1 piper jaffray investor conference new york, ny june 9, 2011
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Piper Jaffray Investor Conference
New York, NY
June 9, 2011
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We make forward-looking statements in this presentation which represent our expectations or beliefs about future events and financial performance. Forward-looking statements are identifiable by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may” and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties, including those described in the Company’s filings with the Securities and Exchange Commission. In addition, actual results could differ materially from those suggested by the forward-looking statements, and therefore you should not place undue reliance on the forward-looking statements.
Safe Harbor Statement
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Today’s Presentation
Discussion Topics
Who We Are
Strategic Initiatives
Financial Highlights
2011 Outlook
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Discussion Topics
Who We Are
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Who We Are
General Characteristics
Nationwide, Mall-Based, Integrated Lifestyle Women’s
Apparel Retailer
Fashion-Forward With a Contemporary Fit
Upscale Product Geared At Style-Conscious Women
Boutique Store Environment: 2,000 Sq. Ft.
Diversified Product Mix: Sportswear, Dresses,
Accessories
Operates 280 Stores in 43 States
General Characteristics
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What We Offer
Sophisticated and Contemporary Day and Evening Sportswear, Dresses and
Accessories
Sportswear $35 - $280
Dresses $75 - $420
Accessories $5 - $100
Merchandise Price Points
Mix
Sportswear 58%
Dresses 33%
Accessories 9%
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Contemporary & Modern
24 to 45 Years In Age: Attitude
Youthful, Confident and Fashion-Conscious
Target Customer
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Provides an important differentiation from other mall-based retailers because of unique offering, quality of product and price points
Key Differentiators
Loyal customer base through consistency in interpreting fashion trends
Capitalizing on growth in key fashion areas and implementation of forward looking strategy
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Stronger & More Efficient Supply Chain
Shift to Traditional Nine-Month Calendar
Change from fast track three-month calendar to
more traditional nine-month cycle
Access to better fabrications
Earlier planning enables upcoming collections to
be presented to the press for inclusion in fashion magazines – increasing
brand awareness
Planning
The re-engineering of our merchandise processes has improved our financial performance and enabled us to elevate our product offerings to meet our customer’s lifestyle needs
Taking Strides in Planning Efforts
Increasing flow of new deliveries to stores and taking markdowns on slower moving styles
sooner
Adjusting flow and quantity of styles to create a greater sense of urgency
for customers to shop
Accelerated inventory turns improving financial
performance
Greater Visibility & Better Pricing
Earlier planning has facilitated the sourcing of higher quality fabrics and enabled us to broaden our
assortments
Higher percentage of goods from overseas
factories to mitigate rising production costs
Increased use of ocean freight instead of air freight, resulting in significant savings
PlanningProduction Calendar Planning Sourcing & Production
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• Recent financial performance a result of strategies put into place in 2010• Strengthened design & merchandising leadership and
enhanced business processes• Elevated product offerings and more cohesive
assortments• Impactful brand marketing with reduced promotional
behavior• Production calendar shift, increased planning efforts,
greater sourcing visibility• Gross margin improvement driven by reduced
markdowns, leverage on merchandise, buying and occupancy costs
• Learnings from installation of traffic counters in select stores helping to drive conversion rates and optimization of labor scheduling
• Improvement in comparable store sales trend• 1st Quarter 2011: +8%
• Positive comp trends continued into Q2
Notable Developments
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Discussion Topics
Strategic Initiatives
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Strategic Initiatives
Gross Margin Improvement
Drive e-Commerce Platform
Optimize Labor Scheduling
Increase Conversion
Expand Market Reach
Further Improve Inventory Turnover
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Gross Margin Improvement
Continued Gross Margin Expansion
770 Basis Point
Improvement to 42.1% in Q1
2011
Increased Flow of New
Deliveries and Consistently
Strong Selling Assortments
Leverage on Merchandise,
Buying and Occupancy Costs from
Higher Sales
Increased Prices, Lower Markdowns
and Re-Focused
Promotional Cadence
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Increasing Flow of New Regular-Price Merchandise to Selling Floor
More Efficient Replenishment Strategy Through Third Party Distribution Center
Taking Markdowns in a More Strategic Manner
Quickly Addressing Slower-Moving Styles
Results in Improvement of Inventory Turns and Profitability
Further Improve Inventory Turnover
Markdown Strategy
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Drive e-Commerce Platform
.com
E-Commerce Sales Grew 74% in Q1 2011 and Represented 5.5% of Total Business
We Believe Channel Can Grow to Represent 10% or More of Total Business
Web-Exclusive, Higher Priced
Product
New Upgraded Web Platform to Launch Q3 2011
Enhanced Navigation &
Search Capabilities
Dedicated e-Commerce
Fulfillment Center
Faster Shipping Times
Lower Return Rate & Higher
Customer Satisfaction
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Optimize Labor Scheduling
• Fall 2010 – Installed 28 traffic counters in a variety of stores for the first time in Company history• Goal was to collect data to begin to understand
important measures like traffic patterns, conversion rates, service levels and sales opportunity
• Thorough analysis revealed that current labor coverage on the weekend did not support the sales volume on these significantly higher traffic days
• Conducted a test in 140 Cache stores in April 2011• Reallocated current scheduling and made an
investment to add additional staff hours to support the weekends in these stores
• Results were highly successful and initiative was rolled out to entire chain for May 2011
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Increase Conversion
Large Opportunity to Increase Conversion Through Optimized Labor Allocation
Improved Service Levels & Customer
Focus
Changes in Recruiting
Methodology
Huge Opportunity on Weekends When
Traffic is Heaviest
Will Lead to Improvement in Dollars Per Transaction and Overall Top Line Growth
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Expand Market Reach
Early Planning of Future Collections
Inclusion in Press Events
Placement in Fashion Magazines
Excellent Brand Building Opportunity
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Editor’s Event: April 2011
• Changes in production calendar have made future assortments available to the press• Intention is to garner editorial credit and features within fashion blogs and
publications as well as create celebrity wardrobe opportunities• Expect styles to have great placement ahead of the Fall selling season• Plan to host events seasonally to build awareness and excitement for the brand
First Ever Cache Fashion Editor’s Event in April 2011
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Discussion Topics
Financial Highlights
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Comp Sales By Quarter
• Positive Recent Sales Trend• Positive comp trend continues into Q2 despite more challenging comparisons
5.1%
(0.2%)
(6.4%)
7.7%
(8.0%)
(6.0%)
(4.0%)
(2.0%)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Q2 2010 Q3 2010 Q4 2010 Q1 2011
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13 Weeks EndedApril 2, 2011 April 3, 2010
($ In Millions, except per share data)
Net Sales $52.1 $48.6
Gross Profit $21.9 $16.7 % Margin 42.1% 34.4%
Operating Income ($1.3) ($6.6) % Margin (2.4%) (13.6%)
Diluted EPS ($0.06) ($0.32)
Stores Open At End of Period 280 285
Comparable Store Sales 8.0% (7.0%)
First Quarter 2011 Results
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• Strong, Stable Balance Sheet
• As of April 2, 2011 :
• $21.2mm in Cash & Marketable Securities
• $24.7mm Including Pre-Paid Rent
• Total Inventory of $23.0mm
• $3.3mm in Current Receivables
• Virtually Zero Long Term Debt
• Positive Cash Flow
• Continue to Grow Cash Position
•
•
Strong Balance Sheet
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Stores At A Glance
Fiscal Year Beginning Opened Closed Ending Remodels Tot Sq Ft
2008 297 13 14 296 11 597,887
2009 296 4 14 286 1 575,522
2010 286 4 8 282 13 570,599
2011(E) 282 0 4 278 6 563,859
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Second Quarter 2011 vs. 2010
Second Quarter2011(E) 2010
Sales (In 000's) $58 - $59 $56
EPS $0.16 - $0.18 $0.07
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Discussion Topics
2011 Outlook
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2011 Outlook
• Return to Profitability in Q2 and Maintain Positive Cash Flow and Profitability for Full Year
• Achieve Positive Comp Store Sales in Mid-Single Digits for Q2 and Continue Forward Momentum
• Capital Expenditures Approximately $2mm for Full Year
• Key drivers• Continue to Present Customers with
Consistently Strong and Distinctive Selling Assortments
• AUR & Gross Margin Improvement• Maintain Capital Discipline• Focus On and Refine Key Initiatives that are
Improving Business Efficiency and Driving Sales Performance
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Piper Jaffray Conference
New York, NY
June 9, 2011
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