Sonae SR: International Expansion

Transcription

1 Sonae SR: International Expansion JMSB Consulting George Emery Jonathan Suprovici Eliane Roy Cinzia Ruberto

2 Mandate How can Sonae SR expand internationally and become fully profitable by 2017? Where to expand Capital light vs. wholesale Brand development IT system

3 Creating the Sonae SR road map Corporate infrastructure Franchise model expansion Address Worten model IT system to control global logistics Restructure management for Int. expansion Franchise model is the future for Sport Zone, Zippy & MO 60 new stores per year, implement success template Close non-profitable Worten s in Spain (38 stores) Implement a retrenchment strategy to focus on franchise model Sonae SR can use the franchise model to grow global footprint

4 Analysis

5 Make minor adjustments to grow Core strengths Management, logistics, staff Strong ability to adapt and grow Improvements Fine-tune the franchise model Develop brands IT infrastructure Improvements can be fixed with minor adjustments

6 Focus each division for future expansion Worten Sport Zone Zippy MO Franchise difficulty 50%/50% own brands Higher end products Lower end products Struggling internationally Profitable in Spain Saudi Arabia business model Africa and Asia Each division should be structured to move forward

7 Franchise BM will be a successful path Sport Zone Growth opp. in India Strong ability to adapt Zippy MO 17 franchise countries Potential for emerging countries Hard-working, experienced staff Logistics and management Focus on franchise model for three divisions will be key

8 Worten model faces intense competition Low competitive advantage Intense competition - Media Markt - Radio Shack - Darty - Best Buy - Apple Look to close 38 stores Possible expansion in the future through JV Worten s model should be a local only play

9 Financials

10 Business Unit Assessment WARTENS 185 Portugal Store 44 Spain Stores 229 Income: 200 K Eur per store SPAIN STORE NOT PROFITABLE Expansion Outlook International Expansion Not Profitable CLOSE SPAIN STORE / OPEN PROFITABLE JOINT VENTURE

11 Business Unit Assessment SPORT ZONE 81 Portugal Store 35 Spain Stores 1 Indian Store 117 Income: 85 K Eur per store Profitable in Spain and Intl Expansion Outlook Expansion via Franchising FRANCHISE EXPANSION

12 Business Unit Assessment MO 113 Portugal Store 6 Spain Stores 3 Saudi Arabia Stores 2 Other intl Stores 124 FRANCHISE EXPANSION Income: 16 K Eur per store Expansion Outlook Expansion via Franchising

13 Business Unit Assessment ZIPPY 38 Portugal Store 35 Spain Stores 15 Saudi Arabia Store 32 Intl Stores 120 FRANCHISE EXPANSION Income: 17 K Eur per store Expansion Outlook Expansion via Franchising

14 Alternatives

15 Strategic Assessment for Expansion Strategy Dual strategy : Franchising and organic Diversified offer for different market segments Core Competency Local management & operations Lean infrastructure for international growth Need to improve tecnology branding, logistics International presence Local knowledge Competition Market

16 Strategic Assessment for Expansion Strategy Dual strategy : Franchising and organic Diversified offer for different market segments Core Competency Local management & operations Lean infrastructure for international growth Need to improve technology branding, logistics International presence Local knowledge Competition Market Finding the right partners & improving structure should be a priority

17 Alternatives for international expansion Criteria Combine stores in mall model Focus on organic growth Focus on franchising model Improve international structure and operations Initial investment Leverage core competencies Synergies Risk

18 Alternatives for international expansion Criteria Combine stores in mall model Focus on organic growth Focus on franchising model Improve international structure and operations Initial investment Leverage core competencies Synergies Risk Franchising is the right model for growth, but the right structure needs to be in place

19 Risks of franchising model RISKS ACTIONS CONTINGENCIES Control on success & brand Control standardization Aggressive growth Hire Franchise Director Create success template Focus on current locations Hire local team to manage franchisees Provide further training to partners Retrenchment to successful locations

20 Creating the Sonae SR road map Corporate infrastructure Franchise model expansion Address Worten model IT system to control global logistics Restructure management for Int. expansion Franchise model is the future for Sport Zone, Zippy & MO 60 new stores per year, implement success template Close non-profitable Worten s in Spain (38 stores) Implement a retrenchment strategy to focus on franchise model Sonae SR can use the franchise model to grow global footprint

21 Implementation

22 Implementation at a Glance Corporate Infrastructure New Corporate Structure IT Platform Development IT Platform Roll-out Franchise Growth Model Franchise Template 60 Franchise stores 60 Franchise stores 60Franchise stores 60 Franchise stores Addressing Worten model Close nonprofitable stores in Spain Find JV Partner for Expansion

23 Sonae SR Corporate Structure Paulo de Azevedo Chaiman & Co- CEO Angelo Pauperio Co-CEO Sonae SR Sonae MC Sonae Sierra Sonaecom Sonae RP Sonae IM Francisco Pimentel Exec. Director International Dev. Teresa Castro Director Operations 173 Stores outside Portugal 4 Brands Franchising operations in 22 countries Sonae SR Structure needs to be adjusted for growth

24 Sonae Corporate Structure Paulo de Azevedo Chaiman & Co- CEO Angelo Pauperio Co-CEO Sonae SR International Division Domestic Divisions Technology Each Brand to have a dedicated Franchising Director Worten Zippy Sport Zone MO 1 Technology Director 2 Technical Specialists New Sonae SR Structure set-up for International Expansion

25 IT Platform Features Store Level Data Best selling products Seasonality Brand Division in HQ Adjust sales forecast Adjust inventory Estimate delivery times

26 IT Platform Roll Out Set-Up Hire Technology director Identify Technology provider Pilot Test with 10 Worton stores in Portugal Integrate Roll-out plan across 18 months By brand Training & Support Connecting data from all 4 brands to ensure seamlessness in expansion

27 Franchising Model Template Each division to Identify potential franchise partners Ensure split of products between Sonae Brands & other brands Utilize synergies from existing franchised stores Dominate existing segments with all 3 brands

28 New Franchise Stores 60 stores per year Zippy countries as baseline Adjust marketing as per local needs with Franchisors Control inventory & delivery with IT Platform Expand in MENA with Alkoair 22 countries with all 3 brands: Zippy, Sport Zone & Mo

29 Addressing Worton Model Close unprofitable stores in Spain Keep Canary islands Identify JV partner for future Worton growth Expand Worton once JV partners identified Reassess Worton Strategy

30 Financials

31 Cost Corporate Infrastructure IT CORPORATE RESTRUCTURE 200 M eur over 30 months (6.7 M eur per month) 1.5 M eur over 18 months (10 executives) M eur over 30 months

32 Cost Franchise Growth FRANCHISEING WARTENS CLOSURE 15 M eur (60 Stores per year for K per store) (20 stores per Sports Zone, Zippy and MO) 9.5 M eur (Closing 38 stores in mainlain Spain 1 Yr) (250 K per closure) 24.5 M eur FIRST YEAR / 15 M eur PER 3 NEXT YEAR

33 Projections WARTENS Portugal stores International stores Sales Closure Income SPORT ZONE Portugal stores International stores Sales Store Open Income ZIPPY Portugal stores International stores Sales Store Open Income 2 2 (2) MO Portugal stores International stores Sales Store Open 0 2 (2) Income 2 2 (2) PROFITABLE BY 2019

34 Creating the Sonae SR road map Corporate infrastructure Franchise model expansion Address Worten model IT system to control global logistics Restructure management for Int. expansion Franchise model is the future for Sport Zone, Zippy & MO 60 new stores per year, implement success template Close non-profitable Worten s in Spain (38 stores) Implement a retrenchment strategy to focus on franchise model Sonae SR can use the franchise model to grow global footprint

35 Questions?