investor presentation icr xchange - january 14, 2014files.shareholder.com/downloads/smrt... ·...

Investor PresentationICR XChange - January 14, 2014


Forward Looking Statement

In the course of this presentation and in response to your

questions, statements may be made as to certain matters that

constitute forward-looking information that is subject to certain

risk and uncertainties. Additional information concerning those

factors that could cause actual results to differ from those in the

forward-looking statements can be found in the company’s annual

report on Form 10-K for the year ended February 2, 2013 and most

recent quarterly report on Form 10-Q.

2


COMPANY OVERVIEW

3


Company Profile and Fast Facts

• Service and presentation of a better department

store at discounted prices

• 264 stores in 29 states (approximately

70% in the Southeast and Texas)

• Became a public company - 1992

• Headquartered in Jacksonville, FLLadies’

67%

Men’s

20%

Home

13%

Sales by Category

2013 LTM*

Sales $1.27 Billion*

4

*Last twelve months ended 11/2/13; includes leased shoe dept. sales.


Our Market Position

How we differentiate from the competition

vs. Dept. and Specialty Stores

• Value - every day low prices up

to 60% off brand name and

specialty merchandise

• Convenient off-mall locations

• Assortment edited for our

customer

vs. Off-Price Retailers

• More upscale shopping

experience

• Depth of assortment displayed

by category, brand, size

• Customer service

• Competitive value

5


Our Customer

• Female 35 - 65 years of age

• Style conscious and value seeking

• Above average income

• Typically married and college educated

• May be multi-cultural

• Works at least part-time in professional

position

• Highly loyal

6


Store Network

7

264 Stores in 29 States


Our Stores

• Located in regional, community and

neighborhood shopping centers

where our customer lives and shops

• Average store 35,000 sf total (newer

stores average 32,000 sf)

• Optimal co-tenants:

o Other apparel retailers

o Higher-end grocers

o Better restaurants

8


Our Merchandise - Fashion & Value for over 100 years

• Attractive department store appearance

• Appealing merchandise presentation

• Moderate to better fashion apparel

• Focus on designer and national brands

• Private label and proprietary/exclusive

merchandise

o Including Peck & Peck and Alan Flusser

• Shoe department exclusively supplied by DSW, Inc.

9


Merchandising Strategy

• Emphasis on every-day value

• Coupons on sale and clearance merchandise

o Limit use of coupons on regular-price items to

special instore events only

o Reinforce regular price value message

• Merchandise focused events (Boutique

Event, Home Event, Chairman’s Event,

Accessories Week, etc.)

• Short duration events (Mad Dash, Dash

of the Day, Door Busters)

10


Marketing and Advertising

• Social Media to engage our customer

o We utilize Facebook, Twitter, Pinterest, Google Local and 4 Square

o Over 433,000 Facebook Fans and 4,750 Twitter followers

o Email to distribute product news and promotional messages

• Targeted marketing/our multi-cultural customer

o Spanish signing and announcements in 34 stores (representing

14% of total sales)

o Spanish language TV, radio and newspaper in designated markets

• Over 2.2 million Preferred & 270K Elite Customers

o Receive preview copies of select circulars

o Member-only shopping days

o Birthday discounts

o Special email announcements

o Provides useful database information regarding customer

preferences, habits and advertising receptivity

11


WHY WE ARE DOING SO WELL

12


Stock Price – 2012 through 2013

13

5/3/13 ($8.59) -

Announced completion

of restatement and

FY2012 earnings.

5/23/13 ($12.35) -

Announced Q1-13

earnings.

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00


Increased Comparable Store Sales

14

Quarterly comparable store sales 2009 through 2013:

*Q4-13 is not complete; represents November/December only.

Jan 2010 -New CMO

Early 2011 -New merchant team complete

Sept 2012 -Ecommlaunch

Sept 2011 -Jay Stein/CEO

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%


New Merchandising Team

• January 2010 - New Chief Merchandising Officer

o Brian Morrow (Macy’s West, Marshall Field’s, Mervyns)

• New Vice Presidents/General Merchandising Managers in

early 2011

15

- Increased and improved national brands

- Re-invented Home area


Designer & National Brands - Growth

Results

o Added 350 + brands since we started the program in 2009

o Grew National Brands to 65% of our sales from 33%

Next Steps

o Maintain Brand penetration at 65%-70% of total sales

o Upgrade brands

33.0%

42.0%

61.0%

65.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2009 2010 2011 2012

National Brands % of Total Sales

% TTL Sales

16


Designer and National Brands - Over 350!

17

Adrienne Vittadini Eileen Tracy Joseph A. Riedel

Alberto Makali Etienne Aigner Kasper Robert Graham

Anne Klein Evan Picone Kenneth Cole Robert Talbott

Ashworth Fairway & Greene Kut from the Cloth Romeo & Juliet

August Silk Free People Laundry by Shelli Segal Seven 7 Jeans

Avanti Towels Godiva Lenox (Linens) Sonny Leigh

BCBG MAXAZRIA Greg Norman London Fog Spanx

Betsy Johnson Hartmarx Lucky Brand Steve Madden

Big Buddha Hazel Luigi Bormioli Super Dry

Bobby Jones Hickey Freeman Maggie London Sweet Shop

Buffalo Jeans HOBO Margaritaville T Tahari

Bulova Watches Hollander Metrocane Tahari

Callaway Hudson Michael Kors Tallia

Calvin Klein HUE Muse Ted Baker

Carlos Santana Igloo Nautica The Sak

Coach Ike Behar Nicole Thomas Dean

Columbia Issac Mizrahi Nike Tommy Bahama

Core Bamboo Ivanna Trump Nine West Tommy Hilfiger

Daniel Rainn Izod Not Your Daughters Jeans Vaklco

Democracy “J” by Jones Original Penguin Vera Bradley

Dooney and Bourke Jack Nicklaus OXO Vince Camuto

DVF Jessica Howard Polo Vineyard Vines

Eagle Jessica Simpson Quicksilver Wacoal

Echo Jhane Barnes Ralph Lauren (Intimates) WRK

ECI Joan Vass Raymond Waites (Linens) XMI

Eileen West (Bath) Jones N.Y. Collection Report Collection Yankee Candles


New Chief Executive Officer

• Jay Stein returned as CEO in September 2011

• Significantly impacted our sales strategy

o Reduced our reliance on regular price coupons

o Changed to a more product-driven and less sale-price

driven promotional focus

18


RESULTS

19


Five-Year EPS

Earnings Per Diluted Share

20

*2010 EPS include two non-recurring items: the impact on the effective tax rate of the deferred tax valuation allowance, including reversal

of valuation allowance $0.48, and gift card cumulative breakage gain, net of inventory charge $0.11.

^LTM - Last twelve months ended 11/2/13.

$0.51 $0.59

$0.44 $0.57

$0.70

$1.26

$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

2009 2010* 2011 2012 LTM 2013^


First Nine Months Operating Results

First Nine Months 2013

• Diluted EPS: $0.40, up +74%

• Operating income: $30.1 million,

up +77%

• EBITDA: $51.0 million, up +49%

• Comp sales: +4.0%

• Total Sales: $902.8 million, up 4.5%

• Gross profit rate: 28.4%

First Nine Months 2012

• Diluted EPS: $0.26 ($0.23 adjusted*)

• Operating income: $19.1 million or

$17.0 million as adjusted*

• Adjusted EBITDA*: $34.2 million

• Comp sales: +1.3%

• Total Sales: $863.8 million, up 2.0%

• Gross profit rate: 27.4%

21

* Excludes $2.1 million breakage income from change in breakage assumptions recorded in Q2-12 ($1.3 million after tax or $0.03 per diluted share).


Strong Financial Position

• Paid special dividend of $1.00 per

share ($43.8M) in 2012

• Resumed our quarterly dividend in

July 2013

• Cash of $59.5 million at end of 3rd

quarter 2013 ($1.34 per share)

• No borrowings since early 2009

22


Valuation

LTM^ at End of Third Quarter (11/2/13):

• EBITDA*: $79.1 million; 6.2% of sales

Market Valuation as of 12/31/13:

• EV/EBITDA*: 6.9 (based on $50 million excess cash)

• Market Cap: $599 million at $13.45 closing share price

*Excludes $4.0M of professional fees associated with last year’s financial restatement recorded in Q4-2012.

^LTM – Last twelve months ended 11/2/13.

23


INITIATIVES

24


Capital Investments

• Capital expenditures for 2013 planned at $38 million

o $15 million for information systems upgrades

o $5 million for distribution center equipment and software

• Invested > $110 million in major systems enhancements and store

remodeling over the past three years:

2010 - $29 million 2011 - $38 million 2012 - $45 million

• Major single investment - Oracle merchandise information system (went

live June 2012)

• Store remodeling - upgraded fitting rooms, lighting, flooring and fixtures

o 35 stores in 2013

o 35 stores in 2012

o 40 stores in 2011

25


Credit Card Program

• Private label card launched June 2012

• Added to existing co-branded MasterCard

• Issued by our business partner, GE Capital Retail Bank

• Customer cardholders earn rewards on cumulative purchases

and additional discounts on extra-savings days

• Customers who have our credit card spend at least 50% more

than non-cardholders

o Visit more often

o Spend more each visit

26


Supply Chain Changes

• Transitioned from third-party operated distribution centers

to company-operated

• Distribution centers/timeline:

o Dallas -completed in June2013

o Atlanta -completed in July 2013

o L.A. -completed in January 2014

• Moving in-house will provide both future cost savings and

operational opportunities and advantages

• Start-up costs in 2013, but excellent return on investment

with positive financial impacts expected in 2014

27


E-commerce – Launched September 2013

• Offering a significant selection of our

stores merchandise online, plus offers

unique to online store

• A marketing tool to reach new customers

• Increase share of customer’s spending

with multi-channel approach

• Tie in online promotion with what we do

for stores

28


Real Estate

Note: all store locations are leased.

ACTIVITY - Stores New Relocated Closing

2014 Prelim. 8 6 2

2013 Actual 4 4 3

2012 Actual 6 4 5

2011 Actual 3 4 5

29

OPPORTUNITY - Markets Current Potential

Chicago 4 10-15

DC/Baltimore 2 10-15

Miami/Fort Lauderdale 7 15-20

Northern Cal. - San Francisco

Bay Area 0 10-12

Southern Cal. - Los Angeles/San

Diego 14 35-40

Metro NYC (NJ, Boroughs, and

Long Is.) 4 20-25


GOALS

30


Sales Productivity

• Build on 2012 and 2013 sales momentum

o Positive comps since May 2012*

• Continue to add and improve brand names

• Deepen relationship with existing customers

and attract new customers

• Add special in-store events to drive incremental

traffic and volume

• Grow e-commerce business

• Add stores in existing markets

o Gain efficiencies in advertising and

operating expenses

*With March and April combined for this year’s Easter calendar shift.

31


Goal - Increase Sales

32

We have an opportunity to return to, or exceed, historical peak

2005 sales and increase return on sales.

*Last twelve months ended 1/4/14.

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 LTM13*

Average Sales Per Store


Goal - Increase Return on Sales

33

*Last twelve months ended 11/2/13.

^EBITDA in these calculations has been adjusted to exclude the following special items:

• 2010 - $8.5M gift card cumulative breakage gain.

• 2012 and 2013 LTM - $4.0M of professional fees associated with last year’s financial restatement.

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 2013 LTM*

EBITDA Percentage of Sales^


Investment Opportunity

• Strong sales momentum since early 2012

• Substantial earnings growth from sales increases

driving higher margins against a lean expense

structure

• Sales growth initiatives

o E-commerce

o Credit card

o Real estate

• Strong cash flows

34

Investor PresentationICR XChange - January 14, 2014 35


Leadership Team

• President & CEO – Jay Stein

o Led company expansion

• Chief Merchant – Brian Morrow (January 2010)

o Macy’s West, Marshall Field’s, Mervyns

• Chief Financial Officer – Greg Kleffner (August 2009)

o Kellwood, Arthur Andersen

• Chief Operating Officer – Hunt Hawkins (1994)

o Genesco, Inc.

• S.V.P., Director of Stores – Gary Pierce (May 2010)

o Belk, Dillard’s

• S.V.P., Marketing – Glori Katz (April 2008)

o Sears, Jockey International, J. Walter Thompson

36


Linda Tasseff, Director of Investor Relations

Office: 904-858-2639

Cell: 904-910-1867

E-mail: [email protected]

Greg Kleffner, EVP, Chief Financial Officer

Office: 904-346-1500

E-mail: [email protected]

Contact Information

37

investor presentation icr xchange - january 14, 2014files.shareholder.com/downloads/smrt... ·...

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