Tuesday Morning Corp New · OTC:TUEMQ
Tuesday Morning Corp New — Tuesday Morning — Investor Presentation (October 2018)
36 slides from Tuesday Morning Corp New's investor presentation, Oct 4, 2018
Slide 1: Safe Harbor Statement
SAFE HARBOR STATEMENT Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements, which are based on management’s current expectations, estimates and projections and are not guarantees of future performance. Forward looking statements include stat
Slide 2: 44 Years of Being Passionate About the Deal
44 YEARS Of Being Passionate About the Deal
Slide 3: Founding & Early Years (1970-1990s)
1974: Founded in Dallas, Texas Pop-Up shop format Four 6-week sales a year 1984: Went public with 57 stores Open year-round, 7 days a week 1997: Went private with 315 stores 1999: Went public with 354 stores 1970-1990’s Founding & Early Years
Slide 4: Rapid Growth Years (2000s)
Rapid Expansion Added 500+ stores Growth strategy focused on low cost real estate Expanded non-core merchandise categories Underinvested in IT/Supply Chain 2000’s Rapid Growth Years
Slide 5: Today - Positioned for Success
Focused on Profitable Growth Over 700 store locations across the US Off-price retailer specializing in name-brand, high quality products for the home including luxury textiles, furnishings, housewares and seasonal decor - all at compelling price points Deal-driven merchandise assortment, opportunist
Slide 6: Sales History ($ Millions)
Sales History ($ Millions) $1,200 $1,000 $800 $600 $400 $200 $0 $828 $821 $813 $838 $865 $ 906 $956 $967 $1,006 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Financial Overview
Slide 7: 700+ Strategic Nationwide Locations
700+ Strategic Nationwide Locations MA (2) Ml (9) MT (0) Rl (0) CT WY (0) (0) (4) DE (3) MD (15) AZ (21) NM (7) " TX (108) *a s of 6/30/18 Today - Positioned for Success 8 ND MO (18) (1) MN (9) SD (1) NE KS (8) OK (12)
Slide 8: Well-Positioned in a Fragmented Home Furnishings Sector
Well-Positioned in a Fragmented Home Furnishings Sector ,......;u....... ANT H RO PO LOC '-")("'-' wes t elm B A li N -··· BrfONEII OQ:eSS 1"01: LeSS LOBBY. JOANN C,urli.ngton TARGET at!_-1_ .... BIG LOTS, Today - Positioned for Success 9 Mass Quality IE Crate&Barrel RH PD TTE II Y n wayfa1r !9.C. k
Slide 9: Highly Experienced Management Team
Highly Experienced Management Team Steve Stacie Phillip Belinda Trent Taylor Catherine Douglas Bridgett Becker Shirley Hixon Byrd Davis Sullivan Zeterberg Position: CEO EVP, CFO & Treasurer EVP, Store Operations SVP, GMM CIO & EVP, Supply Chain and SVP, Marketing SVP, Real Estate SVP, HR, General Co
Slide 10: Highly Experienced Management Team
Position: Retail Experience: TM Experience: Prior Retail Highly Experienced Management Team Eve, FOR Treasurer + Years 25+ Years 6+ Years 2+ Years Hot Topic Neiman. Plato Marcus Learning CompusA Emcore lip Hixon Eve, Store Operations 40+ Years 4+ Years Michael's Petco Merchco 20+ Years 3+ Years Sear
Slide 11: Merchandise Assortment Focused on Core Home Categories
Merchandise Assortment focused on core home categories Home Dècor Textiles Seasonal Housewares/Food Other *FY18. Other includes Toys, Crafts, Children’s, Accessories, Gift Wrap, Party, Bath & Body, Pets, Luggage, Stationery, and Books. Products - Latest trends, Best Prices
Slide 12: Compelling Values
Memory Foam Pet Bed: Wayfair Price: $64.99, TUESDAY MORNING PRICE: $39.99 Occasional Tables: At Home Price: $59.99 World Market Price: $89.99 TUESDAY MORNING PRICE: $19.99-$29.99 Typhoo English Tea: World Market Price: $6.99 Wegmans Price: $7.99 TUESDAY MORNING PRICE: $3.99 American Crafts Punch Set
Slide 13: Compelling Values
Wood Lantern Set: Sears Price: $126.64 Wayfair Price: $101.99 TUESDAY MORNING PRICE: $46.99 Air Fryer: Best Buy Price: $119.99 Walmart Price: $79.99 TUESDAY MORNING PRICE: $49.99 Living Room Seating: ZGallerie Price: $699.99 Bassett Price: $1,389 TUESDAY MORNING PRICE: $329.994399.99 Feather-Trimmed
Slide 14: Compelling Values
Wood Lantern Set: + Sears Price: $126.64 + Wayfair Price: $101.99 + TUESDAY MORNING PRICE: $46.99 Air Fryer: * Best Buy Price: $119.99 * Walmart Price: $79.99 + TUESDAY MORNING PRICE: $49.99 Living Room Seating: . Feather-Trimmed Pillow: + ZGallerie Price: $699.99 + Amazon Price: $58.47 + Bassett Pr
Slide 15: Our Customers Know A Great Deal When They See One
Our Customers Know A Great Deal When They See One Our Core customers are Shopping Aficionados’: Self-professed deal hunters who bask in the satisfaction of nabbing a perfect find at a great price Think shopping is a great way to relax Believe their home is an expression of their personal style Enjoy
Slide 16: 2018 Strategic Initiatives
OFFERING Great DEALS HAS ALWAYS BEEN A BIG DEAL TO US. 2018 STRATEGIC INITIATIVES
Slide 17: 2018 Strategic Initiatives
2018 STRATEGIC INITIATIVES REAL ESTATE SUPPLY CHAIN MARKETING MERCHANDISE
Slide 18: Real Estate Repositioning
Real Estate Repositioning Actively repositioning portfolio to focus on improved co-tenancy Flexible real estate portfolio 25% up for renewal in next 12 months On average, 20% a year Flexible lease terms allow for: Ability to relocate stores Ability to renegotiate rent Stores succeed in a range of si
Slide 19: Relocate 75% of Fleet to Better Shopping Centers
- Format • Relocate 75% of fleet from C/D locations to solid B and better shopping centers with favorable co-tenancy and customer demographics Increase traffic to stores and improve overall customer experience providing significant lift to sales and enhancing brand awareness • 20 --Original New Prot
Slide 20: Strong Co-Tenancy Drives Favorable Customer Demographics and Traffic
Strong Co-Tenancy Drives Favorable Customer Demographics and Traffic SUPER TARGET STRATEGIC INITIATIVES REAL ESTATE
Slide 21: Evolution of Store Locations
Evolution of Store Locations % of Fleet Impacted by Real Estate Strategy Prior FY15 Through FY18 Long-Term Majority of Stores in -35% of Stores -75% of Stores Below Avg. Centers Relocated/Refreshed' will be Relocated/Refreshed' 1Relocated/Refreshed includes stores that have been relocated, expanded,
Slide 22: Real Estate Strategy: Target Relocation Economics
Real Estate Strategy: Target Relocation Economics Store Size (1) 12-14K sq/ft Year 1 Sales $1.6M - $1.8M Store Contribution Margin (2) —15% New Investment (3) “$350K Payback Period —2 years Targeted store size is 12K-14K, but actual results vary based upon real estate opportunities Calculated using
Slide 23: Relocations, Expansions and Closures
Relocation & 30 relocations 46 Relocations 52 Relocations 45 Relocations 173 Relocations Expansions 7 Expansions 7 Expansions 13 Expansions 8 Expansions 35 Expansions New Store Growth 5 16 21 15 57 Portfolio Improvement / 46 Closed 34 Closed 41 Closed 20 Closing 141 Closed Total Stores Touched 88 10
Slide 24: Improving Sales Trend Across Cohorts
Improving Sales Trend Across Cohorts Average Sales per Store *Includes only stores open for entire 12 month period STRATEGIC INITIATIVES
Slide 25: Supply Chain Transformation
Supply Chain Transformation Prior to 2016: Operated one distribution center in Dallas, consisting of 5 non-contiguous buildings Very inefficient and expensive processing facility FY17: Began operating new 600K square foot DC in Phoenix to handle West Coast stores and support growing sales volume Hir
Slide 26: Broadening our Reach to Attract New Customers
Broadening our Reach to Attract New Customers Shared values among audiences’ Current Customer Reach 8.9M Shopping Aficionados Ages 55-69 . Target New Customer Reach 30.3M Shopping Aficionados Ages 25-69 1GfK MRI, Doublebase 2016, Women Shopping Aficionados aged 25-69 STRATEGIC INITIATIVES
Slide 27: Creative Marketing
Creative Marketing Updated brand creative & personality to focus on product, great deals, and telling our story • • Significant improvement in customer data collection, allowing for more efficient marketing • Improved digital marketing to cost effectively broaden our reach to pay top dollar for top
Slide 28: Creative Marketing
Creative Marketing * Updated brand creative & personality to focus on product, great deals, and telling our story * Significant improvement in customer data collection, allowing for more efficient marketing + Improved digital marketing to cost effectively broaden our reach YOU CAN inet | Prices | YO
Slide 29: It's All about the Deal!
It’s All about the Deal! Expanding assortment in foundational categories, while growing new businesses Focusing on partnerships to increase penetration of leading specialty store brands Increasing focus on closeout deals in an opportunistic environment Optimizing store-level assortment and inventory
Slide 30: It's All about the Deal!
It’s All about the Deal! * Expanding assortment in foundational categories, while growing new businesses + Focusing on partnerships to increase penetration of leading specialty store brands * Increasing focus on closeout deals in an opportunistic environment * Optimizing store-level assortment and i
Slide 31: Comp Sales Trend
Comp Sales Trend Comp % • Two Year STACKED FY15 FY16 FY17 FY18 Annual COMP 7.2% Annual COMP 7.8% Annual COMP 2.2% Annual COMP 3.9% Two-Year STACKED 13.3% Two-Year STACKED 15.0% Two-Year STACKED 10.0% Two-Year STACKED 6.1% ‘New stores are included in the same store sales calculation starting with the
Slide 32: Balance Sheet/Cash Flow ($ Millions)
Balance Sheet/Cash Flow ($ Millions) FY 2016 FY 2017 FY 2018 Total Assets $ 362 $ 358 $ 376 Inventories $ 242 $ 222 $ 234 Total Debt, incl. current portion $ 31 $ 38 Total Stockholders’ Equity $ 227 $ 199 $ 180 $180M Asset-Backed Facility — 5 year facility maturing August 2020 — No financial covenan
Slide 33: Path to Profitable Growth
Path to Profitable Growth Focus on improved store sales productivity through merchandising, marketing and inventory management Drive continued margin expansion through improved product margin, markdown management and Supply Chain cost efficiencies Leverage opportunistic real estate environment throu
Slide 34: FY 2019 Outlook
FY 2019 OUTLOOK Comp: 3% - 5% Gross Margin: 100 - 125 bps EBITDA: Significant year-over-year improvement DEBT: Approximately flat to FY18 year-end balance Tuesday Morning
Slide 35: FY 2019 Outlook
FY 2019 OUTLOOK Comp: 3% - 5% Gross Margin: 100 - 125 bps EBITDA: Significant year-over-year improvement DEBT: Approximately flat to FY18 year-end balance Fiesday Morning 35
Slide 36: Thank You!
“Thank You!
Tuesday Morning — Investor Presentation (October 2018) on 6ix