Caleres, Inc. · NYSE:CAL
Caleres — Brown Shoe — Investor Presentation (January 2009)
36 slides from Caleres's investor presentation, Jan 14, 2009
Slide 1: Investor Update
Investor Update BROWN SHOE COMPANY, INC. Winter 2008 E V E R Y P E R S O N, E V E R Y D A Y, E V E R Y M O M E N T 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This investor update contains certain forward-looking statements and expectations regarding the Company’s future performance and the future performance of its brands. Such statements are subject to various risks and un
Slide 3: Brown Shoe Fits the World
BROWN SHOE FITS THE WORLD… with lifestyle footwear that expresses the individual consumer’s fashion sensibility. Whether at play, at work or on the town, people trust Brown Shoe’s signature brands to walk them through the stories of their lives. Brown Shoe is proud to offer a Every day, people aroun
Slide 4: Brown Shoe Platform
A greatly connected footwear company with an Brown Shoe Platform integrated, synergistic wholesale-retail platform Retail Wholesale RETAIL WHOLESALE • Appx. 1,400 total retail doors – appx. 1,100 • World class global sourcing network. Famous Footwear, appx. 300 Naturalizer, Sourced 76 million pairs
Slide 5: Brown Shoe Platform: Power of Integrated Wholesale/Retail Model
Brown Shoe Platform Power of the Integrated Wholesale/Retail Model x Driving Growth, Profitability, and Value Creation • Fragmentation of the consumer has significantly expanded Control the the matrix of style preferences and retail options Customer Experience • Integrated model allows a wide variet
Slide 6: Brown Shoe - $2.3 Billion in Sales
Brown Shoe - $2.3 Billion in Sales (Trailing 12 months November 1, 2008) Total BWS Direct-to-Consumer $105 million (Includes FamousFootwear.com, Naturalizer.com, Naturalizer Catalog, Shoes.com) Specialty Retail Appx. 300 stores 68% Retail $257 million 32% Wholesale Spec. Stores Dept. Stores 20% 19%
Slide 7: Brown Shoe Portfolio
*Source: NPD. 12 months ending February 1, 2008. This NPD data is confidential and proprietary and cannot be reproduced Brown Shoe Portfolio or disseminated by third parties without prior written consent. Fashion Athletic Domestic Sales = $32.7B* Domestic Sales = $10.8B* Salon Bridge Impulse Better
Slide 8: Why Brown Shoe in a Tough Economy?
Why Brown Shoe in a Tough Economy? Brown Shoe is a 130 year-old company that has operated in both growing and declining economies. We have long-established and valued partnerships throughout retail. Our vast Sourcing, Design, and Distribution expertise will be a competitive advantage in this environ
Slide 9: Current Initiatives
Current Initiatives Maximizing Profitability & Liquidity Logos Quarter-to-date inventory at Famous Footwear down 3.4% versus last year Reduced planned capex by $72 million from 2009 to 2011 time period Reduced store opening plan for 2009 to 20-25 net new stores IT infrastructure initiative
Slide 10: Positioning For Growth
Positioning For Growth Improving Increasing Rebuild Sustainable Survival Core Prospects for Growth Competencies Profitability • Focus on best brands • Growing portfolio • Reorganization of • IMPACT • Strategy • Earnings and market Executive Team • Key management development Enhancement Plan opportun
Slide 11: Long-Term Growth and Profit Drivers
Long-Term Growth and Profit Drivers 1. Build Powerful Consumer Brands • Grow brand equity of flagship brands Logos • Test, incubate, and grow new brands • Search for strategic opportunities that fit our growth criteria 2. Drive Brands Through Owned Retail • Leverage vertical & multi-channel business
Slide 12: Famous Footwear
Famous Footwear “Shoe Love Is True Love” ● Leading family branded footwear retailer ● Stores in all 50 states, featuring top brands such as Nike, Skechers, New Balance, adidas, DC, Steve Madden and Timberland among many others ● Real estate strategy to maximize markets ● Leading inventory management
Slide 13: Naturalizer
Naturalizer “Beautiful Feels So Good” ● Extended brand essence to new categories and consumer touchpoints ● New n5 technology system in every shoe ● Tightly-targeted consumer communications ● Improved product delivered when she wants to buy ● Global expansion – retail presence in 35 countries and gr
Slide 14: Dr. Scholl's
Dr. Scholl’s ® ● Innovation and technology ● High brand recognition and strong equity ● Partnerships with Wal-Mart and Schering-Plough ● Extending brand into new categories and channels ● Original Dr. Scholl’s ● Feel Crazy Green – sustainability product ● Dr. Scholl’s Studio – Mid-Tier brand extensi
Slide 15: Direct To Consumer
Direct To Consumer “My Own Private Shoe Store” ● Growth by winning in new and emerging markets ● $350 to $450 million opportunity in next five years ● Integrated platform. Consolidated Shoes.com into St. Louis in 2007 ● Re-launched Shoes.com in Spring 2008 ● Branded web sites and multi-channel oppor
Slide 16: Brown New York
Brown New York • Provides fashion halo to portfolio • Strong emotional connection with consumer • Fashion, Style Credibility, Talent • Brand extension and lifestyle potential • Expect double-digit sales increase in 2008 • August 2008, announced agreement with Vera Wang to design and market her Laven
Slide 17: Appendix: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures In the following pages, the Company’s financial results and measures are provided both in accordance with generally accepted accounting principles (GAAP), and using certain non-GAAP financial measures. In particular, the Company provides historic and estimated fu
Slide 18: Fourth Quarter 2008 & Full Year Guidance
Fourth Quarter 2008 & Full Year Guidance On January 14, 2009 the Company announced that it expects fourth quarter adjusted EPS results to be within the lower-end of the below guidance range established on November 25, 2008. No other guidance has been updated. Consolidated Net Sales: 2008 Estimated 2
Slide 19: Net Sales and EPS – 2003 to Estimated 2008
Net Sales and EPS – 2003 to Estimated 2008 Adjusted EPS GAAP EPS On January 14, 2009 the Company announced that it expects fourth quarter adjusted Guidance range EPS results to be within the lower-end of the below guidance range established on November 25, 2008. No other guidance has been updated. N
Slide 20: Review of BWS Financials
Review of BWS Financials (all $’s in millions except EPS, all earnings are on a GAAP basis) 39 Weeks Ended 39 Weeks Ended November 1, 2008 November 3, 2007 % Chg. Net Sales $1,755.4 $1,788.5 -1.9% Net Earnings, GAAP $19.8 $46.5 -57.4% Net Earnings, Adjusted* $31.0 $56.2 -44.8% EPS, GAAP $0.47 $1.04
Slide 21: Recent Events – Famous Footwear Transition
Recent Events – Famous Footwear Transition On April 10 2008, we announced the relocation of our Madison office to St. Louis This move will create one greatly connected footwear company • Will aid in achieving our vision of being a leading footwear marketer, as it will foster collaboration, increase
Slide 22: Recent Events – IT Initiatives
Recent Events – IT Initiatives During the second quarter of 2008, the Company announced plans to implement an integrated information technology system provided by SAP AG and Parametric Technology Corporation, third-party vendors; The Company will utilize SAP’s industry specific solution, SAP App
Slide 23: Earnings Enhancement Plan
Earnings Enhancement Plan: Savings of $26 million through 2007 Key Accomplishments in 2007: Reorganization of Brown Shoe Retail and associated consolidation of key functions: • Blended all retail field operations and store support functions, across all retail formats • Created enterprise-wide D2C or
Slide 24: Capital Expenditure Schedule
Capital Expenditure Schedule (all $’s in millions) 2008 Est. 2007 New Stores $ 17.0 to $ 19.0 $ 22.8 Remodel 5.0 to 7.0 13.8 Logistics 25.0 to 27.0 0.1 Infrastructure (Incl. IT hardw are) 14.0 to 16.0 4.8 Software (incl. ERP) 17.0 to 20.0 5.7 Total $ 80.0 to $ 90.0 $ 47.2 NOTE: Please see page 17 fo
Slide 25: Debt to Capital Ratio
Debt to Capital Ratio ($’s in millions) Debt to Capital Ratio Q3 2008 Q3 2007 2007 2006 2005 2004 Total Debt Obligations* $ 174 $ 150 $ 165 $ 151 $ 200 $ 142 Total Shareholders' Equity 560 592 559 524 434 391 Total Capital $ 734 $ 742 $ 724 $ 675 $ 634 $ 533 Debt to Capital Ratio** 23.7% 20.2% 22.8%
Slide 26: EBITDA Reconciliation
EBITDA Reconciliation (all $’s in millions) 39 Weeks Ended 39 Weeks Ended November 1, 2008 November 3, 2007 Operating Earnings $ 31.2 $ 78.1 Depreciation & Amortization * 41.3 37.5 EBITDA $ 72.5 $ 115.6 * Depreciation & amortization excludes amortization of debt issuance costs in the amount of $1.1
Slide 27: Reconciliation of GAAP Net Earnings to Adjusted Net Earnings (Nine Months)
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings (Nine Months 2008 versus Nine Months 2007) Nine Months 2008 Nine Months 2007 (Thousands, except per share data) Net Earnings Diluted EPS Net Earnings Diluted EPS GAAP Net Earnings $19,810 $0.47 $46,475 $1.04 Charges/Other Items: Madison Re
Slide 28: Reconciliation of GAAP to Adjusted Net Earnings (Q408 guidance)
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings (Q408 guidance versus Q407) On January 14, 2009 the Company announced that it expects fourth quarter adjusted EPS results to be within the lower-end of the below guidance range established on November 25, 2008. No other guidance has been u
Slide 29: Reconciliation of GAAP to Adjusted Net Earnings (2006 to 2008)
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings (2006 to 2008) On January 14, 2009 the Company announced that it expects fourth quarter adjusted EPS results to be within the lower-end of the below guidance range established on November 25, 2008. No other guidance has been updated. 2008
Slide 30: Review of Segment Financials
Review of Segment Financials 39 Weeks Ended 39 Weeks Ended November 1, 2008 November 3, 2007 % Chg. ($'s in millions) Famous Footwear Net Sales $1,007.7 $1,002.5 0.5% Operating Profit $38.9 $70.7 -45.0% Same-Store Sales -5.1% -0.2% Specialty Retail Net Sales $186.6 $193.1 -3.4% Operating Profit/Loss
Slide 31: Wholesale Portfolio - 2007
Wholesale Portfolio - 2007 Private Label / Private Brand Children’s E V E R Y P E R S O N, E V E R Y D A Y, E V E R Y M O M E N T 31
Slide 32: Famous Footwear: Sales by Category 2007
Famous Footwear: Sales by Category 2007 Athletic Product = 43% Fashion Product = 57% Accessories 5% 15% 6% Athletic 8% Kid’s Athletic Women’s 16% 30% Men’s Athletic 20% E V E R Y P E R S O N, E V E R Y D A Y, E V E R Y M O M E N T 32
Slide 33: Famous Footwear: Rewards Program
Famous Footwear: Rewards Program Through increased focus on customer relationship management, the Famous Footwear Rewards Program has shown continued improvement and currently contributes more than 50% of Famous Footwear sales. The Rewards customer spends more per transaction, buys more units per tr
Slide 34: Famous Footwear: Store Maturity
Famous Footwear: Store Maturity 2007 Sales per Square Foot $300 $250 $242 $210 $211 $195 Sales Per Square Foot $200 $185 $187 $182 $171 $170 $152 $150 $139 $100 $50 $- er ar s s s s s s s s s ar ar ar ar ar ar ar ar ar ld Ye Ye Ye Ye Ye Ye Ye Ye Ye Ye O 1 2 3 4 5 6 7 8 9 10 Number of Years Open NOTE
Slide 35: Famous Footwear: New Store Sales Performance
Famous Footwear: New Store Sales Performance Represents average sales per square foot results for all stores opened during the 2001-2006 period $185 $180 $178 $175 $174 $171 $170 Sales Per Square Foot $165 $161 $160 $155 $150 $150 $145 $140 $135 1st Year Avg. 2nd Year Avg. 3rd Year Avg. 4th Year Avg
Slide 36: Famous Footwear: Unit-level Store Economics
Famous Footwear: Unit-level Store Economics (all $’s in thousands) 2007 Operating Performance Cash Investment (Average store for all stores more than 2 yrs old) (Average for stores opened during last 3 years) Sales $ 1,317 Fixed Assets $ 176 $ per Square Ft. $ 188 Tenant Allowances (98) % of Sales I