LEADING FASHION RETAILER IN THE BALTICS AND EASTERN EUROPE

February 2013

Baltika Group today

• Baltika Group is strong fashion

retailer in the Baltics and Eastern

Europe

• Baltika employs vertically integrated

business model

• Group owns five fashion brands:

Monton, Mosaic, Baltman, Bastion,

Ivo Nikkolo

• Group operates five retail concepts

and over 110 stores in five

countries

• Over 1200 employees

• 2011 revenue 53.4 million euros

• www.baltikagroup.com

From production company to fashion retailer

2013•5 brands•113 stores in 5 countries•Over 1200 employees

2013•5 brands•113 stores in 5 countries•Over 1200 employees

History: company

1928 Gentleman established in Tallinn as producer of raincoats

1959 Company is restructured and renamed Baltika, producing formal menswear

1960 New production building opened at Veerenni 24, Tallinn

1988 Production of ladies wear begins

1991 Baltika is privatised

1997 Baltika listed on the Tallinn Stock Exchange that belongs

to the NASDAQ OMX Group today

2007 European Business Awards 2007 finalist in

two categories

2008 Baltika is recognised for having the best

investor relations on the Tallinn Stock Exchange

2011 Baltika is recognised: best investor relations on the Tallinn Stock Exchange 3rd place

2012 Nominent at Swedish Business Awards in

the category of Corporate Social Responsibility Initiative of the Year

History: brands

1991: Baltika launches its first menswear collection Baltman

1993: Baltika launches its first ladies wear collection Christine Collection (CHR)1995: Evermen collection launched

2002: Baltika launches its brand Monton in five markets

2006: CHR and Evermen concepts rebranded as Mosaic2006: Baltika acquires Estonian well known designer brand Ivo Nikkolo, established in 1994

2012: Baltika acquires Estonian well known brand Bastion, established in 1987

History: stores

1991: Baltika opens its first store in Estonia: Baltman store in Pärnu that is opened till today1993: first store in Lithuania

1994: first store in Russia

1996: first store in Latvia

2000: first store in Ukraine

Baltika has today stores in five countries and 26 cities

2012 Baltika opens Monton e-store that serves customers in Europe, Russia and Ukraine

History: Baltika Quarter

2009: Baltika establishes Baltika Quarter to unite design and creative companies, company sells its real estate in 2012 to focus on its core business, fashion retail2009: Baltika opens novel concept store Moetänav, representing all Baltika´s four brands2010: Baltika renovated office is awarded with Estonian Cultural Endowment Annual Award for architecture and Estonian Society of Interior Architects Annual Award in thecategory of offices

Baltika head office in Tallinn

• Baltika head office is located in

Tallinn in Baltika Quarter

• Former production building, built in

1960s, renovated into a modern

office building in 2009

• Baltika Quarter creates synergy of

design and creative companies

• Awards for Baltika office:

– Estonian Cultural Endowment

Annual Award for architecture

2009

– Estonian Society of Interior

Architects Annual Award in the

category of offices 2009

– Tallinn Design Map

History: awards

Fashion Award Golden Needle (Estonia) for Baltika´s designers:

2011 nomination, Aivar Antonio Lätt (Baltman)

2009 Eve Hanson (Ivo Nikkolo)

2005 Eve Hanson (Ivo Nikkolo)

2004 Evelin Lill (CHR)

2003 Merike Pääro (Bastion)

1999 Janika Sootna (CHR)

1998 Tarvo Jaansoo (Baltman)

1997 Ivo Nikkolo (Ivo Nikkolo)

1996 Marika Siska (Baltman)

Vertically integrated business model

Centralised management

• Centralised management: product design, brand management, supply chain, logistics, store concepts, merchandising, marketing, etc.

• Efficient inventory control and sales information systems: info available on a daily basis

Sourcing

• Own production base (two factories in Estonia): specialisation in men’s and women’s tailored suits, shirts, jackets, coats (ca 30% of sales)

• Worldwide purchasing (ca 70% of sales)

Retail: ca 90% of net sales

Multichanneling: ca 10% of net sales

• A balanced portfolio of different brand store chains (Monton, Mosaic, Baltman, Ivo Nikkolo, Bastion)

• Strong local retail organisations in five markets

• Department stores in the Baltics, Finland, Russia and Europe

• Monton e-store opened in 2012

• Brands franchise concepts

Advantages of vertically integrated business model

• Retail partner is participating in collection making process:– Based on customer demand;– Replenishment according to sales results;– Quick response – repeating bestsellers during season;

• Price making policy according to customer’s purchasing power and demand:– First price;– Sales prices policy;

• Competitiveness increases;

• Flexibility when managing crisis;• Producer isn't so dependent from cooperation partners like

in wholesale and producer can timely forecast production capacity and strategy.

Sourcing from 19 countries Sourcing from 19 countries

Sales to 27 countries Sales to 27 countries

Central warehouse in EstoniaCentral warehouse in Estonia

COLLECTION DEVELOPMENT PROCESSES

Collection Development Cycle

fashion trends analysis

(styling, colour palettes,

fabrics);

creative trips; fabric fairs

Range Review;

initial sales and buying plan;

building up OTB for next

period

sales monitoring&analysis,

stock management;

replenishment; of products;

promotions, other activities

transportation to Baltika

Warehouse

From Baltika Warehouse to

Markets

orders to suppliers;

order conformation;

production

decision of colours, fabrics;

first styling ideas;

new fabrics testing

designing in Corel Designer;

proto sample orders;

preparation of samples

first cost prices based on

proto

salesman samples ;

block orders for supplier if

needed;

final cost prices

COLLECTION

DEVELOPMENT

PROCESS

COLLECTION

DEVELOPMENT

PROCESS

Product development sequence

Sales and Marketing sequence

BRANDS AND RETAIL CONCEPTS

Brands

• Launched in 2002

• Monton is exciting, quality fashion brand reflecting global trends in its own unique way

• Target customer:

– 25+ fashion concious and independent

men and women earning average

income

– individual, fully formed taste, make their

own fashion choices

• New brand visual identity and store concept in 2011 in co-operation with international agency Dan Pearlman

• Store format: 200-350 sqm in shopping centre

• Monton collection sold in 51 Baltika Group stores in Estonia, Latvia, Lithuania, Ukraineand Russia

• Monton e-store

Monton new concept store in SC Galerija Centrs (1):

Monton new concept store in SC Galerija Centrs (2):

Monton new concept store in SC Galerija Centrs (3):

Monton new concept store in SC Galerija Centrs (4):

• Launched in 2006

• Mosaic is for women and men, who are

practical, responsible and well-organized and

have a need for uncomplicated and reliable

fashion

• Target customer:

– 35+ family-oriented and practical women and

men earning average income

– value traditions and are socially active, want

to look elegant and stylish, prefer clothes making them look younger

• New brand visual identity and store concept in

2011 in co-operation with international agency

Dan Pearlman

• Store format: 150-200 sqm in shopping centre

• Mosaic collection sold in 51 Baltika Group

stores in Estonia, Latvia, Lithuania, Ukraine

and Russia

• Main wholesale customers are Peek &

Cloppenburg, Tallinna Kaubamaja and

Stockmann

• Launched in 1991

• Prestigious business wear brand for men, offering stylish, classic and high-qualityclothing and personal service

• 20-year-old innovative brand (multi-layered, wind- and waterproof fabrics like used in sportswear)

• Target customer:

– 35+ practical men earning higher income and working in management position, needing sophisticated look for everyday work, business trips and evening events

– value quality and personal service, practicality and innovation

• Store format: 60-100 sqm in shopping centre

• Baltman collection sold in 16 Baltika Group stores in Estonia, Latvia and Lithuania

• Main wholesale customer is TallinnaKaubamaja

• Designer fashion brand for ladies offering premium business outfit and occasion wear to express own individuality

• Brand established by Estonian fashion designer Ivo Nikkolo in 1994, Baltika acquired the brand in September 2006

• Target customer:– 30+ mindset professional, self confident

and intelligent women with higher income needing quality outfit for work, business trips and events

– value high quality of life and expect very high level of service and high product quality

• Store format: 60-100 sqm in shopping centre

• Ivo Nikkolo collection sold in 17 Baltika Group stores in Estonia, Latvia, Lithuania, Russia and Ukraine

• Main wholesale customers are Stockmann, Tallinna Kaubamaja. Through wholesale partner sold also in Russia and Finland

• Launched in 1987

• Oriented to a woman who

values quality, classical style

and Estonian production

• Target customer:

– 35+ feminine woman with

classic taste and wish for

formal and festive style quality

clothing

– values timeless fashion, quality

and brand handwriting

• Collection is sold in 7 stores in

Estonia and Latvia

HEAD OFFICEAS Baltika

Veerenni 24

EE-10135 Tallinn, Estonia

Tel. +372 630 2731

Fax +372 630 2814

baltika@baltikagroup.com

www.baltikagroup.com