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Ron Lalla – EVP Global Merchandising, Marketing & Margins

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Presentation on theme: "Ron Lalla – EVP Global Merchandising, Marketing & Margins"— Presentation transcript:

1 Ron Lalla – EVP Global Merchandising, Marketing & Margins
Corporate Express US Analyst Meeting Denver – September 2007

2 “Safe Harbour” Statement under the Private Securities Litigation Reform Act of 1995
Statements included in this press release, which are not historical facts are forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Such forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting Corporate Express and therefore involve a number of uncertainties and risks, including, but not limited to industry conditions, changes in product supply, pricing and customer demand, competition, risks in integrating new businesses, currency fluctuations, and the other risks described from time to time in the Company’s filings with the US Securities and Exchange Commission, including the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 9, As a result, the actual results of operations or financial conditions of the Company could differ materially from those expressed or implied in such forward-looking statements. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update publicly or revise any forward-looking statements.

3 We are focused on 6 strategies that will create demand, reduce our supply chain costs and connect us to the customer Implement the category mgt business discipline Communicate more effectively by Marketing Segment Improve the customer shopping experience Global sourcing Streamline the merchandising financial systems Implement a best-in-class private label program Corporate Express — North America You may be asking yourself…who is Corporate Express? CE is Part of the Buhrmann family based in Amsterdam Sales over $9 billion 25,000 Employees Over 60% of the business being OP Corporate Express is the Office Product Company North American sales of $4.4 billion Headquartered in Broomfield, Colorado 15,000 Employees in North America Our focus is exclusively on the B2B Market. We are not in retail. Our overall position around the world #1 in NA #1 in Australia/New Zealand While we are #2 in Europe now, we are in the process of completing acquisitions that will make us #1 in the near future. Our customers Fortune 500 and many global enterprises.

4 To accomplish our financial goals, activities can be bucketed into 3 areas
Creating Demand Reducing Cost of Goods Sold Working Capital Management

5 Creating Demand Comprehensive understanding of market segmentation Execution and training on product lines Sales collateral Category analysis – product trends and fashions, suppliers and their competition and issues, customers and their needs and wants, competition (their assortments, GBB tiers, pricing, their private label) Product assortment – national brand and private label Catalog process Promotional programs Interaction with field organization Assistance with bids Velocity planning – understanding product life cycles and trends to be used in bids analysis

6 Sales Force, Online, Direct Mail
By developing joint Go To Market plans that focus on meeting customer needs by segment we can drive sales improvements very quickly Customers Sales Force, Online, Direct Mail Go-To-Market Plans Segment Marketing Leaders Segment Planning Category Leaders Segment Sales Leaders Customer Needs Assessments Syndicated Data Vendor Studies Customer Sales and Product Analysis Pricing

7 We have a great opportunity to further penetrate our loyal customers
We will continue to leverage product, sales tools, online, and campaigns to create a better bond with our customers by segment with consideration for customer life cycle We have a great opportunity to further penetrate our loyal customers Day -30 Day 1 Day 180+ Prospect Account Acquired New Customer New Customer Loyal Customer

8 Our flagship catalog was changed in 2007 (from traditional method of line listing items) to improve the mix of what we sell. In addition we began presenting our customers with product solutions to meet their needs. 2007 Improvements Increased application shots Use of “Hero shots” larger images Reorganized sections to match how customers shop based on needs Rationalized assortments Added coloring Merchandised in spreads Cleaned up copy, got rid of fluff Better produced shots Easier to shop

9 Reducing Cost of Goods Sold
Preferred vendor agreements - sophisticated RFP/RFQ process, multi-year time frames Negotiated tiered pricing Supply chain management Returns management Price increases/decreases management Forward buying Deviated pricing Rebate programs creation and management Private label reverse engineering to better negotiate

10 Working Capital Management
Vendor receivables Terms Inventory turns Accounts payable

11 Industry suppliers of our products for resale have recently consolidated
GBC – ACCO Esselte – a private buy out Eldon - Dymo - Sanford - Newell Rubbermaid Domtar – Weyerhaeuser Georgia Pacific – Koch Industries

12 We are seeing cost increases from various economic factors
Cut sheet paper cost increases China tariff cost increases/reevaluation of RMB Higher fuel caused cost increases Resin cost increases Industrial chemical increases Energy increases Source: Producer Price Index

13 Allowances and Rebates defined
Allowance: Deduction from the value of an invoice, permitted by the seller of goods to cover damages or shortages. Rebate: Payment made to the purchaser after the purchase is completed to induce the purchase of product.

14 Types of allowances and rebates
Volume rebate – Set as a standard % of purchases. The monies are earned regardless of the volume purchased. Tiered agreement – The rebate comes attached with a volume condition. When the volume tier is reached the agreement can either kick in on purchases after the tier is reached or can apply to purchases back to dollar one. Catalog Placement allowance – A fixed or variable amount that the supplier gives Corporate Express for placement in the catalogs. Marketing Development Funds (MDF) – Funding the supplier provides to aid in the marketing of products that Corporate Express sells. In cases where proof of performance is required on the part of Corporate Express the funding must be monitored to make sure it is not lost at the end of a fiscal year. Promotional allowance- Negotiated specifically for placement in a promotional vehicle that Corporate Express publishes and distributes. Conversion allowance – Monies provided to help Corporate Express transition from one line of products to another. This allowance is frequently negotiated when a supplier gains preferred supplier status. Obsolescence allowance – Usually applied to products with a high degree of seasonality (i.e. dated goods).

15 Assortment Definition
Sourcing Process Category Management Product Development Assortment Definition Private Label Branded Global Sourcing

16 Superior Procurement Solutions Includes a Best-in-Class Private Label
Compensates for low margin SKU’s Exclusive brand will become a valuable corporate asset Increases profitability Offers the customer value Builds customer loyalty Competition cannot compete with our private label

17 Private Label Vision Statement
Corporate Express private label office products will be the best corporate owned brand in the office products industry in the United States.

18 Corporate Express Brands
Started in Europe in 90’s >2,200 sku’s Different packaging US/Canada/Europe plans to align QUALITY Not used in Europe yet premium National Brand Started in Europe in 2006 with 150SKU’s / 250 in 2007 Same packaging US/Canada PRICE

19 Pillars to a Successful Private Label Strategy
IT System for placing orders Interfaces in third parties Robust reporting on all performance metrics Product Management Ensure quality specs Monitoring raw materials production Monitoring human rights Database of manufacturers Merchandising Assortment planning Sales planning Promotional planning E-Way Sales Force Defectives Branding Strategy What does the brand represent Staying true to the brand SUCCESS Logistics Strategy On-time delivery to warehouse Efficient supply chain management Order quarterly Freight efficiency Duty Consolidation of shipments Human Resources Managing an overseas operation Right compensation Broadest range of products and services of any company in the industry., available through Corporate Express companies, not partnerships. Finance Maximize financing options Best legal structure Purchasing models EVA models Best tax structure

20 Greg Shewmaker – VP Global Sourcing & Product Quality
Corporate Express US Analyst Meeting Denver – September 2007

21 “Safe Harbour” Statement under the Private Securities Litigation Reform Act of 1995
Statements included in this press release, which are not historical facts are forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Such forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting Corporate Express and therefore involve a number of uncertainties and risks, including, but not limited to industry conditions, changes in product supply, pricing and customer demand, competition, risks in integrating new businesses, currency fluctuations, and the other risks described from time to time in the Company’s filings with the US Securities and Exchange Commission, including the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 9, As a result, the actual results of operations or financial conditions of the Company could differ materially from those expressed or implied in such forward-looking statements. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update publicly or revise any forward-looking statements.

22 Overview Began import business in 2003 with exclusive buying agent Goal was speed to market for Corporate Express Brands launch Buying agent model provided immediate resources in Asia Significant growth in export volume from Asia 2003 – 2007 Next logic step was direct sourcing

23 Wholly owned subsidiary of Corporate Express, NV
Launch of CE Asia Incorporated in Q1 2007 Headquartered in Hong Kong with satellite office in Southern China Wholly owned subsidiary of Corporate Express, NV Extending Corporate Express global footprint in Asia Closer links with Suppliers, Partners and Customers in the Region Exclusive business conduit for all Asian supplier relationships

24 Values Building Long-lasting Partnerships with Manufacturers Being Best-in-Class in Our Core Competencies of Product Development, Quality Assurance and Supply Chain Management Developing Our People Being a Global Leader in Social Responsibility

25 Regional Experience Currently 37 Employees; 31 in Hong Kong headquarters and 6 in Shenzhen office Each member of senior management team has direct experience setting up multi-national operations in Asia Over 1/3 of the staff are engineers that will focus on manufacturing processes, product enhancements and quality assurance 2/3 of the staff have direct experience in Office Products industry 100% of the staff is multi-lingual (minimum requirement of Mandarin/English capabilities)

26 Year over year cost of goods reduction 98% on-time shipping
Key Success Factors Year over year cost of goods reduction 98% on-time shipping 1% or less defect rate by product category Vendor management Diversification of supply base Rationalization of suppliers Factory audits Scorecards

27 Social Responsibility
Partnership Innovation Quality Partnership Social Responsibility

28 Quality means many different things
Quality of Order Forecasts Collaborative Production Planning Firm management of supply chain Product Quality Detailed specifications to match brand strategy Raw materials Quality engineering Quality of Relationship

29 Evolving from sourcing solution to development solution
Product Innovation Evolving from sourcing solution to development solution Collaboration in product design/development and sales/marketing Product solution opportunities Ergonomics Personal health Sustainable products

30 Why Social Responsibility is Essential
Expected by most customers Required by many customers Avoidance of adverse publicity Right thing to do

31 Social Responsibility
Partnership Innovation Quality Partnership Social Responsibility

32 Productivity in your hands.
Thank you. Productivity in your hands.

33 To be successful in merchandising, we have undertaken a journey to move from a purchasing organization to a category management approach to the business Monitor Performance Market Research Determine Category Role Assortment and service selection Supplier Selection Item creation The products Corporate Strategy

34 Thank you


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