361 Degrees International Ltd. · HKEX:1361
361 Degrees International — H1 2012 Earnings Presentation
19 slides from 361 Degrees International's earnings presentation, Aug 21, 2012
Slide 1: FY2012 Interim Results
361 Degrees International Limited FY2012 Interim Results August 21, 2012
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning 361 Degrees International Limited (the “Company”).
Slide 3: Agenda
Agenda Operational Highlights Financial Review Outlook & Strategies Q&A 3
Slide 4: Operational Highlights
Operational Highlights
Slide 5: Retail operations remain sluggish in 1H but SSSG still above industry peers
Retail operations remain sluggish in 1H but SSSG still above the industry peers FY2011 FY2012 Q1 Q2 Q3 Q4 Q1 Q2 SSSG(1) 14.7% 18.1% 14.1% 9.4% 6.9% 5.1% Channel Inventories(2) 3.3x 3.9x 3.8x 4.2x 4.1x 4.3x 361°'s retail network is broad-based with a particularly strong presence in Tier 3 and small
Slide 6: Recent trade fair orders are disappointing, pointing to lower sales
Recent trade fair orders are disappointing, pointing to lower sales in the next few quarters Trade Fair Order Summary 2012 2012 2012 2013 Spring/Summer Autumn Winter Spring/Summer July 2011 November 2011 March 2012 July 2012 Order Book Growth -26%(1) -23% 23% -10%(1) (Wholesale value, y-o-y) The Spr
Slide 7: The first half saw a net addition of 185 stores, mostly in smaller towns
The first half saw a net addition of 185 stores, mostly in the smaller towns 2012Q2 FY2011 No. of Stores No. of retail outlets 8,050 7,865 New Openings 307 810 Closures 122 209 Northern Region 3,096 Total retail space (sq.m.) 812,733 790,403 Western Region e-POS, a front-end system, is connected t
Slide 8: Continued investment in advertising is necessary to build brand equity
Continued investment in advertising is necessary to build 361°brand equity Key Strategic Partners Major Event Sponsorships Celebrity Athlete Endorsements Steve Hooker Kevin Love The CCTV-5 collaboration is a key asset because of its extensive exposure in the media and across all sports A&P spend
Slide 9: R&D spending is key to the 361° Product Philosophy
R&D spending is key to the 361°Product Philosophy: performance and value Research Patents Guangzhou Asia Research and NFO Development Centre Flexi o This centre concentrates on Motion Stable performance shoes and fit the various Chinese national teams Antislip which 361 sponsor Lumi Guar
Slide 10: Operational leverage with in-house production facilities in Footwear and Apparel
361 has operational leverage with inhouse production facilities in both Footwear and Apparel Jiangtou Wuli Footwear Lines 14 Lines 9 Lines Apparel None 1 Workshop Production workers ~4,000 ~6,000 Estimated Value RMB50 million RMB800 million 361° enjoys strong economies of scale with both factories
Slide 11: 361° Kids grew in strength in FY2012 first-half
361° Kids grew in strength in FY2012 first-half 2011 2012 2012 2013 Fall / Winter Spring / Summer Fall / Winter Spring / Summer Order book growth 60% 53% 20% -5% Number of dedicated outlets Store Format This independently run business unit contributes about 11% of the Group's turnover in this firs
Slide 12: Financial Review
Financial Review
Slide 13: FY2012 Interim Results: Financial Highlights
FY2012 Interim Results: Financial Highlights For the six months ended 30 June (RMB mn unless indicated otherwise) 2012 2011 Change (%) Turnover 2,869.1 3,185.9 -9.9 Operating profit 643.8 945.0 -31.9 Profit attributable to equity shareholders 595.6 773.4 -23.0 Basic EPS (RMB cents) 28.8 37.4 -20.6 I
Slide 14: Revenues declined by 10% in first half as Footwear and Apparel saw weaker deliveries
Revenues declined by 10% in first half as both Footwear and Apparel saw weaker deliveries Revenue breakdown by product For the six months ended 30 June (RMB ’000) 2012 2011 Change Footwear 1,365,960 1,615,331 -15.4% Accessories, 1.1% Apparel 1,138,185 1,388,466 -18.0% Accessories 32,012 67,735 -52.7
Slide 15: Gross margins improve to 42.7% primarily because of higher wholesale pricing
Gross margins improves to a highly respectable 42.7% primarily because of higher wholesale pricing Turnover by geography Gross margins by product For the six months ended 30 June For the six months ended 30 June (RMB ’000) 2012 2011 Change (RMB ’000) 2012 2011 Change (%) Footwear 43.1% 40.8% +2.3p.p
Slide 16: Costs, Cash-Flows and Convertible Bonds: Explanatory Notes
Costs, Cash-Flows and Convertible Bonds: Explanatory Notes Operating Costs Cash Flows Convertible Bonds Selling and Distribution expenses Improved operating cash flows In April, the Company successfully rose by a hefty 73% to RMB478 (RMB1.4 billion) during this interim raised US$150million in
Slide 17: Outlook and Strategies
Outlook and Strategies
Slide 18: 361 Degrees will operate strategies in line with longer-term vision
361 Degrees will operate strategies in line with longer-term vision notwithstanding current challenges Outlook Strategies Challenging conditions remain for rest of 2012 Support retail network through subsidy and training Long-term indicators of the industry remain fundamentally strong: sustain
Slide 19: Q&A
Q&A
361 Degrees International — H1 2012 Earnings Presentation on 6ix