REWOT-HANESBUSINESS PLANSAUDI ARABIA

2010-2014

About REWOT Retail World Trading Company (REWOT) is the recently formed franchising

arm of Al-Muhaidib Group, one of the largest business groups in KSA with revenues in excess of $ 4bn and more than 8,000 employees. The current business line include:

1-FIXED PRICE STORES : Daiso -the largest franchise of 100-yen shops in Japan has a range of over

90,000 goods, REWOT operates 7 Daiso outlets in Saudi Arabia. 2-APPAREL & ACCESSORIES RETAILING: Segue is a brand of the ABC Spa Group - Accessories, Bags and Cosmetics,

specialized in the commercialization of bags and fashion accessories, including those of United Colors of Benetton and Sisley Accessories.

REWOT currently operates 3 outlet of Segue in Saudi Arabia Carter’s is USA’s number one children’s brand, selling over 10 products for

every child born in the country REWOT operates 7 outlets for sales of Carter’s in Saudi Arabia 3-OTHER BUSINESSES: Post the merger of Giant Stores with Panda, the Amusement Park and Viva

La Pizza businesses were transferred to REWOT.

About Hanes:

Type Clothing

Founded 1901

Headquarters Winston-Salem , North Carolina, U.S

Products Underwear , Casual wear , hosiery and socks

Parent Company Hanesbrands Inc

Website http://www.hanes.com

Hanes History and Facts

Hanes (introduced in 1901) and Hanes Her Way (introduced in 1986) are brands of apparel currently owned by the HanesBrands, Inc Corporation.

The Hanes brand is used by the company for marketing a broad range of apparel essentials:

Innerwear › Women's underwear, such as bras, panties and body wear › Men’s underwear and undershirts › Kids’ underwear and undershirts › Socks

Outerwear › Active wear, such as performance t-shirts and shorts › Casual wear, such as t-shirts, fleece and sport shirts

Hosiery

In September 2006, Sara Lee Corporation spun off its branded apparel Americas and Asia business as a separate company called Hanesbrands Inc., which designs, manufactures, sources and sells a broad range of apparel essentials. The Company's portfolio of brands include Hanes (its largest brand), Champion (its second largest brand), Playtex (its third largest brand), Bali, Just My Size, Barely There, Wonderbra, L’eggs, C9 by Champion, Duofold, Beefy-T, Outer Banks, Sol y Oro, Rinbros, Zorba and Ritmo.

The brand's two main competitors are Fruit of the Loom and Jockey.

Hanes History and Facts

Top Performance Globally

Hanes lead in apparel unit sales (1781 MM) and nearing the lead in dollars where Old navy lead Hanes by 0.1 %.

For 5 consecutive years consumers have said Hanes is their first choice and therefore it leads the market in Men’s , Women’s and children’s Apparel

Competitive Advantage

Hanes Rank

Advantage Over Nearest Competitor

Brand Awareness #1 17 points

Preferred Brand #1 20 points

More Comfortable #1 21 points

Better Quality #1 14 points

Better Value #1 9 points

Hanes Sales Mix

Sales

UnderwearSleepwearCasualwearIntimatesSocks

Top Apparel

MEN'S-WEAR WOMEN’S-WEAR INNER-WEAR KIDS’-WEAR

Hanes Hanes Hanes Benetton

Abercrombie &

Fitch

Nike Jockey Carter’s

Levi's ’s Secret Joe Boxer Tommy Hilfiger

Wrangler Fruit Of The Loom Victoria’s Secret Ralph Lauren

Nike Levi Strauss

Reebok L’eggs

Adidas Old Navy

Hanes in Saudi Arabia

Al Hodaithy the main distributor of Hanes brand in the Saudi Arabia did not meet the expectation of customer satisfaction. Therefore , Hanes is not listed in the top market share apparel shops as it is worldwide.

Hanes is not ranked in the top 5 apparel in the market due to many reasons:

Hanes only operate distribution to low end market. Few distribution to the modern trend(hypermarkets and

malls). Poor marketing and advertising strategies. Lack of management.

Apparel Business in Saudi Arabia

Branded apparel & accessories is a SAR 10 bn opportunity currently.

The sheer size of the market opportunity in Saudi Arabia, increasing share of branded apparel. Of the SAR 318.7 bn consumer expenditure in Saudi Arabia, 10% is spent on clothing and accessories i.e. nearly SAR 32 bn.

Branded apparel / accessories accounts for an estimated 30% of the above spend i.e. nearly SAR 10 bn

The young Saudi generations of both genders are increasingly adopting Western fashion apparel. The shift has been driven by the availability of many international brands through various shopping malls established recently in the country

Multi-pronged retailing strategy … Depending on the product segment (men’s-wear, women’s-wear, kids-wear, and inner-

wear) and the brand franchisee partnerships that REWOT is able to establish, multiple retailing options are possible:

Wholesale only - in the case certain products / brands do not justify the establishment of brand specific outlets or cannot be sold even in a concept specific outlet (e.g. multi-brand innerwear retail outlet). Alternatively, for certain brands, REWOT will use only the ‘wholesaler / distributor’ model in initial 1-2 years; before committing investments in brand specific retail outlets. Wholesaling or distribution as a model can generate cash flows for REWOT, without significant investments being committed in retail outlets.

Hybrid model combining wholesale and retail outlets - Depending on the product category or brand, options exist to adopt a hybrid model e.g. sell lower price products through wholesale route to department stores, super-markets or independent retailers; while also selling higher priced products through REWOT owned brand specific or multi-brand outlets. Further, it may be difficult for REWOT to justify the presence of its own retail outlets in smaller cities within Saudi Arabia, in which case, the hybrid model is the most logical solution

Retail Outlets: brand specific or multi-brand stores - Depending on the product category, both options will be evaluated. For example, for inner-wear – a multi brand store is a more prudent solution; while in the case of sports-wear (Nike or Adidas), brand specific outlets will be more relevant.

Apparel Business in Saudi Arabia

Market Opportunities

Any retailing activity by nature is investment intensive and requires at least a five year gestation period to reach ‘critical mass’ in terms of business revenues and cash generation from operations.

The factors that need to be taken into consideration from a business perspective are as follows:

Strength of brands Retail network Concept extension possibilities Profitability

Market Growth

Economy is expected to keep growing at an average of 3.5% in real GDP terms

Saudi Arabia’s real GDP has grown at an average rate of 4.3% for the period 2004-2008. The slow-down in the real GDP due to the fall in oil prices, led by the financial crisis, is expected to affect the real GDP till end of 2009 or mid-2010. However, on a five year time-frame for 2009 – 2014, the Saudi Arabian real GDP is expected to grow at an average rate of 3.5%.

Market Opportunities

Branded apparel sales are concentrated in the 4-5 top cities of Saudi Arabia. With REWOT tying up with HANES brands, targeting the middle class. In Saudi Arabia, malls are emerging as popular destinations for clothing, footwear and accessories.

Based on population, the cities of Riyadh and Jeddah are important locations and REWOT targets to set-up 10--15 retail outlets in EACH CITY. While Dammam have the potential for 5-7outlets,

2008 2009F 2010F 2011F 2012F 2013F

GDP (US$ bn at market exchange rates)

468.9 344.9 394.3 428.8 461 471.9

Real GDP Growth (%)

4.2 0.4 3.3 3.7 4.0 3.9

KSA: GDP BY SECTOR KSA: GDP ORIGIN (CURRENT MARKET PRICES)

Source: Economic Intelligence Unit Forecasts

2004 2007 2010 2013

56.7 63.7 60.639.4

39.4 33.3 36.357.6

4.0 3.0 3.1 3.0

Industry2004 2007 2010 2013

45.6 52.7 54.4 54.9

19.8 17.7 17.4 16.7

34.6 29.6 28.2 28.5

Oil Sector Non Oil - Govt

Market Segmentation

MARKET SEGMENTS Apparel retailing in the kingdom is highly fragmented and largely

dominated by privately held single-outlet operations. However the concentration process is growing with the continual increase in the share held by giant retailers with their chained outlets.

Women’s-wear and Children’s-wear account for around 70% of the total apparel retail market…

The major market segments in retail apparel include Women’s-wear, footwear, children’s-wear, menswear and eyewear. Women’s-wear (54%) and children’s-wear (15%) account for the majority of the total market where as men’s-wear (6%) represents a small segment of the ready-made clothing sector. Footwear is a relatively large segment, accounting for 20% of sales.

Branded apparel accounts for around 25 – 30% of the total apparel retail market and is likely to grow further on account of changes in consumer tastes and converging global fashion trends…

Market Segmentation

The branded apparel market is dominated by 4-6 large companies with Al Hokair alone commanding over 50% of the market share in the branded apparel segment. Other major players in this segment include Al Shaya, Al-Sawani, Landmark and Al Bandar Trading. Each of these large companies is representing a considerable number of international brands via franchise route.

The market is also segmented between the high-end branded sector, the mid-market branded sector and the lower-priced market. The high-end and mid-market sectors of the apparel market are dominated by imports from Europe and the United States. The lower end of the market is characterized by imports from the Far East and South East Asian countries such as China, India, Pakistan and Indonesia.

Riyadh is currently the largest market for retail apparel in Saudi Arabia accounting for around 40% of total retail apparel, followed by Jeddah and Dammam which account for 30% and 20% of sales respectively.

HANES

Men Women Kids

Underwear

Socks

T-shirts

Panties

Socks

Underwear

Socks

Bras

Sweats

Polos T-shirts & Polos

Sweats & T-shirts

Age & Sex Segmentation

REWOT / HANES ROAD MAP

2009 HANES release goods to Al-Hodaithy for six months (2010) as usual REWOT to place an order for six months by September REWOT to immediately start leasing stores in Saudi Arabia and Bahrain REWOT to start dealing with Supercenter for S.I.S. by Nov. - Dec. 2010 REWOT must open 1st HANES Brands Shop by January 2010 REWOT will start parallel distribution by January 2010 REWOT will discuss with Al-Hodaithy the following: Buy stocks of Al-Hodaithy Buy the Business Special deal based on sub-dealership for certain markets   2010 March REWOT will handle the whole distribution REWOT to continue aggressively the HANES Brands Shop Plan REWOT to expand the Shop-in-Shop plan

REWOT Vision: Implementation

REWOT Will focus on three concepts:1. Hanes concept store (Targeting the most

potential malls in Saudi Arabia, Qatar and Bahrain markets).

2. Hanes distribution (three teams to supply and follow up the brands services in each of the mentioned countries).

3. Hanes shop in shop (targeting to have different sizes of units of Hanes in GCC countries).

Revenue Assumption

Hanes business unit will have both a wholesaling arm and a retail outlets arm.

By 2014, REWOT will have 4 branches for wholesaling. Each branch will generate SAR 6 Million in revenues from wholesale distribution; growing at 10% per annum from 2010 levels.

On the retailing side, REWOT will add 3-6 outlets every year, with each outlet measuring 120-180 sq m in area and generating revenues of SAR 2.00 mn per annum expected to increase @ 5% per annum..

FINANCIAL PROJECTION

The financial projection will not only focus on total outcome but also on how “Hanes” is functioning by segmenting and getting each category and collection financial details.

The financial reports should show category to category, collection to collection reports in order to know which brand or category of “Hanes” is profitable and which is not.

REWOT will focus on growth opportunities across the various collection and category .

Sample of Financial Projection(by category)

Hanes : tagless UNITS 2010 2011 2012

Revenues SAR MN

12 13 14

% Growth 0 8.3% 7.6%

Cost of Goods Sold

8 8.5 9

Gross Profit 4 4.5 5

Gross Margins 33% 34% 35.7%

Operating Expense Cost Head Lease & Rental Charges

Retail Outlets Lease rentals for outlets are assumed to be around 15% of revenues. Wholesale Lease rentals for warehouses are assumed at 2% of wholesaling revenues

Salaries & Wages

Retail Outlets Assumed at 15% of revenues Wholesale Taken at 5% of wholesaling revenues

Selling & Marketing Expenses

Retail Outlets Assumed at 8% of revenues ,INCLUDING advertising, and other local promotions Wholesale Taken at 8% of wholesaling revenues

General and Administrative expenses

. Assumed at 5% of sales for wholesale and 5.5% of sales for retail

Note: General & Admin expenses includes insurance, office rents, corporate

heads salaries, legal and finance expenses, consulting expenses, etc, amongst

others.

CAPEX & WORKING CAPITAL

Cost Head Capital Expenditure

Retail Outlets Each outlet will measure 120/180sq m and the costs towards furnishing, finishing and lighting is assumed at SAR 700,000 per outlet;

Inventories 180 days of sales, valued on COGS basis Accounts Payable & Receivables

Wholesale outlets 120 days receivables and payables; Retail outlets 5 days accounts receivables, 60 days payables

Expected FiguresAPPAREL BUSINESS: P&L UNITS 2010 2011 2012 2013 2014 Revenues SAR Mn 25.4 44.7 65.9 89.1 104.0 Percentage Growth 0.0% 76.1% 47.4% 35.2% 16.7% Cost of Goods Sold SAR Mn 14.0 25.9 38.9 52.9 61.4 GROSS PROFIT SAR Mn 11.5 18.8 27.0 36.3 42.6 Gross Margins % 45.1% 42.0% 41.0% 40.7% 41.0% Selling Expenses SAR Mn 0.9 2.0 3.1 4.4 5.1 Marketing Expenses SAR Mn 1.3 2.0 2.7 3.2 3.2 Lease Charges SAR Mn 2.7 3.8 5.1 6.3 7.1 Wages and Salaries SAR Mn 6.2 7.9 9.2 9.9 9.3 General & Administrative Expenses SAR Mn 3.3 4.8 6.2 7.5 8.0 EBITDA SAR Mn -2.9 -1.7 0.8 5.0 10.0 EBITDA Margins % -11.5% -3.9% 1.3% 5.6% 9.6% Depreciation SAR Mn 0.2 0.6 1.1 1.4 1.6 Finance Charges/ Interest SAR Mn 2.3 2.2 1.8 1.5 1.3

EBT SAR Mn -5.4 -4.5 -2.1 2.0 7.2 EBT Margins % -21.4% -10.1% -3.2% 2.3% 6.9% Taxable Income SAR Mn -5.4 -10.0 -12.0 -10.0 -2.8 Zakat & Taxes SAR Mn 0.0 0.0 0.0 0.0 0.0 Tax rate 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% NET PROFITS SAR Mn -5.4 -4.5 -2.1 2.0 7.2 Net Margins % -21.4% -10.1% -3.2% 2.3% 6.9%

HANES ORGANIZATION CHART

REWOT CEO

HANES Business Director

Sales Manager

Retail Manager

Marketing Manager

Warehouse Manager

4 4 3

Sales Van (3)

Salesman (4)

Merchandiser (2)

Store Manager (x)

Salesman (x)

Promotions

Advertising

Truck Delivery 4

(S.I.S. In-Charge) (x)

1

Brand Advertising

During the 1970s and 1980s, their women's hosiery tagline was "Gentlemen Prefer Hanes". In the early nineties, the slogan was turned around as "The lady prefers Hanes".

During the late 1990s, the brand's main slogan was "Just wait'll we get our Hanes on you."

In the 2000s, an ad campaign began for their Hanes "Go Tagless" T-shirt, featuring various celebrities including Michael Jordan, Jackie Chan and Brian Regan.

In 2005, an ad campaign was run with the slogan "Look who we've got our Hanes on now", featuring various celebrities including Michael Jordan, Jennifer Love Hewitt, Marisa Tomei, Damon Wayans, Matthew Perry, and on Spanish-language advertising, Aracely Arambula, and Pablo Montero. In 2006, the campaign added Kevin Bacon and Christina Applegate to their lineup. In 2007, the campaign expanded again to include Cuba Gooding, Jr., and Sarah Chalke in 2008.

As of July 2008, Charlie Sheen joined Michael Jordan as the next Hanes celebrity spokesman. The commercials (along with the previous Cuba Gooding, Jr. commercials) were created by writer Brett Baker and Art Director David McKay of The Martin Agency in Richmond, VA.

Brand Character(Men)

Underwear(nothing but comfort) T-Shirts (because comfort's

the bottom line) men's polos &

dress shirts( We've got you collared) men's sweats & jackets (layer up for fall) men's comfort wear (the joy of lazy) men's socks (tough. durable.

value-priced). men’s big & tall sizes(even more to love)

Men’s Wear Advertisement

Kids Wear Advertisement

Celebrities Advertisement

Joining The Excellency

1. Big Consumer Need2. Big Brand/Big Category3. Winning Concept4. Superior Product5. Winning Advertising6. Big at retail and wholesale7. Big margin

Market Success

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