SSI Stage Stores 2015 Investor Presentation

8/20/2019 SSI Stage Stores 2015 Investor Presentation

1/20

November 19, 2015


2/20

Safe Harbor

2

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.


3/20

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

3


4/20

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


5/20

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


6/20

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

6

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%


7/20

7

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


8/20

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

8

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


9/20

9

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 ~


10/20

10

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


11/20

Growth Initiatives

Create a DTC and omni-channel experience

Increase emphasis on trends and style

Improve the store environment

Activate our connection to customers

11

Our focus is on driving sales productivity in existing stores and expanding the

presence and penetration of our Direct-to-Consumer (DTC) business


12/20

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

12


13/20

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

13

Increase emphasis on trends and style


14/20

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


15/20

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

15

$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


16/20

Financial Overview

16


17/20

17

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


18/20

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


19/20

$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


20/20

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

20

45% PLCC penetration by FY’17

Target EBITDA margins of 10%

Extensive retail experience

SSI Stage Stores 2015 Investor Presentation

Documents

Transcript of SSI Stage Stores 2015 Investor Presentation