Kakha Japaridze - Partner Profile & Caucasus Development Strategy

development in Caucasus regions
GEORGIA ARMENIA AZERBAIJAN
Kakha Japaridze
Partner Profile & Caucasus Development Strategy
Contents
1. Kakha Japaridze – Background

2. Financial Resources
3. SPV Structure & Outsourcing Strategies
4. CK Caucasus Development’s Strengths
5. CK’s Preliminary Hypothesis
6. Partner’s Assumptions & Timing
7. Stores’ Economics
8. CK Presence in Caucasus Regions by year-end 2019
9. Partnership Guidelines & Partner’s Targets
10. Conclusions
Kakha Japaridze – Partner Profile & Caucasus Development Strategy

1. Kakha Japaridze – Background
EDUCATION
1997 – 2001 Bachelor’s Degree in “Forestry and economic” at Agricultural University
2001 – 2003 Bachelor’s Degree in ”Economic”

International Relations, Majoring in Finances and Banking University
PROFESSIONAL EXPERIENCES (employed in Georgian banking system):

2001 – 2003 ”Tbiluniversalbank LTD” – Credit Expert
2003 – 2004 ”Invest Bank LTD” – Head of the Credit Department
2006 – 2007 “Invest Bank LTD” – Head of the Branches Department
2007 – 2013 “Micro invest LLC” – Chief Executive Officer
INVESTMENTS IN BUSINESS OPPORTUNITIES

2003 – 2008 Shareholder of “Royal Armenia” (http://royalarmenia.net/), one of most successful and biggest
coffee importer and distributor company in Georgia, covering over 30% of the country.
2007 – 2013 Promoter and Shareholder of “Europe–Bet” (https://www.europe-bet.com/), one of the most
successful gambling companies in Georgia, with other three investors.
2008 Sale of his 60% shares of “Royal Armenia” coffee business for 2.100.000 GEL (> € 800.000).
Turnover was 18.000.000 GEL (> € 7 million).
2013 Sale of 15% shares of “Europe–Bet” gambling business for XXXXXXXXX*.
Enterprise value was USD 70 million.
* The sale price is CONFIDENTIAL, due to current ongoing negotiations for a next sale

2. Financial Resources
Financial Resources mainly come from the sale of the participations in:
• EUROPE–BET gambling company

• ROYAL ARMENIA coffee importer & distributor company
Moreover, Partner currently owns other two businesses in Georgia:
1. GAS STATION
selling natural gas for vehicles:
• Business started in 2013

• Turnover 750.000 GEL (€ 300.000) per month and approx € 3,6 million per year
2. FOOD GROUP (http://foodgroup.ge/)

distribution company which supplies HO.RE.KA products throughout Georgia territory:
• Business started in 2014

• N. 45 clients among hotels and restaurants leading brands
(i.e. “Marriott Tbilisi Hotel”, “Courtyard Marriott” and “Radisson Blue Iveria” in Tbilisi; “Marco Polo
Hotel” in Gudauri, “Hotel Rixos Borjomi” in Borjomi)
• Turnover 700.000 GEL (€ 275.000) per month and approx € 3,3 million per year

3. SPV Structure & Outsourcing Strategies
 A NewCo., a Special Purpose Vehicle company “SPV” Tbilisi based, will be specifically established for this business.
 Team involved will depend on the growing of the business volume; initially the SPV’s structure will be composed at least
by covering the following positions:
KAKHA JAPARIDZE
Managing Director
exclusive referent of CK
…………………………… ……………………………… ……………………………… ……………………………… …………………………………

Merchandising Manager Accounting Manager HR Manager Project Manager Retail Operations &
products selection in CK administration, accounting, personnel pay rolls, following CK indications Visual Merchandising Manager
bank and public relations new recruitments, (eventually in outsourcing) Shops cash balance and
liaisons with CK’s Training supervision; new shops research;
………………………………… center loss & prevention;
Customer Service policies and procedures,
handle orders and shipments liaisons with CK’s VM Manager
of products following the and In Store VMs
Merchandising Manager
……………………………
Secretary / Receptionistr
assisting all resources
Will be carried out in outsourcing:

 Training School Local training schools for sales techniques courses for current employees
 Head Hunters Recruiter companies specialized in retail, for new resources (i.e. Hays, MicaelPage, ...)
and specialized retail-jobs websites publications (i.e. Fashionjobs, Monster, ...)

4. CK Caucasus Development’s Strengths
WHY CALVIN KLEIN WILL BE WINNING IN CAUCASUS ???

• Lack in top-level fashion products in Caucasus regions, both for clothing and underwear
• Population’s growing interest for western fashion apparel: especially in Tbilisi and Baku people are modern and
fashion, ready to spend money and even to travel to find and buy stylish articles;
• Increasing GPD recorded in the last years in Caucasus regions
• CK popularity especially for its jeans and underwear
collections, at all ages (children to old, man or woman);
• Most of the fashion stores are “multi-brands” with scarce
supply and sometimes even with fake products;
• Only few official “mono-brand” stores are already present
in Caucasus (i.e. Hugo Boss, ErmenegildoZegna, Tommy
Hilfiger, Paul & Shark and Zara). Just few of them could
compete with CK’s brands, but could give an idea for our
target locations (next to Hugo Boss, ErmenegildoZegna or
Tommy Hilfiger, both for for CK Collection and for CKJ):
GPD – Source “Banca Mondiale” 2013

5. CK’s Preliminary Hypothesis

6. Partner’s Assumptions and Timing
 We assume to will preliminary focalize attention on capital cities (Tbilisi, Yerevan and Baku)
 First CKJ store will be open in Tbilisi “Rustaveli Avenue” within December 2015 PRELIMINARY PHASE
 Next stores will be progressively open (one every 6 – 8 months), as follow:
I. One CKJ in the other two capitals, Yerevan and Baku (for a total of 3 CKJ)
PHASE I
II. One CK Collection in Baku (2016 – 2017)
III. One CKU in each capital (only after opening 3 CKJ and 1 CK Collection) PHASE II
(2018 – 2019)
 We consider n. 1 store in ARMENIA as enough for the local market, whilst we suggest n. 3 shops in
AZERBAIJAN, which is a more rich and populated country.
GEORGIA ARMENIA AZERBAIJAN

Pop ulation 4.50 0 .0 0 0 3.0 0 0 .0 0 0 9.70 0 .0 0 0
G DP $ 16,2 billion $ 10 ,5 billion $ 73,5 billion
G DP p er c ap ita $ 7.176 $ 7.726 $ 17.143
C K C ollec tion 1
C K Jeans 1 1 1
C K Und erwear 1 1 1
Source “Banca Mondiale” 2013
GPD per capita – Source “Banca Mondiale” 2013

7. Stores’ Economics
 Average store size: 135 sqm

 Average employees per store: 5,5 FTE
o n. 1 STORE MANAGER / STORE DIRECTOR
o n. 1 ASSISTANT MANAGER / VICE-DIRECTOR
o n. 2 CLERKS full-time
o n. 3 CLERKS part-time (equal to n. 1,5 FTE)
One of the full time will be also responsible for “In Store Visual Merchandising” in direct relation with
CK’s VM Manager and SPV’s Retail Operations & VP Manager.
 Yearly FTE Company Costs: 20 – 25.000 GEL (€ 8 – 10.000) on average
 Project Costs per store: € 150 – 160.000 (CK's assumptions: € 1.150/sqm + € 4.500 PMC)
 Average Rent/month/sqm: 40 – 50 GEL (€ 15 – 20) on average
based on rent levels in “Rustaveli Avenue”, the leading high street location in Tbilisi
 Yearly Turnover: € 875 – 900.000 (CK's assumptions: € 6.500/sqm)
N. 1 STORE N. 4 STORES N. 7 STORES
n. 3 C KJ
n. 3 C KJ
S tores n. 1 C KJ n. 1 C K C ollec tion
n. 1 C K C ollec tion
n. 3 C KU
A verag e S tore S urfac e ( sqm) 135
A verag e n. 1 FTE c omp any c ost € 9.0 0 0 € 36.0 0 0 € 63.0 0 0
A verag e n. 5,5 FTE c omp any c ost € 49.50 0 € 198.0 0 0 € 346.50 0
A verag e Projec t C osts € 159.750 € 639.0 0 0 € 1.118.250
A verag e Yearly Rent € 317.250 € 1.269.0 0 0 € 2.220 .750
A verag e Yearly Turnover € 90 0 .0 0 0 € 3.60 0 .0 0 0 € 6.30 0 .0 0 0
A verag e E ffort Rate 35%

8. CK Presence in Caucasus Regions by year-end 2019
B rand C ity A d d ress
1 Tbilisi ( G eorg ia) Rustaveli A ve.
2 B ak u ( A zerbaijan) Neftc hiler A ve.
4 Yerevan ( A rmenia) S ayat-Nova A ve.
5 Tbilisi ( G eorg ia) Rustaveli A ve.
7 Yerevan ( A rmenia) North A ve.

8.1. Location’s focus in Tbilisi (Georgia)

8.2. Location’s focus in Yerevan (Armenia)

8.3. Location’s focus in Baku (Azerbaijan)

9. Partnership Guidelines & Partner’s Targets
 To become your long-term partner
 To allow a continuous liaison between CK and the SPV’s internal referent
 To follow CK Marketing department’s support
 To respect all the agreements signed in the contract (including payments terms and conditions)
 To have an open-approach to learn and follow any CK’s advise/recommendation/indications
 To respect CK’s policies and procedures
 To develop CK’s brand chain in accordance with mother company programs
 To work professionally in order to reach a mutual confidence, faith and respect

10. Conclusions
WE ARE THE RIGHT PARTNERS.......AND YOUR BEST CHOICE !!!!!

Because:
 We believe in CK brand and development in Caucasus regions
 We are fully committed and interested to develop CK business
 We have our financial resources in place (100% equity) and no bank financing is needed
 We have the right skills and the necessary local regulatory knowledge to develop CK business
 We are anytime and always open to follow all the CK’s indications/requirements may occur
 We wish this partnership will be only the beginning of further future collaborations in Caucasus regions
with PVH Group, for other brands’ developments

THE END
Kakha Japaridze
Partner Profile & Development Strategy

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development in Caucasus regions

GEORGIA ARMENIA AZERBAIJAN

1. Kakha Japaridze – Background