ssi stage stores 2015 investor presentation
TRANSCRIPT
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8/20/2019 SSI Stage Stores 2015 Investor Presentation
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November 19, 2015
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Safe Harbor
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Forward-Looking Statements
This presentation contains forward-looking statements. Such statements are intended to qualify for the protection of the safe harbor provided by thePrivate Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,”
“will,” “should,” “may,” “target,” “forecast,” “guidance,” “outlook” and similar expressions generally identify forward-looking statements. Similarly,descriptions of the Company’s objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate tothe expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operatingresults or events and projected sales, earnings, capital expenditures and business strategy.
Forward-looking statements are based upon a number of assumptions and factors concerning future conditions that may ultimately prove to beinaccurate. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those discussed inforward-looking statements as a result of various factors. Such factors include, but are not limited to, the ability of the Company to maintain normal tradeterms with vendors, the ability of the Company to comply with the covenant requirements contained in its revolving credit facility agreement, the demandfor the Company’s merchandise and other factors. The demand for merchandise and sales volume may be affected by significant changes in economicconditions, including an economic downturn, unemployment rates, consumer confidence, energy and gasoline prices and other factors influencingdiscretionary consumer spending. Other factors affecting the demand for merchandise and sales volume include unusual weather patterns, an increasein the level of competition, changes in fashion trends, changes in the average cost of merchandise, availability of merchandise on normal payment termsand the failure to achieve the expected results of the Company’s merchandising, marketing and store operating plans. Additional assumptions, factorsand risks concerning future conditions are discussed in the Risk Factors section of the Company’s most recent Annual Report on Form 10-K as filed withthe SEC (“Form 10-K”), and other factors discussed from time to time in the Company’s other SEC filings.
Forward-looking statements are based upon management’s then-current views and assumptions regarding future events and operating performance. Although management believes the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of itsknowledge, forward-looking statements involve risks, uncertainties and other factors which may materially affect the Company’s business, financialcondition, results of operations or liquidity. Most of these factors are difficult to predict and are generally beyond the Company’s control.
This presentation should be considered in conjunction with the Form 10-K and the Company’s other SEC filings. You should consider all such risks,
uncertainties and other factors carefully in evaluating forward-looking statements. You should not place undue reliance on forward-looking statements,which speak only as of the date they are made. This presentation was prepared as of November 19, 2015, and the Company undertakes no obligation topubliclyupdate forward-looking statements whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
This presentation includes non-GAAP financial measures. Please refer to the appendices for a reconciliation of the non-GAAP financial measures to themost directly comparable GAAP financial measures. Management believes this supplemental financial information enhances an investor’s understandingof the Company’s financial performance as it excludes those items which impact comparability of operating trends. The non-GAAP financial informationshould not be considered in isolation or viewed as a substitute for net income, cash flow from operations or other measures of performance as definedby GAAP. The inclusion of non-GAAP financial information as used in this presentation is not necessarily comparable to other similarly titled measures
of other companies due to the potential inconsistencies in the method of presentation and items considered.
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We’re a leading specialty department store brand located
in small and mid-sized towns and communities
A Differentiated Business Model
Our stores average 18,000 selling square feet, providing atailored hometown shopping experience
We carry favorite brands and relevant styles in apparel,cosmetics, accessories, footwear and home
Our customers love to shop for style and value in a hometown store
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64%20%
16%
Number of Stores by Market
Area Population*
< 50,000
50,000 - 150,000
> 150,000
4
Small Market Presence The majority of our stores are in small and
mid-sized markets
We have strong brand recognition in ourlocal communities
We serve customers in smaller formatstores with edited assortments of nationally
recognized brands and favorite styles
Moderate overlap in markets with JCPenney’s, Kohl’s and off -price retailers
221 259 52 197 118
Store Count by Nameplate *
* Based on Q3 2015 store count
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5
14
345
97
21834
108
31
Distribution Centers
Headquarters
Stores by Region* Total of 847 locations across 40 states
Over 70% of our stores are located in the South
* Based on Q3 2015 store count
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Diversified product mix, with strong representation in women’s, children’s andfootwear relative to other department stores
Focus on key national brands within each department while expanding doorcount for existing brands that customers love to shop
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Merchandise Mix*
38% 17% 11% 9% 4%
Women’sCosmetics &Fragrances
Home, Gifts& Other
Children’sMen’s
* FY 2014 sales break out
Footwear
13%
Accessories
8%
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Brands, Style and Value She comes to us for her favorite brands and the latest styles and trends
National brands account for approximately 87% of sales
Our pricing is high/low with compelling promotions and coupons
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the Savvy Style Saver Loves shopping and enjoys talking about styleand her look with family and friends
Variety of style is important – she likes tochange up her look
Shops Wal-Mart, JCPenney, Kohl’s, Target
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the Brand FanLoves shopping and pays attention to what’shot and what’s not
Believes designer brands provide fashion thatcan’t be matched
Shops Macy’s, Kohl’s, Wal-Mart, JC Penney
Our Tar get Customers
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Committed to growing our Direct-to-Consumer (DTC) business byimproving the shopping experience and building out capabilities through:
An upgraded shopping experience across all channels Expanded product offerings Improved site functionality and fulfillment
Rapid Direct-to-Consumer Growth
$73
$164
$470
Online Only
Store Only
Omni-Channel
Avg. Annual Spend per Customer*
* FY 2014
Stage DTCLaunched Nov 2010 ~
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Focus media where our customer is spending her time
Shift dollars to digital, mobile and broadcast while maintaining direct mailand dramatically reducing spend on print
Grow customer file for text, email and voice messaging
Digital MediaShare of TotalSpend
+120%
Radio Share ofTotal Spend
+100%
NewspaperShare of TotalSpend
-51%
Total SMS TextSubscribers
+590%+659%
Total FacebookFans
+84%
Total EmailSubscribers
+42%
Total PLCCCardholders
Increase from 2011 to 2015
Refining our Marketing Vehicles
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Growth Initiatives
Create a DTC and omni-channel experience
Increase emphasis on trends and style
Improve the store environment
Activate our connection to customers
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Our focus is on driving sales productivity in existing stores and expanding the
presence and penetration of our Direct-to-Consumer (DTC) business
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Create a DTC and omni-channel experience
Create a seamless shopping experience
Broaden customer reach
Leverage DTC enhancements andfunctionality improvements to connectwith the customer at multiple touch-points
Expand assortments Improve site experience
Expand centralized fulfillment
Infrastructure for buy online, ship to storebeing built for 2016
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Increase share of wallet from existingcustomers and reach new customers
Increase the penetration of updated andcontemporary fashion and brands
New and expanded brands – Dior, BetseyJohnson, Calvin Klein, and Calphalon
Expand cosmetics doors – Estee Lauder andClinique in over 300 stores and growing
Localization – size pack optimization andstore level markdown optimization
Home – re-launched in Q3‘14 with highlyedited offerings in kitchen, textiles and gifts
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Increase emphasis on trends and style
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Shift capital from opening new
stores to updating the existing fleet
ROI driven remodel strategy
designed to elevate the customer
shopping experience
Brighter stores Improved fixturing
Enhanced navigation
Better layout to showcase popular
brands and create focus on
updated apparel and accessories
Improve service to let our
customer know she is very
welcome
Strategic closures of
underperforming locations
Improve the store environment
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Marketing strategy designed for greater connectivity
Shift media and timing to create greater impact Personalize content with tailored offerings
Re-brand using a premier agency in order to refine our brand platform
Expand loyalty programs to include all customers while leveraging PLCC program
PLCC cardholders shop and spend ~3X more than non-cardholders
Activate our connection to customers
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$16$19
$31
$46
$54
32% 32%33%
36%
40%
30%
35%
40%
45%
50%
55%
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
2010 2011 2012 2013 2014
Premier Rewards PLCC
Credit Revenue ($M) Credit Penetration
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Financial Overview
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NetSales
Financial Results*
0.5%
5.7%
-1.5%1.4%% Comp
$102
$108$105 $107
Avg. Salesper SSF
$1,511 m
$1,628 m $1,609 m$1,639 m
FY 2011 FY 2012 FY 2013 FY 2014
Opportunity to drive sales productivity with near-term goal of $120 per selling square foot
Sensitivity to leverage creates margin and earnings expansion off of productivity gains
AdjustedEPS
$0.95
$1.44$1.22 $1.18
* Continuing operations
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Shifting capital spend to focus more on existing stores and technology insupport of strategic growth initiatives
$32
$41$45
$57$65
$75
$0
$10
$20
$30
$40
$50
$60
$70
$80
2010 2011 2012 2013 2014 2015(E)*
Capital Spend History ($M) *
12%
51%
31%
6%
$75M
Technology
Existing
Stores
NewStores
Other
2015 Capital Plan *
18
Capital Spending
*Excluding anticipated one time capital expenditures, net of construction allowances, of ~$12M related to the corporate headquarters consolidation project
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$0.30$0.36 $0.40
$0.50$0.56 $0.60
Strong financial position
Internally funded growth and focus on returning value to shareholders
Disciplined inventory management and a conservative capital structure
Strong liquidity supported by cash flow from operations and credit facility
$350 million revolving line of credit entered into in Oct 2014 increased borrowingcapacity by $100 million and reduces interest expense
Strong dividend track record with six consecutive years of dividend increases
19Sep 2010 Sep 2011 Sep 2012 Jun 2013 Jun 2014 Jun 2015
50%
Increase
20%Increase
11%Increase
25%Increase
12%Increase
Financial Position
7%Increase
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Strong brand loyalty with differentiated
merchandise offerings at a great value
Driving productivity through enhancedmerchandising and remodeled stores
Creating an omni-channel experience ledby direct-to-consumer business growth
Strong PLCC program and piloting atender-neutral loyalty program in 2015
Solid balance sheet and consistentdividend growth
Strong and experienced management
Why Stage Stores
Small and mid-size markets focus
7% dividend increase in FY’15
Goal of >5% penetration by FY’17
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45% PLCC penetration by FY’17
Target EBITDA margins of 10%
Extensive retail experience