OPENINGGlossary Page 67 EXE Ex C ec UTIVE SUMMAR utiv A Global luxury goods market e summary B Global cosmetic goods market Y DCF AND V TGITlossLEary C Global luxury goods market DCF and v R p ar AMETERS • Sustainable luxury ameAL U t aluation Sub title or First paragraph erATION P s • China — can Western luxury tame the Red Dragon’s desire? A CAGR: compound annual growth rate We have seen many luxury houses respond to the • Focus on the American market - Capex: capital expenditure INDUS challenges of the new kind of customer by slowly • Focus on the Italian market Indus developing a digital strategy. This is not just a DCF: discounted cash flow TR try o web presence to manage brand content and deal • Counterfeit issues facing the industry Y O v VER with online sales. It is an integrated approach that EBIT: earnings before interest and taxes ervie • Focus on marketing and advertising VIE harnesses social media, and connects mobile w in the luxury industry W and tablet applications with back-office logistics EBITDA: earnings before interest, taxes, to deliver a viable e-channel. The channel can depreciation and amortization • Focus on licensing in the luxury provide an alternative to retail and wholesale, or industry AND DISMETHODOLOG complement the more traditional routes to market. EV: enterprise value and disMe • Focus on digital in the luxury industry thodology CLAIMER 1. Sustaining development: maintaining the FY: financial year claimer quality and supply of crucial raw materials, such Focus on Brunello Cucinelli and Y GDP: gross domestic product as increasingly rare skins and ethically traceable D Michael Kors gems, is a big challenge for some houses. It has LTGR: long-term growth rate led to an increase in vertical acquisitions in the AND SPE and specific analyS AMPLE SELE supply chain. For example, crocodile farms in S M&A: mergers and acquisitions ample s Australia and African ostrich ranches have been CIFIC ANAL on the acquisition menu of larger luxury groups. SOTP: sum of the parts election But the challenge is not just to secure supply. C s TION WACC: weighted average cost of capital Y e The focus is on sustainable development in all SE s S its forms. It is important to consider the ethics YOY: year on year behind the products and images of luxury; the act us perceived and actual wastage in production E GLOt C Y EXPERGlo processes and packaging; and the carbon onSon t s act usS s ary footprint and water impact of the end product. ARary - C T Ys S s Glo LUXURY AND COThe luxSMETICury and cS THE EosmeY FINANCIAL Ftics financial fACactbook 2015TBOOK 2014