Industria de Diseno Textil, S.A. · BME:ITX
Industria de Diseno Textil — Inditex — FY2007 Earnings Presentation
46 slides from Industria de Diseno Textil's earnings presentation, Mar 31, 2008
Slide 1: FY2007 Results Presentation
FY2007 Results Presentation 31 March 2008
Slide 2: Disclaimer
Disclaimer This document is of a purely informative nature and does not constitute an offer to sell, exchange or buy, or the solicitation of an offer to buy, securities issued by any of the companies mentioned herein. This document contains forward-looking statements. All statements other than state
Slide 3: Index
Index FY2007 Results Overview Financial summary Concepts Outlook
Slide 4: Pablo Isla
Pablo Isla Deputy Chairman & CEO
Slide 5: FY2007: Overview
FY2007: Overview A year of strong expansion for Inditex Satisfactory sales growth and gross margin evolution Higher operational efficiency and cost control Strong cash flow and reinvestment in the business Increased shareholder remuneration
Slide 6: FY2007: Overview
FY2007: Overview Sales growth 15% (17% in local currencies and constant perimeter) LFL sales growth 5% Net income growth 25%, EPS of 2.01 Funds from operations growth 18% RoCE 43% 25% increase in dividend proposal
Slide 7: FY2007: Overview
FY2007: Overview Like-for-like Sales growth 5% 5.5% FY2007 FY2006 Satisfactory performance
Slide 8: Geographic breakdown of store sales
Geographic breakdown of store sales FY2007 FY2006 Asia & RoW Europe ex-Spain 42.4% 40.6% Americas Europe Spain 37.5% 39.6% ex-Spain Americas 10.8% 11.0% Spain Asia & RoW 9.4% 8.9% (1) Store sales: Includes sales in OMS and franchises
Slide 9: Financial summary Antonio Rubio
Financial summary Antonio Rubio CFO
Slide 10: Highlights
Highlights million FY2007 FY2006 % 07/06 Net Sales 9,435 8,196 15% Gross profit 5,349 4,607 16% Gross margin 56.7% 56.2% EBIT 1,652 1,356 22% EBIT margin 17.5% 16.5% Net income 1,250 1,002 25% EPS ( ) 2.01 1.61
Slide 11: Sales growth breakdown
Sales growth breakdown FY2007 Space contribution 12% LFL 5% 7% 5% 3% 6% 1H07 1H06 2H07 2H06 Currency and perimeter impact (2%) Sales growth 15%
Slide 12: Selling area
Selling area sqm. FY2007 FY2006 % 07/06 Total space 1,914,493 1,657,299 16% 257,000 sqm added to our retail base 14.5% space growth on a time-weighted basis Openings biased to H2 25% of space less than 2 years old
Slide 13: Gross margin
Gross margin % on sales FY2007 FY2006 % 07/06 Gross margin 56.7% 56.2% 48 b.p. Satisfactory Gross margin evolution Best estimate for FY2008 Gross margin at FY2007 levels
Slide 14: Operating expenses
Operating expenses million FY2007 % 07/06 Personnel expenses 1,473 18% Rental expenses 855 19% Other operating expenses 898 8% Total 3,226 15% Strict control of operating expenses Reduce 3 implementation on track
Slide 15: EBIT margin
EBIT margin % on sales FY2007 FY2006 % 07/06 EBIT margin 17.5% 16.5% 100 b.p. Strong operating performance
Slide 16: Working capital
Working capital million FY2007 FY2006 % 07/06 Inventory 1,007 824 22% Receivables 464 364 28% Payables (2,087) (1,740) 20% Other 45 55 Operating working capital (571) (497) 15%
Slide 17: Cash flow
Cash flow million FY2007 FY2006 % 07/06 Funds from operations 1,764 1,492 18% Cash from operations 1,817 1,397 30% CAPEX 942 887 6% Dividends 522 418 25%
Slide 18: ROE and RoCE
ROE and RoCE ROE RoCE 43% 43% 33% 32% FY2007 FY2006 FY2007 FY2006
Slide 19: Inditex concepts Marcos López
Inditex concepts Marcos López Capital Markets Director
Slide 20: Sales by concept
Sales by concept Concept FY2007 FY2006 Zara 66.4% 67.5% Non Zara 33.6% 32.5% Non- Zara Pull and Bear 6.5% 6.3% Zara Massimo Dutti 7.4% 7.5% Bershka 9.8% 9.7% Stradivarius 5.5% 5.2% Oysho 2.3% 2.0% Zara Home 2.1% 1.7%
Slide 21: Zara
Zara million FY2007 % 07/06 Net Sales 6,264 13% EBIT 1,116 23% EBIT margin 17.8% RoCE 41% Sales growth in local currency and constant perimeter +16%
Slide 22: Pull and Bear
Pull and Bear million FY2007 % 07/06 Net Sales 614 18% EBIT 99 27% EBIT margin 16.1% RoCE 47%
Slide 23: Massimo Dutti
Massimo Dutti million FY2007 % 07/06 Net Sales 696 13% EBIT 106 31% EBIT margin 15.2% RoCE 44%
Slide 24: Bershka
Bershka million FY2007 % 07/06 Net Sales 925 16% EBIT 154 17% EBIT margin 16.6% RoCE 59%
Slide 25: Stradivarius
Stradivarius million FY2007 % 07/06 Net Sales 521 22% EBIT 119 22% EBIT margin 22.9% RoCE 74%
Slide 26: Oysho
Oysho million FY2007 % 07/06 Net Sales 213 30% EBIT 40 3% EBIT margin 18.8% RoCE 39%
Slide 27: Zara Home
Zara Home million FY2007 % 07/06 Net Sales 201 45% EBIT 18 1% EBIT margin 9.2% RoCE 20%
Slide 28: EBIT margins and RoCE
EBIT margins and RoCE EBIT margin RoCE 41% 50% 43% 17.8% 16.9% 17.5% Zara Non-Zara INDITEX Zara Non-Zara INDITEX
Slide 29: Outlook Pablo Isla
Outlook Pablo Isla Deputy Chairman & CEO
Slide 30: Outlook
Outlook Expansion Reinforce our business model Growth drivers 2008-2010 Outlook FY2008
Slide 31: International expansion
International expansion Strong long term potential to expand profitably Europe key priority: Inditex domestic market • Growth area for all the concepts • Strong growth markets – Western Europe – Eastern Europe and Russian Federation Growth in Asia: Strategic component • Increase in selling space in
Slide 32: Italy
Italy Bolzano Como Varese Udine Udine Novara Novara Milan 8 Milan Monza Monza Bergame Vicenza Trieste FY2007 PaviaBrescia Verona 218 stores Turín Venezia Mantova Mestre Cuneo Cuneo Alexandria Cremona Alexandria Padua Genova Piacenza San San Remo Remo Parma Modena R. Emilia Emilia Bolonia Bolonia 7 c
Slide 33: Russia
Russia FY2007 50 stores 7 concepts FY2008E Strong expansion 80 new stores Samara Krasnodar Krasnoyarsk Yekaterinburg Nizhniy Novgorod
Slide 34: China
China FY2007 15 stores in key capitals (Shanghai, Beijing, HK, Macau) FY2008E Reinforce presence in key capitals Expansion in other capital cities (Tianjin, Nanjing, Harbin, Shenzhen, Dalian) FY2008-10 Stronger expansion in the country
Slide 35: Launch in Korea
Launch in Korea FY2008E 5 stores in Seoul’s key locations FY2009-10E Strong growth potential
Slide 36: Multiconcept growth: Uterqüe
Multiconcept growth: Uterqüe New accessories concept to be launched in Second Half 2008 Strong expansion potential in a highly fragmented market 20-30 openings in 2008 Pull&Bear Zara Zara Massimo Dutti Bershka Stradivarius Oysho Home Uterqüe 1975 1991 1998 1999 2001 2003 2008
Slide 37: Multichannel: Zara Home e-commerce
Multichannel: Zara Home e-commerce Highly satisfactory launch in October 2007 c2,000 references 14 countries: Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Monaco, The Netherlands, Portugal, Spain, Sweden and UK Leverage our experience in e-commerce
Slide 38: Reinforce business model
Reinforce business model Reinforce our business model for future growth Sustain flexibility FY2008-10 FY2007 RoW 2% Asia 35% Other Proximity Proximity 49% countries c50% c50% Rest of Europe 14%
Slide 39: Reinforce business model
Reinforce business model Logistic platforms already in place Significant investments over 2006-08 Scalable to meet 2012 growth targets
Slide 40: Growth drivers 2008-2010 (CAGR)
Growth drivers 2008-2010 (CAGR) Sales Spain c10% Int’l ~4% ~15% markets c90% LFL target Space addition Cash flow CAPEX to grow at half the rate of space ~7% Capital Expenditure
Slide 41: Growth drivers 2008-2010
Growth drivers 2008-2010 International Multi-concept Spain c30% Non-Zara Europe ex- c37% Zara Spain c47% c63% Asia & RoW c14% Americas c9% Highly diversified sales platform Deeper penetration in existing markets Stores in more than 80 countries through 8 concepts
Slide 42: FY2008: Outlook
FY2008: Outlook FY2005 FY2006 FY2007 OPEX to Sales growth spread 300 b.p. 100 b.p. 0 b.p. Optimization of operational efficiency a key part of our strategy 2008: Consolidation of Reduce 3 plan
Slide 43: FY2008: Outlook
FY2008: Outlook Predictable attractive shareholder remuneration Dividend proposal: 1.05 per share 652 MM to be distributed to shareholders 25% increase over FY2006 More than doubled from 2005
Slide 44: FY2008: Outlook
FY2008: Outlook Store opening programme Range % Int’l Zara 145 155 85% Pull and Bear 65 75 80% Massimo Dutti 45 55 75% Bershka 85 95 85% Stradivarius 75 85 65% Oysho 85 95 65% Zara Home 40 50 80% Uterqüe 20 30 20% Total net openings 560 640 New markets: Korea, Ukraine, Egypt and Montenegro
Slide 45: FY2008: Outlook Capital Expenditure: ~ 1 BN
FY2008: Outlook Space growth: ~ 290,000 sqm. Capital Expenditure: ~ 1 BN During the beginning of 1H2008 sales performance is according to Management expectations. Store sales in local currencies have increased by 17% from 1 Feb. to 23 March 2008
Slide 46: FY2007 Results Presentation Q&A
FY2007 Results Presentation Q&A 31 March 2008