Tuesday Morning Corp New · OTC:TUEMQ
Tuesday Morning Corp New — Tuesday Morning — Investor Presentation (June 2018)
37 slides from Tuesday Morning Corp New's investor presentation, Jun 1, 2018
Slide 1: Safe Harbor Statement
SAFE HARBOR STATEMENT The forward-looking statements made in this presentation relate only to events as of the date on which the statements were made. Except as may be required by law, the Company disclaims obligations to update its forward-looking statements to reflect events and circumstances afte
Slide 2: 44 Years of Being Passionate About the Deal
44YEARS Of Being Passionate About the Deal t R 3
Slide 3: • • • • • • •
• • • • • • • 4
Slide 4: 1970-1990s Founding & Early Years
* 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 5: Focused on Profitable Growth
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, oppor
Slide 6: Sales History and Store Locations
Sales History ($ Millions) $1,200 $956 $967 $1,000 $1,000 $906 $838 $865 $828 $821 $813 $800 $600 $400 $200 $0 mo 852 m1 861 m2 852 m3 828 m4 810 m5 769 m6 751 m7 731 m8" 724 Store Locations: ''FY 2018 TTM as of 3/31/18 Financial Overview 7
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) *as of 3/31/18 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 '-")("'-' west elm B A li N -··· BrfONEII OQ:eSS 1"01: LeSS LOBBY. JOANN C,urli.ngton TARGET at!_-1_ Today - Positioned for Success 9 Mass Quality IE Crate&Barrel RH PD TTE II Y n wayfa1r !9 .C. C_o,.s7co k. KI
Slide 9: Highly Experienced Management Team
Highly Experienced Management Team Trent Taylor Byrd Davis Position: CEO EVP, CFO& Treasurer EVP, Store Operations SVP, GMM CIO & EVP. Supply Chain and Inventory Management SVP, Marketing SVP. Real Estate SVP, HR. General Counsel & Corporate Secretary Retail Experience: 7+ Years 25+ Years 40+ Years
Slide 10: Highly Experienced Management Team
Position: Retail Experience: TM Experience: Prior Retail: Highly Experienced Management Team Ste facie Phillip linda Trent Taylor ‘atherine peta: Bs eo Becki irley Hixon Byrd Davis ulli 7+ Years 5+ Years Hot Topic Plato Learning Emcore EVP, CFO & Treasurer 25+ Years 2+ Years Neiman Marcus CompUSA ce
Slide 11: Merchandise Assortment Focused on Core Home Categories
Merchandise Assortment focused on core home categories 14% 25% 15% • Home Decor Seasonal • Other • Textiles • Housewares/Food 'LTM March 2018 Products Latest trends, Best Prices 12
Slide 12: Merchandise Assortment Focused on Core Home Categories
Merchandise Assortment focused on core home categories 15% » Home Décor = Textiles Seasonal = Housewares/Food = Other “LTM March 2018 Products - Latest trends, Best Prices 12
Slide 13: Compelling Values
Occasional Tables: + At Home Price: $59.99 * World Market Price: $89.99 * TUESDAY MORNING PRICE: $19.99-$29.99 Memory Foam Pet Bed: + Wayfair Price: $64.99 + TUESDAY MORNING PRICE: $39.99 American Crafts Punch Set: * Michael's Price: $49.99 + TUESDAY MORNING PRICE: $14.99 Typhoo English Tea: * World
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: + ZGallerie Price: $699.99 * Bassett Price: $1,389 * TUESDAY MORNING PRICE: $329.99-$399
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 Aficionados1: 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 Demographic profile2: Age 52%50-69 37%35-49 Household Income Aver
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= OFFERING = .., DEALS BIG DEAL ro us.\jb .:::::::: ........--_,-' ·_-:-::. . -;:_-;, -·',f.. ,-,. • I .... 1.. . ·' . <f) THAT ARE :·.;···HERE TODAY :····:;:;··· = gone= L _ _ _ _ _ __ _ ; crom.oJlJwttJ, '/ .. AND ARRIVING AGAIN NEXT WEEK! IJ.-L-----L.I.I
Slide 17: 2018 Strategic Initiatives
2018 STRATEGIC INITIATIVES 18
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
Slide 19: Format
- Format • Relocate 75% of fleet from C/D locations to solid Band 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 Proto
Slide 20: Strong Co-Tenancy Drives Favorable Customer Demographics and Traffic
Strong Co-Tenancy Drives Favorable Customer Demographics and Traffic -----ru£sd«!J M_or ---5-0 -----
Slide 21: Evolution of Store Locations
Evolution of Store Locations % of Fleet Impacted by Real Estate Strategy Prior FY15 Majority of Stores in Below Avg. Centers Through FY18 ~35% of Stores Relocated/Refreshed1 Long-Term ~75% of Stores will be Relocated/Refreshed1 Relocated/Refreshed Legacy 1 Relocated/Refreshed includes stores that ha
Slide 22: Real Estate Strategy: Target Relocation Economics
Real Estate Strategy: Target Relocation Economics Store Size (1) 10-13k sq/ft Year 1 Sales (2) ~$1.6 million Store Contribution Margin (3) ~15% Net Investment (4) ~$400K Payback Period (5) ~2 years (1) Targeted store size is 10K-13K, but actual results vary based upon real estate opportunities (2) R
Slide 23: FY15-FY18 Relocations, Expansions and Closures
FY18 1 FY15 FY16 FY17 FY15-FY18 1 30 relocations 7 Expansions 46 Relocations 7 Expansions 52 Relocations 13 Expansions 45 Relocations 8 Expansions 173 Relocations 35 Expansions Relocation & Expansions/ New Store Growth / 5 16 13 55 21 Portfolio lmproveme/ 46 Closed 34 Closed 41 Closed 20 Closing 141
Slide 24: Improving Sales Trend Across Cohorts
Improving Sales Trend Across Cohorts Average Sales per Store 2,500 $2,070 $2,050 $1,920 2,000 $1,840 1,500 $1,320 $1,270 $1,160 $1,060 1,000 500 FY14 FY15 FY16 FY17 •Top 100 Bottom 100 •Total 'Includes only stores open for entire 12 month period
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 volu
Slide 26: Broadening our Reach to Attract New Customers
Broadening our Reach to Attract New Customers Shared values among audiences1 Current Customer Reach 8.9M Shopping Aficionados Ages 55-69 Target New Customer Reach 30.3M Shopping Aficionados Ages 25-69
Slide 27: Updated Brand Creative and Digital 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 quality. YOU CAN TR
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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 i
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 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -2.7% Q3 Ql Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q4 Ql Q2 Q3 -5.0% D COMP % •Tw o Year STACKED FY15 Annual COMP 7.2% Two-Ye a r STA CKED 13.3% FY16 Annual COMP 7.8% Two-Year STA CKED 15.0% FY17 Annual COMP 2.2% Two-Year STA CKED 10.0% FY18 'New stores are inc
Slide 32: Balance Sheet/Cash Flow
Balance Sheet/Cash Flow ($ Millions) FY 2015 FY 2016 FY 2017 Q3 FY18 Total Assets $ 335 $ 362 $ 358 $ 390 Inventories $ 210 $ 242 $ 222 $ 245 Total Debt, Incl. Current portion - - $ 31 $ 44 Total Stockholders’ Equity $ 220 $ 227 $ 199 $ 190 $180M Asset-Backed Facility - 5 year faility maturing Augus
Slide 33: Driving to Profitable Growth
Driving to Profitable Growth • Focused efforts to improve store inventory allocation • Increased inventory turn and freshness • Tightly managing weeks of supply • Improved overall working capital management throughout the supply chain • Additional gross margin opportunity through improved IMU, markd
Slide 34: FY 2018 Outlook
FY 2018 OUTLOOK FISCAL 2018 GUIDANCE: Comp: 3%-4% improvement 35 DEBT: Approximately flat to FY17 year-end balance EBITDA: Significant year-over-year
Slide 35: Long-Term Outlook
LONG-TERM OUTLOOK REAL ESTATE REPOSITIONING SALES SUPPLY CHAIN EFFICIENCIES AND PRODUCTIVITY GROSS MARGIN MERCHANDISE AND INVENTORY OPTIMIZATION SALES GROSS MARGIN MARKETING PRODUCTIVITY SALES 36
Slide 36: Long-Term Outlook
LONG-TERM OUTLOOK REAL ESTATE — SALES REPOSITIONING SUPPLY CHAIN EFFICIENCIES ee GROSS MARGIN AND PRODUCTIVITY MERCHANDISE AND mum SALES INVENTORY OPTIMIZATION GROSS MARGIN MARKETING PRODUCTIVITY —y SALES
Slide 37: Thank You!
Thank YOU!