TOM TAILOR SOURCING STRATEGY

JACOB ROJENS DIRECTOR GLOBAL SOURCING

Capital Markets Day, November 28, 2012

GLOBAL SOURCING – BIG PICTURE

2

No magic sourcing country

China is changing. Fast

Efficiency

Cost is going up

Change

GLOBAL SOURCING – BIG PICTURE

IN NUMBERS

3

Country USD billions

apparel

exports, 2010

Number of

apparel

factories

Number of

workers in

apparel industry

(in million)

China 130 18,000 5-10

Bangladesh 16 5,000 4

India 11 11,000 1.5

Vietnam 11 2,000 2-3

Indonesia 7 2,450 0.4

Pakistan 4 7,500 6

Cambodia 3 250 0.3

SOURCING CHALLENGES IN 2010

4

Rapid wage increases and inflation in developing economies

Increasing and strong domestic Chinese demand as well as a

recovering global economy

Lead-times increased resulting in higher freight cost

Cotton. Prices tripled over 12 months. Rampant speculation

A need for a TOM TAILOR presence in Asia to safeguard capacity

and production space for continued growth

MOVE FROM AGENTS TO OWN SOURCING

5

Small companies

Country / product specific

Ineffective structures

Vested interest

“One interest only”

One oversight

Risk management

Cross divisional efficiency by

bundling capacities

Optimize buying power

Doing more with less suppliers

3rd party agents Own sourcing structure

JV PARTNER: ASMARA INTERNATIONAL LTD.

Asmara International Ltd. and TOM TAILOR have a long standing

relationship

Asmara has an established network of offices and professionals across

Asia: - 12 Offices - 9 countries - 750 people

Decision to found TOM TAILOR Sourcing Ltd.

51% controlled by TOM TAILOR

49% controlled by Asmara International

Asmara has a broad customer base in US and Europe, e.g.

Abercrombie & Fitch, Olsen, Guess, Marc O’Polo, Zalando, Loblaws

(Canada)

6

Establish TOM TAILOR Sourcing

with Asmara International

Shift complete sourcing volume from

Asmara to TOM TAILOR Sourcing

Terminate existing agency

agreements

Standardize payment terms

Communicate objectives for TOM

TAILOR Sourcing in Hamburg and

Asia

TOM TAILOR SOURCING:

ACHIEVEMENTS FIRST 12 MONTHS

7

Bangladesh transition

India focus

Bundle capacities and reduce supplier

base

Devised sourcing strategy for biggest

product categories:

T-shirt category

Better manufacturers

Structural achievements Sourcing achievements

FOCUS ON BANGLADESH AND INDIA LEADS

TO CHANGING SOURCING LANDSCAPE

8

TOM TAILOR sourcing by fob turnover 2011

China 32%

Bangladesh 23%

India 15%

Indonesia 12%

Europe 8%

Pakistan 5%

Vietnam 2%

Others 3%

TOM TAILOR sourcing by fob turnover 2012

China 25%

Bangladesh 28%

India 18%

Indonesia 11%

Europe 5%

Pakistan 6%

Vietnam 6%

Others 1%

Bangladesh +32%

India +28%

Indonesia -8%

China -11%

* fob = free on board

Change in fob sourcing

2012 versus 2011

China:

18 people

Hong Kong:

6 people Bangladesh:

46 people

Vietnam:

14 people

Indonesia:

20 people

India:

26 people

TOM TAILOR SOURCING: NETWORK

9

Present in

6 countries

7 offices

130 people

Exclusive

procurement

for TOM TAILOR

Group

as of November 2012

236 suppliers in 2011

reduced to 197 in 2012

1% of total buy came from

71 suppliers 2011

47 suppliers 2012

50% of our total buy came from

15 suppliers 2011

20 suppliers 2012

Combining and reducing

supplier base to increase

efficiency

BUNDLING SUPPLIERS: DOING MORE

WITH LESS SUPPLIERS

10

0 €

4.000.000 €

8.000.000 €

12.000.000 €

16.000.000 €

20.000.000 €

1 51 101 151 201

2011 Suppliers and volume

Strategic direction

Sourc

ing v

olu

me

Number of suppliers

Comments

Reduce number of suppliers

from 47 to 18

Reduce number of markets

from 9 to 3 markets

Develop better manufacturers

on quality, price and speed

SOURCING STRATEGY BY CATEGORY:

T SHIRTS

11

€ 1.8m saving on fob turnover

Sourcing by category 2011

T-shirts 19%

Knit 15%

Denim 14%

Shirts 13%

Pants 10%

Jackets 8%

Sweat 8%

Polo 4%

Other 11%Target

BONITA: SOURCING SPLIT BY COUNTRY

12

BONITA sourcing by fob turnover 2012

Turkey 33%

Asia 26%

Germany 21%

Italy 4%

Netherlands 4%

Others 12%

Turkey 29%

Asia 53%

Germany 6%

Italy 1%

Netherlands 1%

Others 10%

* fob = free on board

BONITA sourcing by fob turnover 2015

Europe: From 29% to 8%

Asia: From 26% to 53%

Turkey: From 33% to 29%

Others: From 12% to 10%

Targeted changes in fob

sourcing 2012 versus 2015

2012 2015

BONITA: PRODUCT OPPORTUNITIES

13

Polo Pique Turkey 18 € India 8 €

Blouse Importer 25 € China 15 €

Coordinates Turkey 29 € Indonesia 16 €

Bonita bought 11 million pieces 2011

BONITA: PRIORITIES 2013-2015

14

Sourcing activities concentrate on 2014 and beyond

Set ambitious milestones with product teams

Reduce purchase from EU based importers & traders

Move part of Turkey production to Asia

Harmonize process and structure with TOM TAILOR

2015: Reduction of fob expense by € 10m;

Measure: quarterly fob averages by product category

Target

TOM TAILOR SOURCING:

OUTLOOK 2013

15

Expand cross divisional synergy in key categories

€ 150m managed by TOM TAILOR Sourcing (60%)

Exit from all 3rd party agencies completed

Continue to build a world class sourcing organization for TOM

TAILOR