Arvind Fashions Ltd. · NSE:ARVINDFASN
Arvind Fashions — Non-Deal Roadshow (August 2018)
39 slides from Arvind Fashions's roadshow presentation, August 2018
Slide 1: Arvind Fashions Limited Investor Roadshow
Arvind Fashions Limited Investor Roadshow August 2018 0
Slide 2: Agenda
1. What is our track record 2. What is our winning aspiration Agenda 3. Why we are confident of delivering our winning aspiration How we are preparing for the future leveraging 4. digital 5. How our business will look in 2022 1
Slide 3: Track record of robust and profitable growth
Track record of robust and profitable growth Sales growing at With improved profitability 22% CAGR Sales (Rs. Cr) EBITDA (Rs. Cr) 3,794 +22% 3,324 2,142 2,290 1,737 +26% 240 165 128 95 101 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 5.5% 6.0% 4.4% 5% 6.3% EBITDA% Fastest growing branded appare
Slide 4: Agenda
1. What is our track record 2. What is our winning aspiration Agenda 3. Why we are confident of delivering our winning aspiration How we are preparing for the future leveraging 4. digital 5. How our business will look in 2022 3
Slide 5: Our winning aspiration
Our winning aspiration Sales growth at 100 bps improvement each year for With sharp increase in 20%+ CAGR the next 4 years capital efficiency Sales (Rs. Cr) EBIDTA (Rs. Cr) ROCE (%) +20% 25.0% 3,794 +36% 240 4.4% FY18 FY19E FY20E FY21E FY22E FY18 FY19E FY20E FY21E FY22E FY18 FY19E FY20E FY21E FY22E
Slide 6: Agenda
1. What is our track record 2. What is our winning aspiration Why we are confident of delivering our winning 3. aspiration Agenda Powerful Powerful 3.1 Market 3.2 3.3 capability portfolio platforms How we are preparing for the future leveraging 4. digital 5. How our business will look in 2022 5
Slide 7: India apparel market is growing fast and witnessing rapid shift to branded apparels
India apparel market is growing fast and witnessing rapid shift to branded apparels Overall market growing at Branded market growing at ~13% CAGR ~19% CAGR Total Market Branded Market ($ Bn) ($ Bn) +13% 112 +19% 40 48 ~36% 12 ~30% 2015 2022E 2015 2022E 6 Source: Technopak, Images Retail Report; Bott
Slide 8: Factors driving market shift
Factors driving market shift Key factors driving market shift 112 CAGR Market (2015-22) Change in income ($ Bn) pyramid 40% Men 13% Increase in 48 discretionary spend 41% Women 14% 41% 39% Improved access 20% Kids both off-line and on- 20% 13% line 2015 2022E 7 Source: Technopak, Images Retail Repor
Slide 9: Increasing preferences for casuals & denim wear
Increasing preferences for casuals & denim wear Age & urbanization in favor of …dress code of India is becoming …Men’s casual wear market casualization… more casual expected to grow at 18% Median age in India expected to be 75%+ men wear casuals more than Market (USD Bn) 29 years by 2020 thrice a we
Slide 10: Agenda
1. What is our track record 2. What is our winning aspiration Why we are confident of delivering our winning 3. aspiration Agenda Powerful Powerful 3.1 Market 3.2 3.3 capability portfolio platforms How we are preparing for the future leveraging 4. digital 5. How our business will look in 2022 9
Slide 11: Arvind's winning portfolio mirrors market trends – unmatched portfolio in casuals and denim wear
Arvind’s winning portfolio mirrors market trends – unmatched portfolio in casuals and denim wear Super Premium 2015 2022 Branded market $ 0.7 Bn $ 2.0 Bn Mass Premium 2015 2022 $ 8.7 Bn $ 26.0 Bn 25-30% market share; higher than #2 and #3 put together in branded premium casual wear market 10 Source:
Slide 12: Powerful portfolio addresses three other significant opportunities
Powerful portfolio addresses three other significant opportunities Value fashion Kids wear Inner wear 2015 2022 2015 2022 2015 2022 Branded market $ 2.7 Bn $ 12 Bn $ 2.9 Bn $ 5.1 Bn $1.9 Bn $ 2.8 Bn 11
Slide 13: Brand portfolio at different stages of maturity for delivering superior growth
Brand portfolio at different stages of maturity for delivering superior growth Power Brands Specialty Retail Emerging Power Brands Leveraging expanding value market opportunity Large brands growing @ Leveraging rapid growth in Significant growth and 15%+ CAGR with superior premium beauty market prof
Slide 14: Power brands growing at 15%+ CAGR with superior financials
Power brands growing at 15%+ CAGR with superior financials 18% 18% 4,000+ Sales (Rs Cr.) 2,307 1,185 FY14 FY18 FY22 EBITDA 11.5% 12.3% 14.5% (%) ROCE (%) Above 35% 13
Slide 15: USPA case study – Category expansion powering the super brand
USPA case study – Category expansion powering the super brand Category launches Tailored & Active Mens Casuals Mens Denims & Kids Womens Innerwear Footwear FY10 FY12 FY13 FY14 FY15 FY18 FY22 2% 2% 2% 2% 5% 7% 4% 12% 33% 19% 16% 52% 100% 100% 51% 29% 10% 29% 25% Mens Casuals Mens Denim Kids Women Inn
Slide 16: USPA case study – Performance snapshot
USPA case study – Performance snapshot 25% 6x 2.6x Sales x FY22 E FY18 FY14 EBITDA In high teens (%) ROCE Above 35% (%) 15
Slide 17: USPA case study – Runway for sustained high growth
USPA case study – Runway for sustained high growth Three categories with combined potential to reach Rs 1000 Cr.+ by 2022 Innerwear Kidswear Footwear Size of the bubble indicates size of the opportunity FY14 FY16 FY18 FY22 E 16
Slide 18: USPA case study – Runway for sustained high growth
USPA case study – Runway for sustained high growth Tier 2/3, Department stores and Online will continue to provide growth momentum Retail Department stores FY15 FY18 CAGR FY15 FY18 #Counters Sales #Counters Sales Univ. CAGR Cities #Stores Sales Cities #Stores Sales 429 x 1,008 2.0x 20% Metros 8 8 87
Slide 19: Unlimited case study – Leveraging expanding value market opportunity
Leveraging expanding value market opportunity – Unlimited case study Key actions Outcome • Moved from discount proposition to value proposition Positioning Brand • A family fashion store Gross Margin • Preferred locations – malls & high traffic high streets 38% to 45% • Equal representation for men,
Slide 20: Scaling up Unlimited
Scaling up Unlimited Expanding footprint 110 #Stores 75 51 38 FY16 FY17 FY18 FY19 30% Proving the Rapid 5% concept expansion Sales 700 (Rs Cr.) 569 FY22E 230 stores by 2022 FY18 FY14 EBITDA (%) 2.9% Break-even 7-8% 19
Slide 21: Sephora – Leading position in premium beauty segment with portfolio of exclusive brands
Sephora – Leading position in premium beauty segment with portfolio of exclusive brands Growing Beauty & Leveraging Personal Care market capabilities Market size ($ Bn) 9.0 18.4 100% Brand development 0.5 (5%) 1.5 CAGR Premium Market (8%) Premium ~25% (2015-22) 95% Go to market Mass ~17% CAGR Mass M
Slide 22: Accelerating momentum to be Rs 1,000 Cr. beauty retailer by 2025
Accelerating momentum to be Rs 1,000 Cr. beauty retailer by 2025 Performance since takeover 5x Sales x FY18 FY16 Potential to grow to # stores 4 17* Rs 700-800 Cr. by FY22 with 50 stores and 15% contribution from online Concept already profitable 21 * As of Aug 2018
Slide 23: Potential power brands – growth & profit driver for the future
Potential power brands – growth & profit driver for the future 800+ 20%+ Sales (Rs Cr.) ~400 - FY14 FY18 FY22 EBITDA EBITDA positive FY19 onwards (%) 22
Slide 24: Powerful Portfolio - Snapshot
Powerful Portfolio - Snapshot FY14 FY18 FY22 E Power 1,185 2,300 4,000+ brands cr cr cr Specialty 570 830 2,500+ retail cr cr cr Emerging - 400 800+ Power brands cr cr Other 155 275 350+ brands cr cr cr 23
Slide 25: Agenda
1. What is our track record 2. What is our winning aspiration Why we are confident of delivering our winning 3. aspiration Agenda Powerful Powerful 3.1 Market 3.2 3.3 capability portfolio platforms How we are preparing for the future leveraging 4. digital 5. How our business will look in 2022 24
Slide 26: Powerful capability platforms
Powerful capability platforms Product/ Go-to- Sourcing Online Design market Management Team 25
Slide 27: Strong Product/Design capabilities
Strong Product/Design capabilities • Strong Product/Design team ‒ 250+ designers & merchants • Deep understanding of Indian consumer requirements ‒ Track record of creating India specific designs for international brands • Innovation leader ‒ Slim fit ‒ Stitch less shirts ‒ Auto flex trousers ‒ Eco
Slide 28: Powerful go-to-market capabilities have led to rapid footprint expansion
Powerful go-to-market capabilities have led to rapid footprint expansion Go to Retail Market 189 stores in the Stores Cities covered top 25 malls vs 115 (# of stores) (# of towns) store for next best Distribution 1300 150 180 competitor. 903 120 Strength 811 58 167 Highest for any 2008 2015 2016 201
Slide 29: Sourcing expertise - Scaled up business without any manufacturing investments
Sourcing expertise - Scaled up business without any manufacturing investments through strategic vendor relationships Annual sourcing volume Handling large (in mn) volumes 33 17 Number of product categories 51 Multi category expertise 20 FY14 FY18 • Menswear • Menswear • Womens wear • Womens wear • K
Slide 30: Strong e-commerce expertise
Strong e-commerce expertise Own e-commerce Sales 356 (Rs Cr.) • Own e-ecommerce through NNNOW.com • Differentiated through Omni-channel Experience +86% • GMV run rate at 100 Cr+ contributing to 10% of ecommerce sales 139 30 3rd Party e-commerce FY14 FY16 FY18 • Strategic partner to all e-commerce pl
Slide 31: Has the best track record in scaling up brands leveraging powerful capability platforms
Has the best track record in scaling up brands leveraging powerful capability platforms Year of launch and current size 2010 2014 2015 Rs 1000+ Cr Rs 150+ Cr Rs 100+ Cr 30
Slide 32: Experienced Leadership Team
Experienced Leadership Team Four Functional Heads J Suresh Managing Director & CEO, S Kannan • 13 Yrs in Arvind CFO • 18 Yrs in HUL • 7+ Yrs at Arvind • MBA – IIM Bangalore • 23+ Yrs of experience of which 12 yrs in HUL • Chartered Accountant Six Business Leaders Anindya Ray Alok Dubey Sumit Dhingra
Slide 33: Organization structure geared to scale up brands with low fixed cost
Organization structure geared to scale up brands with low fixed cost Brand’s own capabilities Arvind’s plug and play capabilities 1 Sourcing Product 1 2 2 Finance 3 Sales 3 IT channels 4 4 Logistics 5 Marketing 5 HR 32
Slide 34: Agenda
1. What is our track record 2. What is our winning aspiration Agenda 3. Why we are confident of delivering our winning aspiration How we are preparing for the future leveraging 4. digital 5. How our business will look in 2022 33
Slide 35: Three key transformational projects to sustain competitive edge
Three key transformational projects to sustain competitive edge and deliver superior financial performance 1 Supply chain optimization .. delivering superior financial • Analytics driven retail planning performance • AI driven buying • Auto replenishment • … Improved LTL growth 2 Best in class omni-
Slide 36: Agenda
1. What is our track record 2. What is our winning aspiration Agenda 3. Why we are confident of delivering our winning aspiration How we are preparing for the future leveraging 4. digital 5. How our business will look in 2022 35
Slide 37: Shape of our portfolio
Shape of our portfolio FY 14 FY18 FY 22 E #4 #5 #5 100+ Cr #1 #3 #3 500+ Cr - - #1 1,000+ Cr - - #2 2,000+ Cr 36
Slide 38: Shape of our business
Shape of our business Sales to grow at 100 bps improvement for Steady rise in 20%+ yoy the next 4 yrs Capital efficiency Sales (Rs. Cr) EBIDTA (Rs. Cr) ROCE (%) +20% 25.0% 3,794 +36% 240 4.4% FY18 FY19E FY20E FY21E FY22E FY18 FY19E FY20E FY21E FY22E FY18 FY19E FY20E FY21E FY22E 6.3% 7.3% 8.3% 9.3% 1
Slide 39: Thank You!
Thank You!