Caleres, Inc. · NYSE:CAL
Caleres — Brown Shoe — Investor Presentation (September 2005)
34 slides from Caleres's investor presentation, Sep 16, 2005
Slide 1: September 2005
Famous © Footwear. SARTO LifeStride fashion, sang, a ee — | ed | — Poe Bass f ETIENNE AIGNER FOOTWEAR w shoes.cony
Slide 2: Forward-looking statements
This presentation by Brown Shoe Company, Inc. contains certain forward-looking statements, including without limitation, statements made concerning forward looking guidance on Sales, Earnings Per Share (EPS), Net Earnings, Adjusted Net Earnings, EBITDA, Adjusted EBITDA and Debt to Capital ratio. Suc
Slide 3: Today's Topics – NYSE: BWS
Today’s Topics – NYSE: BWS 1) The BWS Story – Re-Shaping Our Platform 2) Enterprise-wide strategies 3) Financial results 3
Slide 4: Brown Shoe Today -- $2.3 Billion in Sales Projected for 2005
Brown Shoe Today -- $2.3 Billion in Sales Projected for 2005 Unique wholesale-retail platform. Building our brands and retail concepts to gain market share while delivering style to the consumer. 2001 Projected 2005 38% Mass 62% Retail Merchandisers Wholesale $250 million Department & Specialty Stor
Slide 5: Remaking BWS
Remaking BWS – 6.0% 1) Operating Earnings – from 2001 to 2005, GAAP operating earnings are expected to grow from $11mm to more than $90mm; on an adjusted basis, operating earnings are expected to more than double from $50mm to more than $100mm. Please see Appendix for calculation of this measure. 4.
Slide 6: Our Rank Among Wholesalers in Department Stores
Brown Shoe Today – Our Rank Among Wholesalers in Department Stores Sales of Women’s Fashion Footwear in U.S. Department Stores Ranked by Parent Company ($ in millions) $600 $500 $400 After Acquisition $300 Brown Wholesale Bennett Footwear Group $200 $100 $0 p e n s p e s e p. rou Sho dd e an ie rou
Slide 7: Our Portfolio of Brands – 46% Market Share in Moderate Zone
Our Portfolio of Brands – 46% Market Share in Moderate Zone (women’s) No. 3 men Zone No. 1 No. 3 No. 11 No. 18 women Rank Moderate Moderate Moderate Junior Source: NPD Group Reported POS Dollar Volume. 12 Months ending July, 2005. 7
Slide 8: Our Portfolio of Better/Bridge Brands – 17% Market Share
Our Portfolio of Better/Bridge Brands – 17% Market Share in Better Zone Zone No. 9 No. 2 No. 9 No. 13 Rank Bridge Better Better Better Source: NPD Group Reported POS Dollar Volume. 12 Months ending July, 2005. 8
Slide 9: Our Portfolio of Brands – Mid-tier and Mass
Our Portfolio of Brands – Mid-tier and Mass A leading footwear vendor at Wal-Mart, Target & Payless 9
Slide 10: Our Position Among Top Footwear Retailers
Brown Shoe Today – Our Position Among Top Footwear Retailers 8 7 6 % Share of Dollars 5 4 3 2 1 0 t al 's t ne et s ay s r m 's ey SW er ar ar ea es ar rd iv hl rg tro ck Li M -M Km nn Se rn w Ko illa yl D Ta d+ tlo ds sh ot al Pe Pa Ca D Fo W o te or ni Fo JC ra oe Fi N s de ou Sh Fe m Fa Source: C
Slide 11: Our Portfolio of Retail Concepts – 1300 Stores
Our Portfolio of Retail Concepts – 1300 Stores, 5 Web-stores Zone No. 1 No. 4 No. 3 Rank Family, branded Women’s specialty Internet footwear Retail Famous Footwear Naturalizer Shoes.com Brands Factory Brand Shoes Via Spiga stores Naturalizer.com FX LaSalle Famousfootwear.com Source: Competitive Shar
Slide 12: BWS Enterprise-Wide Strategies for Sustainable Growth
BWS Enterprise-Wide Strategies for Sustainable Growth: 1) Create differentiation –creating competitive advantage by differentiating our stores, our footwear, and our brands 2) Delight consumers with style – raising the style quotient of our footwear assortments to win consumer preference for our bra
Slide 13: Creating Differentiation at Famous Footwear
Enterprise-wide Strategy # 1 Creating Differentiation at Famous Footwear Improved Product: More brands, more current, more trend-right Redesigned Stores Improved shopping experience Fashion + Branded Value, not Price Innovative marketing 13
Slide 14: Creating Differentiation at Naturalizer
Enterprise-wide Strategy # 1 Creating Differentiation at Naturalizer Introducing a new sense of style for brand Improving our retail platform Improved our wholesale business model Enhanced product styling Market Share Rank in U.S. 1 Department Store Channel* 2nd 2 3rd 3rd 3 4th 4 5 6th 6 7th 7 8th 8
Slide 15: Delighting the Consumer with Style -- Top Department Store Brands
Enterprise-wide Strategy # 2 Delighting the Consumer with Style -- Top Department Store Brands Leading designers (e.g. Franco Sarto) acquired with Bennett Product development and Style & Trend functions centralized; augmented with Italian design talent Exclusive product programs with major retailers
Slide 16: Speed-to-Market
Enterprise-wide Speed-to-Market Strategy # 3 Providing the consumer with fashion closer to need Enhancing Retail Planning & Analysis Stronger focus on sell-through and inventory flow Standardizing Design, Development, & Production World-class logistics and customer support Worldwide sourcing capabil
Slide 17: Growing our Portfolio -- Recent Acquisitions of Brands and Licenses
Enterprise-wide Strategy # 4 Growing our Portfolio -- Recent Acquisitions of Brands and Licenses Creating a portfolio of brands and licenses that garners greater market penetration Bennett Footwear Group 2001 2001 February 2004 August 2004 April 2005 17
Slide 18: Bennett acquisition – the perfect fit for BWS
Enterprise-wide Strategy # 4 Growing our Portfolio – Bennett acquisition – the perfect fit for BWS Strong brands in better and bridge zones complement our strength in moderate Increases our share-of-market in women’s fashion footwear Growing business with strong market share and healthy operating ma
Slide 19: Guidance, Earnings, Segment Projections
Guidance, Earnings, Segment Projections 19
Slide 20: 2005 Guidance
2005 Guidance Diluted Earnings Per Share 2005 Estimated 2004 Guidance (GAAP Basis) $1.75 - $2.00 $2.30 Actual EPS (GAAP Basis) Tax cost to repatriate foreign earnings $0.55 $0.18 Bass transition costs Cost to restructure Naturalizer $0.55 - $0.45 $0.12 Bond guarantee charge ($0.05) Tax reserve recov
Slide 21: EBITDA
EBITDA* 2005 Estimated Range (in millions) 2003 2004 Low -- High EBITDA* $ 103.6 $ 95.7 $ 126.2 $ 133.7 Special Charges Naturalizer Restructuring - - 16.5 13.5 Bass Transition Costs - 5.6 - - Bond Guarantee Charge - 3.5 - - Environmental Litigation 3.1 0.6 - - Canada Factory Closure 4.5 - - - Adjust
Slide 22: Famous Footwear Operating Margin
Famous Footwear Famous Footwear 2004 Performance & 2005 Outlook $1,200 10.0% 2004: Strong results in a difficult retail $1,000 environment Sales up 4.0% 8.0% Operating earnings +16.3% $800 Operating margin* up 60 basis pts Sales in millions Operating Margin Operating Margin* versus FY03 6.0% $600 SF
Slide 23: Brown Shoe Wholesale Operating Margin
Brown Shoe Wholesale Wholesale Operations $1,200 2004 Performance & 2005 Outlook 10.0% 2004: Interruption in momentum and $1,000 Operating Margin* earnings trend 8.0% Strong performance at LifeStride, Dr. Scholl’s, and Carlos could not offset Sales in millions $800 misses in our Naturalizer, Bass an
Slide 24: Increasing Naturalizer Retail Productivity
Specialty Retail Increasing Naturalizer Retail Productivity 1) By April 2006, improve the Naturalizer store base by closing underperforming stores (approx. 80: 60 in the U.S. and 20 in Canada) 2) Consolidate the Canadian store buying, merchandising, accounting and IS functions into our U.S. operatio
Slide 25: Conclusion
Conclusion Short Term – Projecting $2.3 Billion in Sales and $1.75 - $2.00 EPS in 2005 Includes $0.55 expense for taxes related to repatriation of foreign earnings and $0.45 - $0.55 expense for Naturalizer store closings Bennett expected to be accretive by $0.15-$0.20 in 2005 Famous Footwear expecte
Slide 26: Financial Highlights & Appendix
Financial Highlights & Appendix 26
Slide 27: Sales and EPS – 2001 to 2005
Sales and EPS – 2001 to 2005 Sales in Billions Earnings Per Share $2.3 Billion $2.0 $2.50 $2.00 $1.5 $1.75 – $2.00* $1.50 * Includes $0.55 per share of incremental tax $1.0 charges from repatriating $1.00 foreign earnings and $0.45-$0.55 per share of incremental $0.5 expense in $0.50 connection with
Slide 28: Distinct Wholesale Portfolio
Distinct Wholesale Portfolio Based on 2004 Pro Forma Sales* * The 2004 Pro Forma Sales detail includes the Bennett brands as if they had been acquired by Brown Shoe on February 1, 2004. These results are not necessarily indicative of the results that would have been achieved had the acquisition occu
Slide 29: Famous Footwear -- Sales by category
Famous Footwear -- Sales by category Based on 12 months ended January 2005 Accessories 4% 4% 5% 5% Athletic 9% 9% Kid’s 28% 28% 17% 17% Women’s Men’s Athletic 16% 16% Athletic 21% 21% 29
Slide 30: Reconciliation of Net Earnings to Adjusted Net Earnings
Appendix: Reconciliation of Net Earnings to Adjusted Net Earnings 2005 Estimated Range 2003 2004 Low High Net Net Net Net Earnings EPS Earnings EPS Earnings EPS Earnings EPS GAAP Results $ 46.2 $ 2.48 $ 43.3 $ 2.30 $ 33.2 $ 1.75 $ 37.9 $ 2.00 Special Charges and Recoveries: Naturalizer Restructuring
Slide 31: Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Appendix: Reconciliation of Net Earnings to EBITDA* and Adjusted EBITDA 2005 Estimated Range 2003 2004 Low -- High Net Earnings $ 46.2 $ 43.3 $ 33.2 $ 37.9 Interest Expense, net 9.3 7.5 18.4 18.4 Income Tax Provision 17.4 13.0 36.3 39.1 Depreciation and Amortization 30.7 31.9 38.3 38.3 EBITDA* $ 103
Slide 32: Appendix: Debt to Capital Ratio
Appendix: Debt to Capital Ratio Millions of dollars, except for Debt to Capital Ratio Debt to Capital Ratio 2005-Est 2004 2003 2002 2001 Total Debt Obligations* $ 296 $ 142 $ 120 $ 152 $ 216 Total Shareholders' Equity 426 391 350 292 253 Total Capital $ 722 $ 533 $ 470 $ 444 $ 469 Debt to Capital Ra
Slide 33: Appendix: Operating Margin %
Appendix: Operating Margin % Operating Margin % 2004 2003 2002 2001 Famous Footwear: Sales $ 1,116.7 $ 1,073.6 $ 1,075.2 $ 1,044.4 Operating Profit 60.3 51.8 44.7 6.8 Operating Margin % 5.4% 4.8% 4.2% 0.7% Wholesale: Sales $ 615.9 $ 561.3 $ 566.4 $ 503.3 Operating Profit 44.9 55.8 54.5 51.3 Operatin
Slide 34: Reconciliation of Operating Earnings to Adjusted Operating Earnings
Appendix: Reconciliation of Operating Earnings to Adjusted Operating Earnings (in millions) 2005 Est. 2004 2003 2002 2001 Operating Earnings $ 91.7 $ 63.8 $ 72.9 $ 71.7 $ 11.1 Special Charges and Recoveries Naturalizer Restructuring 15.0 - - (0.8) 16.8 Famous Footwear Inventory Write-Down - - - - 16