Tandy Leather Factory, Inc. · NASDAQ:TLF
Tandy Leather Factory — Shareholder Meeting (June 2020)
24 slides from Tandy Leather Factory's shareholder meeting presentation, Jun 3, 2020
Slide 1: Annual Meeting of Shareholders June 2, 2020 Management Presentation
Annual Meeting of Shareholders June 2, 2020Management Presentation
Slide 2: Tandy Strategy Overview Introduction
Tandy Strategy Overview Introduction
Slide 3: Long-term strategy to drive sales and earnings growth
Long-term strategy to drive sales and earnings growthOur assessment revealed strengths and opportunities……Leading to key actions we need to take to grow2019: a year of investment – and restatementWe are now also addressing COVID-19 INTRODUCTION Today’s presentation will include statements, other tha
Slide 4: Tandy Strategy: Strengths
TANDY STRATEGY StrengthsBrand awareness and strong equityOur stores are a key competitive advantage100-year old heritage
Slide 5: Tandy Strategy: Opportunities
TANDY STRATEGY OpportunitiesPricing was too high and complicated Consumer perception of inconsistent quality targeted at beginnersCompetitors have been winning with high-value consumer segmentsCustomers outgrow TandyTalent, process, tools, systems to execute strategic initiatives need rebuilding
Slide 6: Our Core Today
Our Core Today Customer Type Hobbyist End Use Hobbyist-Maker Etsy Small/Home Business Medium Business Large Business/ National Chain Traditional Tooled Leather Bags/SLGs Costumes Books Fetish/BDSM Furniture Shoes Jewelry Art/Sculpture Smaller Bigger Not Our Expertise Gun/Knife Our Expertise TANDY ST
Slide 7: Strategic Actions
Strategic ActionsImprove the brand propositionReverse the decline with business customersBuild the talent, process, tools, systemsPosition for long-term growth TANDY STRATEGY Started in 2019, these actions require multi-year investment
Slide 8: Long-term growth: online, international, chains and institutions
Long-term growthOnlineInternationalChains and institutions TANDY STRATEGY We have already made significant progress in building our online business
Slide 9: Strategy & Performance 2019 Summary
Strategy & Performance 2019 Summary
Slide 10: 2019 Goals: Foundation Building
Improve our brand proposition with key consumer segmentsAssess and build the infrastructure and operating modelBuild the team 2019 GOALS: FOUNDATION BUILDING
Slide 11: 2019 Initiatives
2019 INITIATIVES 2019 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 Improve Consumer Proposition 3 Build Team 2 Assess and Build Infrastructure New approach to pricing and promotionNew web platform and experienceImprove product line, flow of newnes
Slide 12: 2019 Sales Bridge
Changes accounting for $3MM in sales declineClosed 5 stores Stopped selling on Amazon, Ebay and Walmart.comMade Leathercraft Library freeEnded Wholesale Clubs 2019 SALES Remaining decline attributed to start-up effects of a new team 10% decline from 2018 ($3,043) ($5,269) Sales on fiscal calendar 20
Slide 13: Restatement
Inventory not correctly stated at FIFOWarehousing and handling not correctly capitalizedWarehousing and handling incorrectly classified as operating expensesOn track to complete by August 10, 2020 RESTATEMENT
Slide 14: COVID-19 Response & Outlook 2020
COVID-19 Response & Outlook 2020
Slide 15: 2020 Plan
Demonstrate success of our consumer-facing strategiesSubstantially complete key infrastructure initiativesEvaluate and test growth opportunitiesComplete restatement by August 10, 2020 2020 PLAN
Slide 16: COVID-19 Timeline
TIMELINE Shelter-in-place order in Northern California;Store closures begin MAR 17 All Tandy stores close to public; 20 stores operating behind the scenes MAR 22 Fort Worth warehouse ships 532 orders APR 9 All but 13 stores close fully; 406 employees furloughed; corporate employees work remotely APR
Slide 17: COVID-19 Response: Focus on web fulfillment
COVID-19 RESPONSE Focus on web fulfillmentRetooled to drive online business and fulfill all web orders out of Fort WorthAble to ship over 1,500 direct-to-consumer orders from our warehouse dailyCreated virtual customer service and phone order team
Slide 18: 2020 Sales
2020 SALES Increase in online sales Online orders up 200% from last year Decline in total sales 1Q – 18% declineApril – 60% declineMay – 40% decline (17.7%) (60.1%) % Total Sales Change (39.6%) Sales on retail calendar
Slide 19: COVID-19 Response: Conserving capital and protecting liquidity
COVID-19 RESPONSE Focus on conserving capital and protecting liquidity406 employees furloughed or laid off on April 2Reduced SG&A expenses, including salary cutsPaused product purchasesNegotiated abatements, deferrals and longer-term reductions in rent8 stores permanently closed Do we want to put co
Slide 20: COVID-19 Response: Closed stores
COVID-19 RESPONSE Closed storesPhoenix AZAustin TXDallas TXPeoria ILRichmond VANyack NYJohnston RISt Leonard QC
Slide 21: COVID-19 Response: Store closure impact
COVID-19 RESPONSE Operating Expense Impact ($000) Total cost to exit: $183 in 2020 SG&A savings: $1,586 annually approx. +$530 annually Net Cash Impact ($000) Store Closures Sales Impact ($000) 55% Est. Sales Lost 45% Est. Sales Retained $3,474 2019 Sales I’m taking this off the page but leaving in
Slide 22: Where We Are Now
WHERE WE ARE NOW Reopening stores where possiblePrioritize the safety of our employees, customers and community10 stores currently offering curbside pickup (plus 2 more by June 5)Fort Worth Flagship location opened to customers This is a gradual process, as we monitor and assess business and environ
Slide 23: Outlook
OUTLOOK Protecting long-term valuePositioning to reemerge strongSolid strategy to build on
Slide 24: Questions
QUESTIONS To ask a question, please message Daniel Ross in the Zoom chat and he will facilitateIf you are calling in on a phone line and would like to ask a question, please email Dan Ross at daniel.ross@tandyleather.com
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