidly growing at nearly 10% per year therefore multiplying the domination of wealthy Chinese rapidly. According to Huron Report (Shanghai based magazine) there were 271 billionaires in China in 2010 which is double the number in 2009. Chinese shoppers account for approximately 40bn in 2011 India and Russia also have a steady boost in demand for luxury. Based on Forbes 2011, Moscow alone had 79 billionaires, displacing New York City as the largest. By the end of the next decade, 60% of luxury sales is expected to come from these emerging markets. In India and Brazil, growth to date have been somehow hindered by high import duties, restrictions to harvest the profits on luxury goods and (this is mainly true for India) the lack of high end luxury malls to create a bridge-to-luxury. Chinese investor are expected to become increasingly interested in purchasing companies in the luxury arena from 2012. This will help creating liquidity in the Luxury M&A market albeit it will possibly increase the market multiples.
4.000 2.000 2008 2009 2010 2011E Source: Source: PwCs analysis Altagamma report
6 Global Middle Class Population 2010 - 2030 5
Middle Class population (bn)
Other Developing Asia-Pacific

0,7
Developed
0,5 3,2
2
0,3 0,5 1,0
1,7
1,0
1,0
2010
2020
2030
Source: Global Harvest Initiative, UN Department of Economic and Social Affairs, OECD (report by The Brookings Institution)
2012 5
Online Sales worldwide show a superior performance compared to the overall luxury market
Value of E-Commerce Luxury Market FY07-10
4.500 4.000
Valore del mercato e-commerce luxury 07-10F

4.200 3.600 3.000 2.500
20% 100% 100% 80% 80% 75% 75% 70% 20% 20% 25% 25%
Online purchases purchases ofof luxury goods by Chinese consumers Online luxury goods by Chinese consumers
40 35
e=estimate f= forecast
37,24
Yuan in billion
in millions
3.500 3.000
17%
30%
30
25 20 15 10 6,36 5
28,45 21,32
2.500
2.000 1.500 1.000 500
15,68
10,73
0 2007 2007
2008 2008
full price
2009 2009
off price
2010 2010F
2010 2011e 2012f 2013f 2014f 2015f

Source: Iresearch.com.ch
Source: Altagamma 2011
The percentage of expenditure on off-price goods is steadily increases year to year which shows that the customer is interested in e-commerce to gain an advantage in terms of price. The e-commerce channel in the luxury sector increasing and gaining importance within the retail channels. The luxury sector has reached, in the e-commerce, a significantly higher performance (+20%) than that the overall market (+8%) in 2010. With current technology innovations, more luxury shopping websites are emerging allowing luxury fashion brands to reach more customers through online platforms. A growing market coupled with more digital consumers translates into an exponential revenue growth.
2012 6
During the period 2007-2011 big internationally listed groups are confirmed as winners in the global luxury competition over performing market trends and pre-crisis results
15%
vs pre-crisis figures
Prada
10%
mld LVMH Richemont Luxottica Ralph Lauren PPR Luxury Division Hermes Tiffany Gruppo Prada Salvatore Ferragamo Burberry Tod's Total & Avg.
Revenues '11 23,66 6,89 6,22 3,91 4,92 2,84 2,76 2,52 0,99 0,97 0,89 57
EBITDA Sales CAGR Margin'11 '09-11 26% 24% 18% 15% 29% 31% 25% 30% 19% 24% 26% 25% 18% 15% 11% 5% 20% 22% 19% 27% 26% -18% 11% 15%
Var. EBTDA Margin '09-11 2% 3% 2% 9% 5% 3% 3% 11% 9% 3% 4% 4%
Sales CAGR '07-11 9% 7% 6% 3% 6% 15% 7% 16% 9% -9% 7% 8%
Var. EBTDA Margin '07-11 2% -1% -3% -5% 6% 1% 2% 7% 5% 2% 3% 1%
Gucci
Var. EBITDA Margin FY07-11
Tods
5%
LVMH
Salvatore Ferragamo
Burberry
0%
Tiffany & Co Richemont
Herms
= HIGHER REVENUES GROWTH = HIGHER PROFITABILITY INCREASE
Strategic hints:
(5%)
Ralph Lauren
(10%)
Luxottica
5% 10% 15% 20%
(10%)
(5%)
0%
CAGR FY07-11
Note: (*)= Compound annual growth rate.
Emerging Markets Retail Development Focus on key brand 25% Optimization of product and geographical mix Increase scale to improve margins
Source: PwCs analysis public consolidated financial statements, Bloomberg and Merger Market
2012 7
Asia is becoming one of the main markets for the main luxury operators after Europe
Luxury Market Value in 2011 ( in billions)
250
200 172 150
11% 25%
Main strategic drivers

1
(2)
191
-9%
11%
11%
100
50 2010 RoW Asia-Pacific
+11%
Japan
Americas
Europe
2011E
Source: e-commerce B2cC in Italy MIP School of management, www.osservatorio.net
Top Luxury Companies sales split by geographic region Region Europe Americas Japan Asia (incl.China) Other (incl Russia) Total Var % FY11-10 12.4% 15.2% 7.6% 32.6% 8.8% Revenue % FY11 33% 22% 10% 29% 6% 100.0% Revenue % FY10 34% 22% 11% 26% 7% 100.0%
Luxury Market of 2011 has grown (11% in 2011 vs. 2010) despite the recent global recession. Asia-Pacific is the best performer with 25% growth in 2011 vs. 2010. In terms of performance by geographic region, Asia (+33% in FY11 vs. FY10) is becoming one of the main markets (accounting for about 29% of revenues in FY11) for the luxury operators after Europe (33% of revenues in FY11) and is firmly established as a focus of growth.
Source: Statutory Financial Statements
2012 8
Retail is confirmed the best performer channel for the top luxury operators in 2011 (+22,8% vs. FY10) and China appears to be the main destination market for new DOS openings
2011 - Luxury Top Players Retail Development
Top Luxury Companie Revenue split by Channel Chanel Retail Wholesale Other Total Var % FY11-10 22.8% 17.3% Weight (%) 2011 57.8% 41.5% 1% 100% Weight % 2010 56.4% 42.8% 1% 100%
In terms of performance by distribution channel, Retail in the FY11 has shown the best result (+22,8% with respect to FY10) compared to the wholesale channel(+17,3% with respect to FY10) supported by the strong DOS network expansion into the Asian markets. China along with other Asian regions accounted for about 70% of the overall new openings realised by the main luxury operators during 2011. For example, almost 50% of the new openings for Gucci and Tiffanys in emerging countries (BRIC) relate to China, while all the Prada and Tods 2011 new DOS openings in BRIC countries have been realised in China.
Source: Statutory Financial Statements
2012 9
Consumers in traditional markets are looking for both product and service quality... whilst consumers in emerging markets are still looking for status symbols and social acknowledgement
Emerging Traditional
Excess Tradition and Ostentation Push strategy
Extravagance Research of Status research status Shopping exeperience on site
Quality
Innovation
Exclusivity Shopping experience Direct interaction
Service
CRM
Target brand loyalty
2012 10
What are the main strategies underline performances over the period 2009-2011? : the example of Prada
PRADA Group
GOALS
Sales Growth: 2009-2011 CAGR 27% Profitability: Ebitda 2011 (30% on revenues) ; Var. 09-11 +11 bp
Capital For Growth IPO

IPO led to 19% of the shares in PRADA spa being listed on the Hong Kong Stock Exchange. The operation involved the sale of existing and newly issued shares and raised a net amount of Euro 206.6 million for the Group.
Distribution Channel
Retail accounts for over 70% in 2011 recording a +39% in 2011 vs 2010 mainly driven by LFL (+ 23% vs 2010). In 2009 Retail accounted for 54.3% of total revenues Dos network grew from 265 in 2009 to 388 in 2011 In the future selective new openings in European touristic cities. Focus on retail expansion in Far East (China and Korea) Wholeasale channel selective approach Europe and US not considered as Mature Market because of increasing travellers flow (EU and US accounts for over 50% of total revenues in 2011) In 2011 all markets grew double digit Focus on key brands Prada and Miu Miu no acquisition during the the last years
Key Figures Pre/Post IPO 2011

Revenues growth
2010
+31% 26.2% 407 0.8x +56 207 4.2%
2009
-3% 18.6% 485 1.7x +31 135 4.9%
+25% 29.7% (16) na +69 279 5.1%
STRATEGIC HINTS
Geography

Ebitda Margin
Net Financial Debt ( mln) Net Financial Debt/ Ebitda New DOS openings Capex ( mln) Advertising&Comm (% on revenues)
Brand Product
Accessories (leather goods and footwear) accounts for over 80% of revenues in 2011 whilst in 2009 about 70%.
Scale growth and continuing shift toward Retail channel enable a strong increase in EBITDA margin Impact on margins of a more favourable geographical and product mix
Profitability Improvement

Successful IPO 24 June 2011

Enhancing Companys reputation, brand awareness providing capital for further expand the Retail Network (planned 80 new openings per year)
Source: PwCs analysis on financial statements,
2012 11
What are the main strategies underline performances over the period 2009-2011? : the example of Ferragamo
Salvatore Ferragamo
GOALS
Sales Growth: 2009-2011 CAGR +26% Profitability: Ebitda 2011 (19% on revenues) ; Var. 09-11 +9 bp
Capital for Growth IPO

IPO led to 25% of the shares in Ferragamo being listed on the Milano Stock Exchange. The operation involved the sale of existing shares and raised a net amount of Euro 344 million for the Group.
Retail accounts for about 67% over the period 2009-2011 In the future retail development mainly in China, store renovation and enlargement in Mature Market Expansion on E-commerce activity
Key Figures Pre/Post IPO 2011

Revenues growth
2010
+26% 14.5% 18 0.2x +13 21,8 5,6%
2009
-10% 10.0% 80 1.3x +26 20,9 5,1%
Geography
+26.2% 18.6% 29 0.2x +11 42,3 5,9%
STRATEGIC HINTS
Greater China as Group # 1 Market. Asia Pacific region in 2011 accounts for about 36% ot total revenues (31% in 2009) Europe as an emerging market driven by travellers and successfull operational improvement
Ebitda Margin
Net Financial Debt ( mln) Net Financial Debt/ Ebitda New DOS openings Capex ( in mln) Advertising&Comm (% on revenues)
Brand
Continuing rejuvenation of brands image
Product
Accessories (leather goods and footwear) accounts for over 80% over the period 2009-2011.
Scale growth enable an important increase in EBITDA margin of +4 basis points (2009 vs 2011) Improved coordination and sinergyes across product collections
Successful IPO 24 June 2011

Enhancing Companys reputation, brand awareness providing capital for further expand the Retail Network
2012 12
What are the main strategies underline performances over the period 2009-2011?: the example of PPR (luxury division) and Tods
Luxury Division - PPR Tods
GOALS
Sales Growth: 2009-2011 CAGR +20% Profitability: Ebitda 2011 (29% on revenues) ; Var. 09-11 - +5 bp
GOALS STRATEGIC HITS
Sales Growth: 2009-2011 CAGR +11% Profitability: Ebitda 2011 ( 26% on revenues) ; Var. 11-07 +4 bp
Strong retail improvement mainly driven by Emerging Countries (+222 DOS in Asia and RoW 2007 vs 2011) Mature markets retail consolidation (+85 DOS 2007 vs 2011 of which 48 DOS in Europe) Expansion on E-commerce activity
Retail accounts for about 53% of total revenues in 2011 ( 49% in 2009) Retail improvement mainly driven by Emerging Countries (+38 DOS in Asia and RoW 2007 vs 2011) Italy is the Group key Market ( 50,2% in 2011) Emerging Markets grew considerably in the last years ( 22.4% in 2011 vs 15.6% in 2006) Focus on key brands Tods, Hogan and Fay and refocusing effort on Roger Vivier brand (+22,9% 2007 vs 2011); Strong focus on Shoes and Leather Goods (about 90% of total revenues in 2011) Scale growth enable an important increase in EBITDA margin of +4 basis points (2009 vs 2011)
Geography

STRATEGIC HINTS
Geography
Asia Pacific is the Group key Market ( 31% ot total revenues in 2011)
Brand
Brand
Focus on key brands Gucci, Bottega Veneta and Yves Saint Laurent Acquisition of Brioni in 2011
Product
Product
Strong focus on Shoes and Leather Goods (about 70% of total revenues in 2011)
Scale growth and cost cutting policy enable an important increase in EBITDA margin of +5 basis points (2009 vs 2011)
2012 13
Luxury indices have outperformed general market index in the last year
Luxury Multiple EV/Ebitda; P/E

180,0
Luxury MarketCap vs S&P 500 - 2011

S&P 500 Index vs Panel - Market Capitalization (base 100)
Company LVMH Richemont Luxottica Ralph Lauren PPR Luxury Division Hermes Tiffany Gruppo Prada Salvatore Ferragamo Burberry Tod's
Enterprise Equity Value Value 80.969 29.353 10.051 12.367 15.194 21.179 8.711 9.994 1.898 5.561 2.414 85.932 26.757 12.082 11.431 18.601 20.169 8.981 9.978 1.947 5.386 2.303
P/E 2011 26,4 x 25,4 x 22,2 x 18,7 x 15,4 x 35,6 x 19,8 x 23,1 x 23,3 x 22,9 x n.a. 23,3 x 22,8 x 15,4 x 35,6 x
EV/EBITDA 2011 14,0 x 12,7 x 10,7 x 1,7 x 9,7 x 20,2 x 10,5 x 13,2 x n.a. 12,9 x 9,8 x 11,5 x 11,7 x 1,7 x 20,2 x
170,0
LVMH
160,0
Richemont Luxottica Ralph Lauren
150,0
140,0
PPR Hermes Tiffany Gruppo Prada
130,0
120,0
110,0
Salvatore Ferragamo Burberry Tod's S&P 500 Index
100,0
Average --> Average adj --> Min --> Max -->
90,0
80,0 gen-11
feb-11 mar-11
apr-11
mag-11
giu-11
lug-11
ago-11
set-11
ott-11
nov-11
dic-11
Source: PwCs analysis public consolidated financial statements, Bloomberg and Merger Market
2012 14
Size does matter: aggregation to emerge in the global competition should be a must for Italian luxury companies
Var. Var. CAGR EBITDA EBITDA EBITDA EBITDA EBITDA CAGR EBITDA Number of margin revenues margin margin margin margin margin Number of revenues companies FY10-FY08 (%) 2010 (%) 2009 FY08-FY10 companies FY10-FY08 (%) 2010 (%) 2009 FY08-FY10 9.2% 6.5% 0.9% -2.0% -1.0% 1.6% 11 3 5 17 12 37 9.2% 21.6% 23.8% 1.1% 21.6% 23.8% 6.5% 8.1% 15.4% 0.2% 8.1% 15.4% 0.9% 12.6% 15.7% 2.6% 12.6% 15.7% -2.0% 8.0% 10.4% -2.4% 8.0% 10.4% -1.0% 6.8% 9.6% 0.5% 6.8% 9.6% 1.6% 13.4% 9.1% 13.4% 9.1% 0.1% 1.1% 0.2% 2.6% -2.4% 0.5% 0.1%
Major Luxury Italian (sample Companies (sample with turnover > 50m) r Luxury Italian Companies with turnover > 50m)
ousands in thousands
ational Inter national 11 Cluster A (revenues >1bn) r A (revenues >1bn) 3 Cluster B (revenues 500bn < x < 1bn) 5 r B (revenues 500bn < x < 1bn) Cluster C (revenues100mln r C (revenues100mln < x < 500mln) < x < 500mln) 17 Cluster D (revenues < 100mln) r D (revenues < 100mln) 12 Average ge 37
EBITDA: Earning Before Interest and Tax Amortization Depreciation and Amortization Earning Before Interest Tax Depreciation EBITDA Margin: EBITDA/Revenues Margin: EBITDA/Revenues
Large companies experience much higher margins, therefore the biggest opportunity in luxury brands exist in these large fashion houses. Higher profitability is primarily attributable to: Brand Recognition (this is particularly true for emerging markets); Optimal brand portfolio management; Economies of scale (e.g. advertising costs). ]
2012 15
PwC Deals Advisory Strategy Team
2012 PwC
Section 2 PwC Deals Advisory Strategy Team
Whats unique about PwC Strategy?

Cumulative industry expertise of team and dedicated team by industry- We involve senior dedicated industry experts from the beginning of the project, and we work to ensure that potential industry issues are raised early in the process. Our international structure and knowledge The Retail & Consumer Center of Excellence is a WorldWide PwC R&C Network composed by Senior Strategy people with a broad expertise in the sector Extensive transactional experience in Italy and across the world, having been involved in many deals and project in the Retail & Consumer Sector which have taken place. Business driven approach to analysis structured around value drivers. We will fully understand your priorities and set the scope accordingly. We have a strong track record of delivering on time. Partner and Director time is not limited to sign off of the work, but rather is used to assist in the examination of the company for value drivers and other occurring issues We are committed to confidentiality during the project.
Richard Sharp, head of principle investment, Goldman Sachs and Matthew Alabaster, Director, PwC Strategy Group
Commercial and Team ofof the Year Commercial and market Market due Duediligence Diligence Team the Year
PwC received the award for Commercial and Market Due Diligence. PwCs due diligence team, which is run out of its transaction services strategy department, is more than 100 people strong in London alone. It worked on more than 160 transactions in the last financial year, three quarters of which were buyside mandates. They included advising Permira and KKR on the acquisition of SBS Broadcasting, a deal which had an enterprise value of 2.1bn. Private Equity News, 9 October 2006
Nel 2009 e 2010, PwC stata premiata come Market & Commercial Due Diligence Team of the Year in Europa dalla rivista Private Equity News.
PwC
2012 17
The global presence of the PwC Strategy Team

The PwC Strategy Group has more than 300 professionals in Europe, with its main offices in London, Milan, Paris, Frankfurt and Madrid. Over the last years , other offices have been opened in New York, Shanghai, Dubai, Hong Kong and Singapore to allow a better global coverage for our clients. The Strategy Group in Italy offers Business & Strategic Planning services, Market & Commercial Due Diligence (vendor-side and buy-side), M&A Strategy, Commercial Planning, IPO Advisory and Deal
PwC
2012 18
PwC Strategy - Retail & Consumer Luxury Sponsorship and Publishing

Sponsorships and Speaking Engagements
Il Sole24Ore Publishing
2012 19
Our Italian Team Who we are?

Nicola Anzivino Partner PwC Advisory Strategy Leader
Mobile: +39 348 8519 842 nicola.anzivino@it.pwc.com
Marco Lazzaro Senior Manager PwC Advisory Retail&Consumer Expert

Mobile: +39 348 1554541 marco.lazzaro@it.pwc.com
2012 21
2012
Market Vision Luxury

Challenges and opportunities in the new luxury world: winners and strategic drivers

Marketvision Luxury 2012 PDF

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2012

Market Vision Luxury

An Overview of the Luxury Market

Section 1 An Overview of the Luxury Market

225/ 230 230

5% 11% 16% 31%

Full Year 2012

Latin A merica Japan A sia M iddle East

2009 Americas Asia-Pacific

2010 Japan RoW

YoY Growth/ Cagr 11-14

Source: PwCs analysis Altagamma report

Section 1 An Overview of the Luxury Market

Fragrances & Cosmetics

YoY Growth/ Cagr 11-14

Source: PwCs analysis Altagamma report

Section 1 An Overview of the Luxury Market

Absolute/Aspirational (apparel&accessories) market value 2007-2011

Source: PwCs analysis Altagamma report

Section 1 An Overview of the Luxury Market

12.900 9.200 42%

7.100 5.900 20% 30%

Other Developing Asia-Pacific

Section 1 An Overview of the Luxury Market

Valore del mercato e-commerce luxury 07-10F

2010 2011e 2012f 2013f 2014f 2015f

Source: Altagamma 2011

Section 1 An Overview of the Luxury Market

Var. EBTDA Margin '09-11 2% 3% 2% 9% 5% 3% 3% 11% 9% 3% 4% 4%

Sales CAGR '07-11 9% 7% 6% 3% 6% 15% 7% 16% 9% -9% 7% 8%

Var. EBTDA Margin '07-11 2% -1% -3% -5% 6% 1% 2% 7% 5% 2% 3% 1%

Var. EBITDA Margin FY07-11

Tiffany & Co Richemont

= HIGHER REVENUES GROWTH = HIGHER PROFITABILITY INCREASE

Section 1 An Overview of the Luxury Market

Main strategic drivers

50 2010 RoW Asia-Pacific

Source: e-commerce B2cC in Italy MIP School of management, www.osservatorio.net

Source: Statutory Financial Statements

Section 1 An Overview of the Luxury Market

Source: Statutory Financial Statements

Section 1 An Overview of the Luxury Market

Excess Tradition and Ostentation Push strategy

Extravagance Research of Status research status Shopping exeperience on site

Exclusivity Shopping experience Direct interaction

Target brand loyalty

Section 1 An Overview of the Luxury Market

Capital For Growth IPO

Key Figures Pre/Post IPO 2011

+25% 29.7% (16) na +69 279 5.1%

Successful IPO 24 June 2011

Source: PwCs analysis on financial statements,

Section 1 An Overview of the Luxury Market

Capital for Growth IPO

Key Figures Pre/Post IPO 2011

+26.2% 18.6% 29 0.2x +11 42,3 5,9%

Successful IPO 24 June 2011

Source: PwCs analysis on financial statements,

Section 1 An Overview of the Luxury Market

GOALS STRATEGIC HITS

Source: PwCs analysis on financial statements,

Section 1 An Overview of the Luxury Market