39 slides from Children's Place, Inc. (the)'s proxy contest presentation, May 8, 2015
Slide 1: The Children's Place: Executing a Transformation to a Leading Global, Omni-Channel Children's Apparel Brand
The Children’s Place: Executing a Transformation to a Leading Global, Omni - Channel Children’s Apparel Brand May 2015
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward Looking Statements This presentation may contain certain forward - looking statements regarding future circumstances. These forward - looking statements are based upon the Company's current expectations and assumptions and are subject to various risks and uncertainties
Slide 3: The Children's Place Today
The Children’s Place Today 2 Financial Overview ($mm) Management Tenure TSR 2 (10 - Dec - 2009 – 06 - May - 2015) • Largest pure play children’s specialty apparel retailer in North America ‒ #1 brand awareness and the highest market share among children’s specialty retailers • 1,097 retail stores wi
Slide 4: Delivering Superior Shareholder Value
Delivering Superior Shareholder Value Executing a Higher Growth, Higher Value Strategy x Changing market dynamics for kid’s apparel, coupled with historical under investment and failure to adapt, meant The Children’s Place needed a new strategy for success x Successfully executing a long - term stra
Slide 5: Driving a Transformation, Delivering Results
Driving a Transformation, Delivering Results 4 x Executing a clearly defined transformation strategy to continue to drive shareholder value x Outperformed the market and specialty apparel retailers 1 since Jane Elfers was announced, and growing momentum for continued outperformance x Stock is curren
Slide 6: Agenda
Agenda 5 II. Through the Transformation, Record of Delivering Value to Shareholders I. TCP Strategy for Transforming the Company to a Global Omni - Channel Brand III. Highly Qualified Board and Enhanced Corporate Governance V. Concluding Remarks IV. Macellum / Barington Proxy Fight
Slide 7: Market Trends in Children's Specialty Apparel Meant The Children's Place Needed to Adapt
17,734 20,145 2009 2013 # of US Stores (Retailers with Children's Departments) Market Trends In Children’s Specialty Apparel Meant The Children’s Place Needed to Adapt Over 2,400 Stores Added… Kid’s Apparel Has Become More Competitive Source: NDC, NPD and Company filings 6 Specialty Retailers Retail
Slide 8: In 2010, Children's Place Announced a New Strategy Well Received by the Marketplace
In 2010, Children’s Place Announced a New Strategy that Was Well Received by the Marketplace 7 “ After meeting new president and CEO Jane Elfers, we have a higher degree of confidence PLCE can further penetrate the children’s value apparel market. Ms. Elfers’s cross functional style of managing and
Slide 9: Significant Progress Towards Becoming a Global Omni-Channel Children's Brand
Channel Expansion We Are Making Significant Progress Towards Our Goal of Becoming a Global Omni - Channel Children's Brand Talent 8 Operational Excellence Product Focus Transforming Business through Technology Fleet Optimization 1 2 3 4
Slide 10: Transforming Our Product Offering in Every Division and Category
Transforming Our Product Offering in Every Division and Category 9 • Product is and will always be our #1 priority • Immediate focus when Jane Elfers joined was on consistent product execution across all divisions • Immediate focus in 2010 on the big kids (size 4 - 14) opportunity based on upcoming
Slide 11: Business Transformation Through Technology
Business Transformation Through Technology 10 • We are in the third year of a five - year plan of a company - wide transformation of our technology and systems • Our technology initiatives are strengthening our inventory management capabilities including planning, allocation and replenishment . Glob
Slide 12: Global Growth Through Alternate Channels of Distribution
$119 $151 $176 $215 $246 $280 7% 9% 10% 12% 14% 16% FY09 FY10 FY11 FY12 FY13 FY14 E - Commerce Revenue ($mm) % of Total Revenue Global Growth Through Alternate Channels of Distribution 11 • E - Commerce has grown at an 18.5% CAGR since 2009 ‒ 16% of total sales in fiscal 2014 • Launched a Canadian e
Slide 13: Store Fleet Optimization in North America
Store Fleet Optimization in North America 12 Fleet Facts 1,097 Stores in North America Brand Performs Well Across Variety of Formats United States 88% Canada 12% Premium Malls 56% Value Centers & Small Markets Outlets 12% Street/Strip/Other 8% 24% 4 • Developed a new store prototype in 2010 wi
Slide 14: Agenda
Agenda 13 I. TCP Strategy for Transforming the Company to a Global Omni - Channel Brand II. Through the Transformation, Record of Delivering Value to Shareholders III. Highly Qualified Board and Enhanced Corporate Governance V. Concluding Remarks IV. Macellum / Barington Proxy Fight
Slide 15: Top Quartile Sales Performance With Focus on Margins
(372) bps (606) bps (1,439) bps (29) bps (167) bps (186) bps (327) bps (352) bps (396) bps (482) bps (570) bps (2,277) bps (132) bps Top Quartile Sales Performance … With Focus on Margins Maintaining Leading Market Share Top Quartile Comp Sales Growth in 2014 1 Source: Cap IQ and Company filings Not
Slide 16: Carter's Is Not a Close Operating Peer
Baby (Ages 0 - 2) 35 % Other 65 % Carter’s Is Not a Close Operating Peer Source: Market share data from NPD Group, Company filings, CapIQ Note: Oshkosh figures are for Oshkosh retail 1 Justice figures are based off of LTM periods ending January for each respective year. Comparable sales for Justice
Slide 17: Stock Price Is Up 131% Since Jane Elfers' Appointment
Stock Price Is Up 131% Since Jane Elfers’ Appointment… Source: Press releases, Factiva and Bloomberg; Market data as of 06 - May - 2015 Stock Price Is At Its 8 - Year High 16 New Strategy & Leadership Transformation into Global, Omni - Channel Brand Delivering Returns $29.07 $0 $10 $20 $30 $40 $50 $
Slide 18: Outperformed Specialty Apparel Retailers and S&P 500
New Strategy & Leadership 10 - Dec - 2009 – 06 - May - 2010 5 Year 3 Year Delivering Results 1 Year 53.2 % 28.5 % 5.8 % 0.5 % 0.8 % 53.2 % 29.0 % 6.5 % Children's Place Specialty Apparel Retailers S&P 500 Source: Bloomberg as of 06 - May - 2015 1 Date prior to the announcement of Jane Elfers’ appoin
Slide 19: Prudent and Balanced Approach to Allocation of Capital
52 % 55 % 44 % 48 % 10 % 34 % 2 % 6 % 17 % 11 % 17 % 7 % 49 % 25 % 28 % 31 % 34 % 38 % 45 % 51 % 65 % 66 % 70 % 94 % 100 % Repurchase Dividends Capex Source: Company filings and Capital IQ Note: Above chart is based on last four quarters of reported data. Children’s Place is based off of FY2014 data
Slide 20: Consistent Return of Capital to Shareholders
Successful Execution of Our Strategy Has Enabled Significant Return of Capital to Shareholders • Prudent cash flow management has allowed us to consistently reward shareholders ‒ We have purchased over $520 million of our common stock since the Board authorized the capital return program in 2009 • O
Slide 21: Strategic Transformation and Continued Operating Momentum Positions for Success
Strategic Transformation and Continued Operating Momentum Positions The Children’s Place for Success 20 “We continue to believe PLCE represents favorable risk/reward given…strong strategic execution (evident by better than - expected 1Q reannouncement ) as we raise estimates and PT to $ 72 from $69.
Slide 22: Agenda
Agenda 21 I. TCP Strategy for Transforming the Company to a Global Omni - Channel Brand II. Through the Transformation, Record of Delivering Value to Shareholders III. Highly Qualified Board and Enhanced Corporate Governance V. Concluding Remarks IV. Macellum / Barington Proxy Fight
Slide 23: Strong Record of Corporate Governance
Strong Record of Corporate Governance Independent & New Leadership and Oversight • 7 of 8 Directors are independent • Five new Directors added since 2011, including two in 2014 Executive Compensation Built Upon Shareholder Feedback • Redesigned long - term incentive plan • Instituted new performance
Slide 24: Executive Compensation Aligned With Performance
= Performance - Based (PRSUs + Bonus) Substantial Majority of 2014 Compensation Performance - Based x CEO compensation in fiscal 2014 was in - line with Proxy Peer Group’s 1 CEOs and our other NEOs x Alignment of compensation and performance — CEO compensation in fiscal 2014 was aligned with TSR per
Slide 25: Highly-Qualified Board with the Right Mix of Experience
Jane Elfers (CEO) x x x Norman Matthews (Chairman) x x x Joseph Alutto x x Susan Griffith x Joseph Gromek x x x Kenneth Reiss x x x Stanley Reynolds x x x Susan Sobbott x x Highly - Qualified Board with the Right Mix of Experience • Balanced Mix of Long - Term and Fresh Perspective – Average tenure
Slide 26: The Children's Place Board of Directors
Norman Matthews – Chairman The Children’s Place Board of Directors ▪ Age: 82 ▪ Director since 2009; Independent ▪ Member of the Compensation Committee and Nominating and Corporate Governance Committee ▪ Former President of Federated Department Stores (1987 - 1988) ▪ Other Directorships: Henry Schein
Slide 27: Two New Directors Joined the Board in 2014
Stanley W. Reynolds Susan Sobbott • Age: 50 • Independent Director since 04 - Nov - 2014 • Member of Audit Committee • Joined 7 - Eleven in 1977; served as CFO since 2005 • Qualifies as an “audit committee financial expert” under SEC rules Biography and Qualifications Two New Directors Joined the Bo
Slide 28: Agenda
Agenda 27 I. TCP Strategy for Transforming the Company to a Global Omni - Channel Brand II. Through the Transformation, Record of Delivering Value to Shareholders III. Highly Qualified Board and Enhanced Corporate Governance V. Concluding Remarks IV. Macellum / Barington Proxy Fight
Slide 29: Macellum & Barington Have Not Sought Constructive Engagement
Macellum & Barington Have Not Sought to Have Constructive Engagement with The Children’s Place 28 2014 2015 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr The Children’s Place Continues to Deliver… 11 - Mar: Macellum & Barington publically send letter to Board of Directors 26 - Jun: Investor phone call
Slide 30: Macellum & Barington's Platform Is Based on Misrepresentations
Macellum & Barington’s Platform is Based on Misrepresentations and Misleading Analyses 29 × Company’s stock price has significantly underperformed its peers x Stock is up over 130% and has outperformed specialty apparel retailer s and S&P 500 since Jane Elfers joined the Company 1 x Is trading at it
Slide 31: Macellum & Barington's Platform Is Based on Misrepresentations
Macellum & Barington’s Platform is Based on Misrepresentations and Misleading Analyses 30 The Facts Macellum & Barington Myths × The Company has made merchandising mistakes x Company developed long - term strategic plan to transform the Company into a leading global, omni - channel children’s appare
Slide 32: Macellum & Barington's Platform Is Based on Misrepresentations
Macellum & Barington’s Platform is Based on Misrepresentations and Misleading Analyses 31 The Facts Macellum & Barington Myths × High management turnover x When Jane joined, the Company lacked effective leadership, had no growth strategy, and inventory management, financial systems and supply chain
Slide 33: Macellum & Barington's Preliminary Proxy Is Inaccurate
In addition, Macellum & Barington’s Preliminary Proxy Is Inaccurate 32 × Jane Elfers’ total compensation over the last three years was $42.6 million x False; t he aggregate compensation listed for Ms. Elfers (the $42.6 million referenced) covers a four - year period, not a three - year period x Fail
Slide 34: Macellum & Barington's Preliminary Proxy Is Inaccurate
In addition, Macellum & Barington’s Preliminary Proxy Is Inaccurate 33 × Since 2010, the Company is on its fourth CFO x Although factually correct, it is a misleading statement x The incumbent CFO was replaced upon Ms. Elfers’ appointment as CEO and its newest CFO, Anurup Pruthi, was appointed upon
Slide 35: Macellum & Barington Seek to Remove Strong Leaders with Critical Skills
Macellum & Barington Seek to Remove Strong Leaders with Critical Skills Macellum & Barington Are Targeting Directors with Significant Leadership Roles , Committee Responsibilities, and Skills Critical to Company’s Transformation 34 Norman Matthews Stanley W. Reynolds Strong Management and Board Expe
Slide 36: Macellum & Barington's Nominees Offer No Differentiated Value
Macellum & Barington’s Nominees Offer No Differentiated Value to The Children’s Place Board 35 × CEO of Pacific Sunwear from April 2005 to September 2006, during Mr. Johnson’s tenure Pacific Sunwear significantly underperformed with shares declining ~45% from April 2005 – Oct 2006 × After Mr . Johns
Slide 37: Agenda
Agenda 36 I. TCP Strategy for Transforming the Company to a Global Omni - Channel Brand II. Through the Transformation, Record of Delivering Value to Shareholders III. Highly Qualified Board and Enhanced Corporate Governance V. Concluding Remarks IV. Macellum / Barington Proxy Fight
Slide 38: Driving a Transformation, Delivering Results
Driving a Transformation, Delivering Results 37 x Executing a clearly defined transformation strategy to continue to drive shareholder value x Outperformed the market and specialty apparel retailers 1 since Jane Elfers was announced, and growing momentum for continued outperformance x Stock is curre
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