FNG Investor presentation week 36 v18 online · 2010 2013 Mail-order company 1983-1995 2017 Ellos Group switched to a completely new ... Customer Lifetime Value (CLV)2 CAC CAC CLV

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4. Introduction to Ellos

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Ellos Group – a leading Nordic e-commerce company

1)  GfK 2016 2)  Arthur D. Little

3)  Awarded by Sweden's Best Managed Companies 4)  Deloitte adjusted Q1-19LTM

Market leader Introduction to Ellos Group §  Ellos Group is a leading Nordic e-commerce group founded in 1947 and today

the Group operates in all the Nordic countries under the brands Ellos, Jotex and Stayhard

§  Ellos offers product ranges within fashion and home interior, Jotex within home furnishing and Stayhard within men’s fashion

§  The three brands have a focused online strategy offering both private label and external brands

§  Ellos Group offers integrated, flexible and efficient payment solution together with private loans and insurances to its customers in a cost efficient manner through partnerships

Revenue4) SEK 2.6 billion

EBITDA4) SEK 230 million

Site visits 117 million

Conversion rate 2.8%

Share mobile traffic 62%

Return ratio 25%

Active customers 1.7 million

% P Extensive

track record

P Private label brands

P Common e-commerce platform

P Efficient logistics set up

P Integrated payment solutions

Position in Swedish online Fashion1

Position in Nordic online Fashion2

Position in Nordic online Home & Interior after IKEA – Clear No.1 in Textiles online in Sweden1

Ellos Group

Integrated Financial Services

The online department store

The online home interior store

The online men’s fashion store

Winner of Sweden’s best managed companies 20193

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Strong brand with roots dating back to 1947

1)  Kering Group, a global luxury group owning brands such as Gucci, Saint Laurent and Bottega Veneta

Ellos was founded in Sweden by Olle

Blomqvist

1983 Ellos is launched in

Norway 1987

Ellos is launched in Finland 1995

Ellos is launched in Denmark

Swedish grocery retail chain, ICA, acquires Ellos

Group

Ellos premium outdoor brand

"Áhkká" is launched

Private equity firm Nordic Capital

acquires Ellos and Jotex to form the

Ellos Group

Ellos Group acquires Stayhard

Transition from offline to online business model

Launches first web page

Acquired by French holding company

PPR (today known as Kering1)

Acquisition of Jotex

Ellos launches app for iPhone

1988 1997

2012 2014 1996 2004

2010 2013

Mail-order company

1983-1995

2017

Ellos Group switched to a

completely new system for its e-

commerce business

1947

Launch of furnishing marketplace Homeroom

2019

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Wide customer reach through three business segments backed by a well-invested, scalable e-commerce platform

Backed by a shared, well-invested, scalable e-commerce platform

Product development and design

Financial Services Marketing CRM Sourcing Logistics

Business segment

Brand proposition

”The online shopping platform for Nordic

Women”

“The leading Nordic home furnishing e-commerce store”

“Leading Nordic street style destination”

Key offering

§  Women’s fashion §  Home textile and

decoration §  Kid’s apparel

§  Textiles §  Carpets §  Furniture

§  Men’s fashion §  Men’s sneakers §  Men’s grooming

Target customers

Women aged 30 – 60

... where Ellos is her lifestyle specialist online when it

comes to Fashion & Home Interior

Individuals aged 30 – 60

… looking for a more personal and beautiful

home

Men aged 18 – 35

… with an interest in clothes and his style as part of personal identity and

lifestyle

Added to group - 2004 2014

Share of sales (2018FY)

76% 17% 7%

Sweden

Finland Norway

Denmark

Ellos – entered 1983

Jotex – entered 2003

Stayhard – entered 2015



Ellos – entered 1995 Jotex – entered 2017



Stayhard – entered 2005

16%

17%

59%

7%

Strong presence throughout the Nordics with longstanding heritage

USA covered through licenced

business

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Annual Sales Merchandise sales split (2018)

Share of private label (2018) Online visits

Fashion: 60% Furniture: 72%

100%

31%

Ellos Group’s brands

Apprarel, 79% Accessories, 8% Shoes, 7% Grooming, 4%

Furniture, carpets & light, 46% Curtains, 34% Bed, bath and children, 19% Other home, 1%

Home, 34% Womenswear, 26% Shoes, 8% Underwear, 7% Sportswear, 7% Compl. Products, 7% Other, 11%

CAGR: 2%

Millions SEKm

: 100%

: 60%

: 72%

: 30%

Note: Based on management accounts

1.522 1.517 1.595

2016 2017 2018

254 287 350

2016 2017 2018

139 155 155

2016 2017 2018

68 73 81

2016 2017 2018

14 19

24

2016 2017 2018

8 10 10

2016 2017 2018

CAGR: 17%

CAGR: 6%

CAGR: 9%

CAGR: 32%

CAGR: 13%

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Optimal customer journey ensured through integrated business model

Customer returning

Keep or return

Logistics

Closing the sale Infrastructure

Target market

Product offering

Marketing

1

2

3

4

5

6

7

8

The Ellos Group strives to provide a personal, friction free and fast customer journey – and fulfilment to meet all customer expectations

Customer centric approach

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Customer returning

Keep or return

Logistics


Target market

Product offering

Marketing

1

2

3

4

5

6

7

8



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Customer returning

Keep or return

Logistics


Target market

Product offering

Marketing

1

2

3

4

5

6

7

8



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Customer returning

Keep or return

Logistics


Target market

Product offering

Marketing

1

2

3

4

5

6

7

8



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Customer returning

Keep or return

Logistics


Target market

Product offering

Marketing

1

2

3

4

5

6

7

8



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Product offering

Ellos’ core customer group is carefully selected…

Source: Ellos customer database extract 2017 1)  Some birthdays excluded due to unlikely nature of date 2)  Unknown, unisex or other genders not included

Fashion 570k

customers

Home 244k

customers

Mixed 256k

customers Mean age:

44 Mean age:

40 Mean age:

43

50,7% 58,9% 63,4%

21,5% 15,8%

18,8% 16,0% 15,3%

12,6% 11,8% 10,1% 5,2%

Fashion Home Mixed Sweden Finland Norway Denmark

90,3% 80,6%

93,1%

9,7% 19,4%

6,9%

Fashion Home Mixed Female Male

7%

21%

27% 24%

14%

6%

1%

14%

33%

22%

17%

10%

4% 1%

6%

25% 28%

24%

12%

4% 1%

16-25 26-35 36-45 46-55 56-65 66-75 76-105

Fashion Home Mixed

§  Ellos strives to instill a “mature modernity” perception among customers – it is an unclaimed part of the Nordic market

§  Ellos’ core customer group is 30 – 60 year old women

§  Delivering a Fashion & Home Interior offering – catering to the desires and needs of the woman, her family and home

§  Ellos aims to be curated and personal to draw people away from platforms / aggregators – with a fast and friction free shopping experience

Num

ber o

f ado

pter

s

Ellos’ focus

Mass market

Time

Positioning Age1

Country Gender2

Marketing Infrastructure Closing the sale Logistics Keep or return Customer returning Target market

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…and is generating significant value

1)  Ellos customer database extract – 2017 data 2)  Base on 2018 data

CAC

Customer KPI’s1

23%

42%

3,435

4.2

64%

53%

44%

1,389

1.9

37%

23%

13%

1,140

1.3

26%

Gross dispatched sales

# orders per customer

Sales per customer (SEK)

% of ordering customer

Retention rate Y1

Fashion Home Mixed

Ellos’ multi-category customers are 2.5x more valuable than single category customers

Valuable customers with upside through mixed sales

Customer Lifetime Value (CLV)2

CAC CAC

CLV CLV

CLV

2.8x

2.2x

1.5x

§  The Ellos Group is positioned towards a valuable customer space and through its customer centric strategy significant returns are generated. This is evidenced by a Customer Lifetime Value (CLV) larger than the Customer Acquisition Cost (CAC)

§  Each customer segment is valuable on a stand-alone basis, however, the mixed customers are significantly more valuable which proven through several key KPIs

Customer Lifetime Value (CLV) Customer Acquisition Cost (CAC) CLV/CAC

Product offering Marketing Infrastructure Closing the sale Logistics Keep or return Customer returning Target market

CLV definition: Sales incl. customer fees less COGS incl. warehouse cost and inbound logistics divided by active customers start of period + new customers in period. The calculation is done over 2 years.

CAC definition: Total marketing cost divided by new customers multiplied with the share of new customers of the active customers

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Product offering

Optimised in-house digital marketing ensuring profitable growth – evidenced by customer growth in combination with declining CAC

1)  As of 10 June 2019 (zalando, ikeasverige, ellosofficial, jotex.se+jotex.dk+jotex.fi+jotex.no, stayhard_official, boozt.com)

New customer growth with decreased CAC State-of-the-art automated marketing platform

Significant increase in marketing efficiency from digital shift % of marketing costs (Ellos

and Jotex)

Customers, (thousands)

594 634 684 741 761

823 899 880

705 603

508 464

1.542 1.491 1.492 1.518 1.524 1.597

2014 2015 2016 2017 2018 2019

New customers CAC

Active customers online Active customers offline

Total active customers

§  Ellos Group is highly skilled in digital marketing and has approx. 243k followers on Instagram, which can be compared to Zalando’s 613k followers and EUR 5.4 billion in revenues 2018FY

20% 19%

59%

14%

7%

53%

14% 13%

2019 2014

Mass media / PR / Other

Digital / TV / PR

Creative Paper

Big data input from transactional data, external demographic data, behavioural online data, financial services data

Email marketing Website

Google Facebook

Other media

684

424

250

240

99

27

Instagram followers, thousands1

Transition from offline to online business model

Target market Infrastructure Closing the sale Logistics Keep or return Customer returning Marketing

Avg. CAC (SEK)

The successful transformation towards digital marketing is evidenced through Ellos position in social media relative to its size

Enables improved customer journey, CLV and profitability

Media independent recommendation engine per brand Built in-house – utilising machine learning

-48%

Q1 2019LTM

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Marketing

Well invested infrastructure with a state-of-the-art IT platform

Strong legacy in CRM State-of-the-art IT platform launched in 2017

1,7

5,0 0.7

0.2

2.4

Ellos Jotex Stayhard Cold file Total

+5 million in the customer file Customers, millions

High quality customer data Clean and structured data using 1) transactional data, 2) online data and 3) third party data (e.g. Bisnode for

demographics) – and very successful GDPR implementation

Ellos Group CRM Model Across all brands providing easy customer file tracking and CAC /

CLV optimization

Big data and machine learning capabilities Creating advanced predictive scoring models and personalization

Customer behaviour monitored in real time – reporting any issue impacting revenue

Comprehensive, seamless and real time experience by selecting the most relevant inspirations, products and offers based on

each customer’s historical data and behaviour

UX management (Tealeaf)

Imagery (Ampliance)

Ratings (BazaarVoice)

Credit (MUP)

Adobe Service Cloud

Personalization

Merchandizing Message center & interactions

X-sell Analytics

Provides actionable insights through Cloud Analytics and Merchandising, Customer Intelligence and Self

Service BI

Headless Storefronts

CTI Adobe Service Cloud

Product life cycle management (Infor PLM)

Product information

ERP Return (M3 mod)

WMS (M3 mod)

Customs (CGT)

Credit (MAKS)

AP (Medius)

Consolidation (Infor d / EPM)

Supplier portal (Infor SEP)

Product planning (QA)

BI Marketing data marts

Integration platform



Mul

e in

tegr

atio

n pl

atfo

rm

eCall Center

Product offering Target market Closing the sale Logistics Keep or return Customer returning Infrastructure

SEK 130 million invested in a shared IT platform with high degree of scalability, facilitating for future needs

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2017 2018

Integrated financial services offers significant advantages…

1) Example of loyal customers using split payment 2) Ellos and Jotex 3) Loyal customer using split payment vs avg. fashion invoice customer 4) Defined as (Adjusted Cash EBITDA – ∆NWC – Capex) / Adjusted Cash EBITDA

An integrated part of the Group’s business model

684 741 761

2016 2017 2018

+75% Retention rate Y13)

§  Ellos Group offers seamless and fully integrated payment solutions to its customers, including, i) invoice, ii) split payment and iii) credit card payment

§  Invoice and split payment customers proceed straight to check-out and can apply for a credit of up to SEK 30,000 through a hassle free and immediate credit application

§  Seamless and fully mobile invoice payment experience launched in 2018 §  Ellos Group’s Financial Services is an integrated part of its business model and

has resulted in higher profitability due to increased stickiness, leading to lower CAC, in addition to income from its Financial Services

Higher CLV1

Increased volume through

new and returning

customers2

Profitable growth

and cash generation4

Lower CAC and avg. cost

per order

116% 93%

2017 2018

CLV excl. FS CLV incl. FS

+22%

1

2

3

4

Infrastructure Marketing Product offering Target market Logistics Keep or return Customer returning Closing the sale

New customer mode of payment split

Overall mode of payment split

7% of active invoice customers transfer to split payment per month

New customers typically start with invoice as the default payment option, which is a good stepping stone towards split payment and other Financial Services – a journey Ellos actively drives and facilitates through the new IT

platform

Split payment 11%

Invoice 41%

Card or Cash on Delivery 48%

Split payment 46%

Invoice 33%

Card or Cash on Delivery 21%

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…whilst reducing credit risk through partnerships

1) Source: Danske Bank Equity Research – Investment Research Qliro Group, Nordea Credit Research – Credit market update, Betaltjänstmarknaden i Sverige, Konkurrensverket 2) Example for Sweden 3) Annual percentage rate

Financial service providers1 SEKm

Ellos Group and Klarna basically offer the same payment products …

… but Ellos Group offers a more broad Financial Services portfolio

Ellos Group has the same offering as Klarna2

14d invoice

30d invoice

Split Pay

Additional Fin. Services

Total income

Free TBA

SEK 29 SEK 19

29.22% APR3 29.40% APR3

Credit card Insurances & Loans

4.525

3.091

1.213 512 380 223

Payment solutions (invoice /

split payment)

Private loans

Insurance

Ellos advertises Ellos branded private loans, however, the customer borrows directly from third party financial institution – Ellos Group receives kickback from Ellos branded private loans

Ellos advertises insurance products delivered by third party. The Ellos Group does not bear any insurance risk - Ellos Group receives commission for offering insurance

Integrated financial services

Illustrative flows between Ellos Group and third party financial institutions Monthly kickback calculated

Invoice

Default payment option

Offered services

Payment solutions

Loans

Insurance

Step-in step-up strategy

Split payment

Payment protection insurance

Loans Personal insurance

“Try out at home – pay conveniently at the end of the month”

“Pay conveniently at your own pace – up to 36 months”

“Additional security for the unexpected”

“Small loans fast, easy and money directly”

“Safety for you and your family”

Month 1 Daily payments

Month 2 Cumulative monthly balance

Receivables are sold on a daily basis to a third party at 100% of the invoice

value

Example of non-payment after 30 days

§  The use of sales finance significantly reduces net working capital need and improves cash conversion

§  Potential non-payments are capped at 40% of invoiced amount, eliminating a large portion of the customer credit risk

§  Kickback from third party financial institutions is a significant income contributor to Ellos Group

Calculated based on total outstanding balance, product mix etc.

Deductions:

Kickbacks:

Monthly fee

40% of the value of a non-payment is deducted from the kickback – no

further recourse to Ellos

Infrastructure Marketing Product offering Target market Logistics Keep or return Customer returning Closing the sale

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Logistics

The integrated customer journey ensures high degree of customer stickiness and market leading share of wallet

1) GfK 2017 2) Source: Javelin (year 1 retention rates)

Leading retention rates

§  Ellos’ multi-category customers are 2.5x more valuable than single category customers

Retention rates Ellos Benchmarks2

Online homewares 26% 21-22%

Online fast fashion 37% 31-37%

Mixed 64% -

Ellos retention rates in Fashion and Home in line with benchmarks – and extraordinary

high in Mixed

The “Ellos customer” spends 24.3% of its apparel wallet on Ellos

and only 1.5% on Zalando – demonstrates resilience against

international competition

Closing the sale Infrastructure Marketing Product offering Target market Keep or return Customer returning

24% 15%

13% 7%

19%

Best-in-class share of wallet in targeted segments2

§  The “Ellos customer” spends 24.3% of its apparel wallet on Ellos in the age group 31-50 years – significantly ahead of all competition

Moving towards NPS target of >50%

25%

2013

8%

48%

2019

32%

Satisfied customers result in increasing NPS

FNG Investor presentation week 36 v18 online · 2010 2013 Mail-order company 1983-1995 2017 Ellos Group switched to a completely new ... Customer Lifetime Value (CLV)2 CAC CAC CLV

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