Caleres, Inc. · NYSE:CAL
Caleres — Investor Day (October 2015)
62 slides from Caleres's investor day presentation, Oct 29, 2015
Slide 1: Investor Day October 29, 2015
Investor Day October 29, 2015
Slide 2: Private Securities Litigation Reform Act of 1995
Under the private securities litigation reform act of 1995 This presentation contains certain forward-looking statements and expectations regarding the company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actu
Slide 3: Agenda
Agenda Opening Remarks Financials Famous Footwear Brand Portfolio Sam Edelman Q&A Diane Sullivan CEO, President and Chairman Ken Hannah Senior Vice President and CFO Rick Ausick President Jay Schmidt President Sam Edelman President Executive Team 3
Slide 4: FY'15 expectations
41) Excludes Shoes.com; 2) FY’15 adjusted diluted EPS assumes 3Q’15 at $0.78 Street estimate $1.24B $0.94 ~$2.61B $1.95 to $2.00 FY’15 expectations Sales1 3% Adj. EPS 24% Sales1 +3% Adj. EPS2 +13% to 16% 1H’15 FY’15
Slide 5: Who we are
5 Established in 1878 2014 Revenue $2.6B More Than 1,200 Retail Stores +20 Brand Portfolio Brands 3 TARGETED PLATFORMS Who we are
Slide 6: Our transition
6 Our transition Fit to Feet Fit to Gender Fit to Personality Fit to Lifestyle 1879 20158
Slide 7: CALERES
CALERES x5
Slide 8: Our vision
8 MISSION Inspire people to Feel good… Feet First! VALUES Passion Accountability Curiosity Creativity Caring BRAND ETHOS Be ferocious about fit BUSINESS STRATEGY We build a diverse portfolio of global brands with broad appeal REASON TO BELIEVE We leverage over 135 years of expertise to provide the r
Slide 9: Our brand identity
Our brand identity Sam elon, — VINCE. = FAMOUS VIA SPIGA DA Fit for the Aluxurious fit Fit for the family. Fit for your every mood. Acolorful and fashion forward. for everyday. confident fit. eOR ° . . o ™ 4 2 DrScholls naturalizer eo oe FrancoSarto Pow most A fit that keeps A feel-good fit Fit for
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Slide 11: Drive material change in company's financial performance
11 Drive material change in company’s financial performance Focused on consistent, profitable and sustainable adjusted EPS growth LEANER, STRONGER AND MORE PROFITABLE COMPANY INVEST FOR ORGANIC GROWTH 2011 2012 2013 2014 20151 $0.70 $1.13 $1.41 $1.72 $1.95 to $2.00 $2.29B $2.39B $2.45B $2.53B ~$2.61
Slide 12: Drive material change in company's financial performance
12 Drive material change in company’s financial performance Focused on consistent, profitable and sustainable adjusted EPS growth LEANER, STRONGER AND MORE PROFITABLE COMPANY 2011 2012 2013 2014 $0.70 $1.13 $1.41 $1.72 Net Sales1 Sold AND 1 Closed Sun Prairie DC Licensed and exited unaligned brands
Slide 13: Investments and progress since 2011
13 • Incubators/new brands: Launched and/or developing DVF, George Brown, Bzees and Vince Men’s • Acquisition: Acquired Franco Sarto brand • Stores: Opened 100 Famous Footwear, four Sam Edelman and nine Naturalizer stores • Brand development: Engaged brand development consultants on key growth oppor
Slide 14: Higher ambition
14 Higher ambition Refining our strategic approach and investing in our next phase of growth Brown Shoe Company (2011 to 2015) Focus on three consumer platforms Keep our portfolio relevant Invest in avenues of growth Refocusing resources Drive profit growth Achieve financial targets Consumer centric
Slide 15: Higher ambition
15 Higher ambition Refining our strategic approach and investing in our next phase of growth • Continuously manage portfolio to improve relevance and maximize both performance and profit outcome • Align and focus brand efforts to deliver the promise of brands and consumer platforms • Operate a scala
Slide 16: Consistent, profitable and sustainable adjusted EPS growth
16 ~$2.61B $1.95 to $2.00 Double digit growth Focused on consistent, profitable and sustainable adjusted EPS growth INVEST TO GROW 20152 DRIVE GROWTH AND DELIVER 8% ROS Sales EPS 3% to 4% CAGR 2020 $2.29B $0.70 Sales EPSSales EPS 20111 LEANER, STRONGER AND MORE PROFITABLE COMPANY 1) FY’11 sales excl
Slide 17: Ken Hannah, Senior Vice President and CFO
Ken Hannah Senior Vice President and CFO
Slide 18: FY'15 Guidance
FY’15 Guidance 18 Metric FY’15 Consolidated net sales ~$2.61B Famous Footwear same-store-sales Famous Footwear reported sales Up low-single digits Flat, due to sale of Shoes.com Brand Portfolio net sales Up mid-single digits Gross margin Up 15 to 20 bps SG&A Less than or equal to 35.4% of sales Net
Slide 19: Business Model
Delivering consistent, profitable, sustainable growth Maintaining financial flexibility to execute plans Investing in infrastructure to enhance performance Creating a compelling consumer experience Offering differentiated product and distinctive brands Business Model 1. 2. 3. 4. 5. 3
Slide 20: Business Model
Delivering consistent, profitable, sustainable growth Business Model 1. 4
Slide 21: Increasing sales trends
21 Focused on three platforms aligned with market trends − Family − Healthy Living −Contemporary Fashion Total sales growing at +3% CAGR, excluding exited brands − Famous Footwear growing at +2% CAGR − Brand Portfolio growing at +5% CAGR Healthy Living growing at +1.5% CAGR Contemporary Fash
Slide 22: Increasing sales trends
221) FY’11 sales exclude discontinued operations, exited brands and businesses $2.29B ~$2.61B 3% to 4% CAGR Increasing sales trends 2015 2020 LEANER, STRONGER AND MORE PROFITABLE COMPANY INVEST FOR ORGANIC GROWTH 20111 Sales Sales Sales Famous Footwear expected to grow at 2% to 3% CAGR Brand Por
Slide 23: Increasing operating earnings
23 2.5% +5% Increasing operating earnings LEANER, STRONGER AND MORE PROFITABLE COMPANY INVEST FOR ORGANIC GROWTH 20111 2015 Gross margin expansion Improvement in SG&A leverage Exited ~$150M of unaligned brands and businesses Invested in brands, infrastructure and people −Developed new incuba
Slide 24: Increasing operating earnings
24 8% Increasing operating earnings LEANER, STRONGER AND MORE PROFITABLE COMPANY INVEST FOR ORGANIC GROWTH 2015 2020 Operating Margin Operating Margin Operating Margin Portfolio management − Keep our portfolio and brands relevant Dial-up growth − Focus on financial performance and macro trends
Slide 25: Consistent, profitable and sustainable EPS growth
25 Focused on consistent, profitable and sustainable EPS growth Sales EPSSales EPSSales EPS $2.29B ~$2.61B 3% to 4% CAGR $0.70 $1.95 to $2.00 Double digit growth INVEST TO GROW 20152 DRIVE GROWTH AND DELIVER 8% ROS 202020111 LEANER, STRONGER, AND MORE PROFITABLE COMPANY 1) FY’11 sales exclude discon
Slide 26: Maintaining financial flexibility to execute plans
Delivering consistent, profitable, sustainable growth Maintaining financial flexibility to execute plans Business Model 1. 2. 10
Slide 27: Maintaining financial flexibility
27 $344M +$680M Debt-to-capital ratio down from 49% − Refinanced senior notes Lowered rate and increased term −Credit upgrades S&P to BB and Moody’s to Ba3 Liquidity doubled since 2011 −No current borrowings against credit facility −Generating operating cash Priorities for cash − Invest to
Slide 28: Investing in infrastructure to enhance performance
Delivering consistent, profitable, sustainable growth Maintaining financial flexibility to execute plans Investing in infrastructure to enhance performance Business Model 1. 2. 3. 12
Slide 29: Global supply chain initiative
Material Management Global Sourcing Design and Development Processes Accelerated Calendars Purchase Order to Delivery End-to-End Supply Chain Visibility Optimize cost, speed and flexibility Investing in future growth Global supply chain initiative Enhance materials management Implement rapid repleni
Slide 30: Consumer fulfillment initiative
Before After Direct to consumer in 6 days Speed Direct to consumer in 2 days Separate facilities for retail and wholesale Flexibility Business agnostic facilities Meet volume projections Capacity Support growth plan 2015 2016 20172014 30 Tejon Modernization Lebanon Expansion and Modernization Perth
Slide 31: Consistent, profitable and sustainable EPS growth
31 Focused on consistent, profitable and sustainable EPS growth Sales EPSSales EPSSales EPS $2.29B ~$2.61B 3% to 4% CAGR $0.70 $1.95 to $2.00 Double digit growth INVEST TO GROW 20152 DRIVE GROWTH AND DELIVER 8% ROS 202020111 LEANER, STRONGER AND MORE PROFITABLE COMPANY 1) FY’11 sales exclude discont
Slide 32: Business Model
Delivering consistent, profitable, sustainable growth Maintaining financial flexibility to execute plans Investing in infrastructure to enhance performance Creating a compelling consumer experience Offering differentiated product and distinctive brands Business Model 1. 2. 3. 4. 5. 16
Slide 33: Rick Ausick, President Famous Footwear
Rick Ausick President Famous Footwear
Slide 34: Staying focused
Staying focused 34 Working to find high-value consumer segment Raising the bar on successful store metrics Finding accretion opportunities when closing stores Developing e-commerce and omni-channel capabilities to serve our consumers however they choose to shop with us Consistent, profitable and sus
Slide 35: Identified high-value consumer segment
35 Identified high-value consumer segment... has strong emotional connection to footwear and is predisposed to shop with us Shop more often Buy more pairs Spend more per pair More loyal Greater lifetime value Digitally connected but like store experience Consumer engagement
Slide 36: Identified high-value consumers
36 Identified 1M in our existing database • We know who they are • We know what they buy • We know how they shop • And we’re going to grow our share +30M targeted high-value consumers Consumer engagement Identified high-value consumers
Slide 37: Real estate portfolio
37 Direct correlation between stores with greater concentrations of high-value consumers and... • Higher volume • Higher sales per sq. ft. • Higher gross margin • Higher operating profit • Better traffic trends Real estate portfolio Identified stores with greater concentrations of high-value consume
Slide 38: Adding new stores and amplifying sales productivity
38 Scoring new locations for potential high-value consumers • Represent ~25% of stores opening in 2015 • On track to have ~50% of new stores in markets with greater penetration of high-value consumers Proactively looked at top 50 DMAs for locations with more high-value consumers • Seeking space in t
Slide 39: E-commerce and omni-channel
39 Installed WiFi in all doors Developed mobile checkout capability Communicate via mobile in-store More meaningful social media relationship Improve mobile e-commerce Better Associate and consumer access to inventory E-commerce and omni-channel Investing to reach digitally savvy and dependent consu
Slide 40: Consumer engagement
40 Strong positions in coveted categories and brands Adjusting assortments to provide more comprehensive offering Engaging high-value consumers in digital environments they frequent Messaging tailored to their strong emotional connection Revamping program to provide more meaningful interaction for e
Slide 41: Famous Footwear growth expectations
41 Famous Footwear growth expectations $1.5B ~$1.6B +2% to 3% LEANER, STRONGER AND MORE PROFITABLE COMPANY INVEST FOR ORGANIC GROWTH 2011 2015 2020 Sales Sales Sales
Slide 42: Jay Schmidt, President Brand Portfolio
Jay Schmidt President Brand Portfolio
Slide 43: Delivered consistent, profitable and sustainable sales growth
Contemporary Fashion Sales Healthy Living Sales Delivered consistent, profitable and sustainable sales growth 43 $0.90B$0.83B $0.92B $0.98B ~$1.02B Sales exclude discontinued operations, exited brands and businesses LEANER, STRONGER AND MORE PROFITABLE COMPANY INVEST FOR ORGANIC GROWTH 2011 2012 201
Slide 44: Editing to an aligned Brand Portfolio
44 While editing to an aligned Brand Portfolio HEALTHY LIVING CONTEMPORARY FASHION
Slide 45: Across channels and price points
Across channels and price points 45 $65 (sandals) to $200 (boots) $150 (shoes) to $595 (boots) $155 (shoes) to $425 (boots) $175 to $595 $79 (shoes) to $225 (boots) $175 to $595 Specialty & Independent High-End Mid-Tier Department Store E-commerce
Slide 46: Across channels and price points
Across channels and price points 46 Department Store Specialty & Independent $79 (shoes) to $209 (boots) $25 (shoes) to $200 (boots) $50 (shoes) to $100 (boots) $50 to $85 Mass Mid-Tier E-commerce $69 (shoes) to $225 (boots) $59 (sandals) to $199 (boots)
Slide 47: As we amplify our brand storytelling
As we amplify our brand storytelling 47
Slide 48: And move forward
NEW BRANDS Diane von Furstenberg George Brown 48 IMPROVE RELEVANCY Naturalizer, Franco Sarto Ongoing branding agency work INCREASE MARKET SHARE Analyzing market data Target new growth areas DIGITAL COMPETENCY E-commerce, brand storytelling, consumer engagement MAINTAIN ENTREPRENEURIAL SPIRIT Unique
Slide 49: Sam Edelman
Sam Edelman President Som Cele
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Slide 51: Power of six core styles
51 Power of six core styles
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Slide 55: Sam & Libby
SAM®LIBBY
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Slide 57: Sam Edelman Retail
Jom Glebron, Retail GARDEN STATE PLAZA PARAMUS NI RUDENTIAL ENTE FORUM SHOPS BOSTON, MA VALLEY FAIR KING OF PRUSSIA\ KINGOF i SOHO FLAGSHIP WORLD TRADE =| ptr au ar < MILLENNIA racnamn AVENTURA MALL
Slide 58: World Trade Center renderings
58 World Trade Center renderings
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Slide 61: Investor Day October 29, 2015
Investor Day October 29, 2015
Slide 62: Non-GAAP reconciliation
62 Non-GAAP reconciliation Diluted Earnings Per Share 2015 Guidance 2011 2012 2013 2014 Low High GAAP earnings $0.56 $0.64 $0.88 $1.89 $1.80 $1.85 Charges/Other Items ASG acquisition and integration-related costs 0.16 0.01 0.00 0.00 0.00 0.00 Loss on debt extinguishment 0.02 0.00 0.00 0.01 0.15 0.15