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Renewal & Transformation Renewal & Transformation Update 3 March 2009 Contents 1 Introduction 2 Focus on the Customer 3 Portfolio update 4 TfithbiTransforming the business 5 Winning on the internet 6 Operational opportunities 7 Summary 2 Introduction (i) ● 10 Months into 3 year Renewal & Transformation plan ● Period of intense activity ● The UK business is being reset quickly ● Italian turnaround on track ● Nordic and Greece performing well in their markets and gaining share ● Restructuring of PC City Spain to focus on cash ● Tough market for review in Central Europe 3 Introduction (ii) ● Speed and depth of recession greater than expected in May 2008 ● But we have re-planned the business for a weak environment ◘ Reducing costs, focusing on margins and cash generation ● New DSGi Executive team appointed ◘ Aligning structure with customers’ needs ◘ One set of business processes ◘ Merging PC World and Currys back office ● Emerge from the recession as the leading multi-channel electronics goods retailer 4 Renewal and Transformation Plan - May 2008 1. Focus on the customer ◘ unbeatable combination of VALUE, CHOICE and SERVICE 2. Focus the portfolio on winning ◘ realise potential of UK market position positions ◘ address unprofitable stores and chains ◘ turnaround Italy 3. Transform the business ◘ broaden choices for customers ◘ improve the selling process ◘ upgrade selling space ◘ sell services more effectively 4. Win in the internet market ◘ grow our pure play business ◘ become masters of multi-channel retailing 5. Reduce cost base ◘ simplification to make processes better, easier and cheaper ◘ one set of business processes 5 Contents 1 Introduction 2 Focus on the Customer 3 Portfolio update 4 TfithbiTransforming the business 5 Winning on the internet 6 Operational opportunities 7 Summary 6 Core values Bringing life to technology 7 Core values Customers People They're interested in working out We love to make our customers what's right for me happy It's easy to shop We know our stuff It's an exciting place to be I can get what I want when I want We love to work here it The prices are good We deliver They make things work and keep them working They deal with queries and complaints brilliantly 8 Service improvement started ● UK-wide training of store colleagues emphasising: ◘ Selling service Î £25m of annualised new service sales ◘ Colleague training Î 20,000 colleagues through training programme ◘ Product knowledge Î Support from suppliers ◘ Connectivity Î 5,,p000 broadband connections per week ◘ After-sales service Î 700,000 repairs per year ● Launched uniqqyyue next day delivery in 3-hourly timeslots ◘ 23,000 3-hour timeslot deliveries over Peak ● Imppgroving feedback from customers 9 Contents 1 Introduction 2 Focus on the Customer 3 Portfolio update 4 TfithbiTransforming the business 5 Winning on the internet 6 Operational opportunities 7 Summary 10 Italian turnaround plan is working ● Sales tracking ahead of the market* ● Margins up 1%* ● Total costs down by over 20%* ● Stock improvement* ◘ Availability up 20%, further work to do ◘ Total stock down 20% ◘ Clearance stock significantly reduced ● Store closure plan ahead of schedule ◘ 43 this year ◘ Further 10 stores identified for closure ◘ 96 stores remain in the portfolio 11 * = Figures are for the 24 week period to end of December 2008 versus the prior year Italian plan underpinned by new customer offer ● 14 PC City implants completed ◘ Implants producing 10% uplift for the store* ◘ 11 further stores this financial year ◘ Potential for further 30 next year ◘ PC City will operate within the UniEuro business ● New format trial store employing elements of UK learnings €60 – €75 million of cash expected to be required to achieve profitability over next 3 years 12 * = Average gross profit uplift versus the store performance prior to the implant PC City implant in UniEuro 13 Spain ● Market conditions have resulted in DSGi pursuing strategy to retain and restructure ● Minimising cash outflow until market recovers ● Central office and store cost reduction plan underway ● Trial of new UK format planned for a limited number of stores ● Pos t rest ruct uri ng cash outfl ow targe tted to b e c. £5m - £8m per annum during the recession 14 Central Europe ● Difficult trading conditions, especially in Hungary, impacting outlook ● Czech continues to be profitable ● Slovakia opening performance in line with expectations ● PlPolan d rema ins su b-scale ● Focus on margggins, cash generation and costs ● Strategic review continues ◘ Update at end of financial year 15 Contents 1 Introduction 2 Focus on the Customer 3 Portfolio update 4 TfithbiTransforming the business 5 Winning on the internet 6 Operational opportunities 7 Summary 16 Key elements of UK work ● New UK store formats opened: ◘ 41 PC World stores ◘ 13 Currys ◘ 4 CurrysDigital ◘ 1 Currys/PC World combined store ● Successful Megastore format: ◘ 1 in the UK ◘ 3 in the Nordics ● All ranges reviewed with wider and better choices ● All colleagues trained in first phase of FIVES 17 All the new UK formats work Format Number Average gross profit uplift Capex Pay back 12 weeks* 6 weeks* per ft2# period (yrs) + CurrysDigital 4 30% 46% £90- 3 £100 Currys Full 4 16% 16% £33 3 Currys Mezzanine 4 43% 49% £36 3 Currys Lite 5 26% 19% £17 2-3 PC World 41 7% 10% £35 3-4 Currys Megastore 1 - 54% £25 2-3 Combined 2-in-1 1 - 62% £35 2-3 *= year on year gross profit uplift versus the relevant chain for 6 week and 12 week periods to 7 February 2009 # = estimated cost of reformatting the stores 18 + = estimated payback period based on expected gross profit uplift Good uplifts from refitted stores ● Transformation working across all formats ● PC World performance linked closely to availability of new ranges 100% 100% 90% 90% 80% 80% 70% 70% Uplift Uplift ss ss 60% 60% Add in second PCW column 50% 50% 40% 40% k Average k Average Sale k Average k Average Sale ee ee 6 We 6 We 30% 30% 20% 20% 10% 10% 0% 0% Currys Digital Currys Full Currys Full Mezz Currys Lite PCW Full FtFormat 19 Note: Average sales uplift by reformatted store for the 6 weeks to 21 February 2009, versus the rest of the chain Major range changes in new format SKU Computing Computing White Consumer Vision & Essentials increase hardware non hardware Goods electronics Audio Currys +21% Superstores CurrysDigital +30% Currys Megastore +58% Combined 2-in-1 +34% PC World +15% 20 Summary of UK changes to shopping trip ● New brand identity and in-store look and feel – less "warehouse", more departmentalised ● Category adjacencies more intuitive to improve navigation with improved signage Brand/ ● Drive aisle and straight gondolas to maximise sales space, ease of shopping and sight lines Format ● Playtables enable customers to interact with products before they buy ● Introduction of new, standard system to leverage cost and efficiency synergies ● Ranges redesigned to match consumers' needs and tailored to specific format ● More premium products, in clear trade-up architecture, supported by supplier concessions Range ● Improve d ranges in compu ting, imag ing an d gam ing w ith more f ocused range of MDA & SDA ● Much more focus on essentials across all ranges in all stores ● Introduction of product specific planograms (PSP) to improve standards and stock levels ● All Colleagues trained in new customer service model - FIVES ● All sales colleagues also given improved product training People ● Experts in store on key departments (imaging , computing , MDA, vision, gaming etc. ) ● Improved remuneration structure 21 New formats have more potential ● Combination of full and lite fit outs ● Stores chosen to be representative across the market ◘ Mix of different catchments and sizes ◘ Not chosen for potential uplift ◘ No unusual launch marketing ● Furth er uplift po ten tia l throug h:- ◘ Improvements in availability ◘ Further development of store design ◘ Better execution in-store ◘ Local marketing 22 Transforming Currys Superstores - Before 23 Transforming Currys Superstores - After 24 Transforming Currys Superstores - After 25 Key changes in Currys Superstores ● Grid layout with main drive aisle – better sight lines ● New signage – easier to navigate ● Playtables enabling customers to try products more easily ● More range, improved adjacencies ● Supplier concessions ● Higher mix of computing and consumer electronics ● Uplift in computing with increased range, prominence and colleague training ● MDA & SDA now 1/3rd of space ● MDA upstairs in mezzanines ● Increase in essentials ranging 26 Transforming CurrysDigital - Before 27 Transforming CurrysDigital - After 28 Key changes in CurrysDigital ● Clear signage – easier to navigate ● More contemporary store design – less clutter ● Playtables in centre instead of counters – enables better access to products ● 30% more SKUs ● Enhanced laptop range for High Street customer base ● Authoritative camera range with high end DSLRs ● Distinctive sound and vision destination at back of store ● Accessories on side walls and under playtables focusing on higher- turn ranges ● Remove White Goods and small domestic appliances High Street destination for portable consumer electronics 29 Transforming PC World - Before 30 Transforming PC World - After 31 Key changes to PC World ● Grid layout, central drive aisle – better sight lines ● Clear signage – easier navigation ● Playtables – easier to try products ● Improved computing range – segmental targeting ● Introduction of photography ‘department’ with authoritative range ● Better adjacencies through the store ● More open accessible TechGuys area ● Better
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